Cost-cutting, ad turnaround drives $14.1 million net income
Are we seeing a turnaround at the Times?
The New York Times Co. reported a profit during the first quarter, with executives pointing to improving advertising trends and lauding the “vigilant” cost-cutting in previous months to get there.
The company reported net income of $14.1 million during the quarter, compared to a $74.3 million loss during the first three months of 2009.
One major reason: the company was able to slash its operating costs14.6 percent during the period – with half of the savings coming from reductions in labor costs and newsprint expense.
Print advertising is still struggling, but other parts of the business are making up for it. An 18 percent rise in digital advertising revenues helped offset a 12 percent decrease in print advertising during the quarter. Overall, ad revenues declined 6.1 percent.
"In the first quarter, we experienced significant positive trending in both print and digital advertising revenues relative to the fourth quarter,” NYT Co. president Janet Robinson said. “As the quarter progressed we saw acceleration in the rate of advertiser spending across our newspapers, Web sites and other platforms, reflecting a firming of economic conditions.”
Online advertising revenues “have become a much more significant part of our mix,” she said — 26 percent of the company’s total advertising revenues in the first quarter, up from 20 percent last year.
Circulation revenues rose 3.5 percent due to a hike in subscription and newsstand prices for the Times and Boston Globe.
Overall, revenues fell 3.2 percent in the quarter, but that was an improvement over 11.5 percent slide during the fourth quarter of 2009.
Robinson said she expects the turnaround to continue: "In the early part of the second quarter, revenue trends for print advertising are expected to improve from the levels of the first quarter, while digital advertising is expected to trend similarly to the first quarter, with increases in the high teens.”
UPDATE: During a conference call with investors, Robinson addressed the Wall Street Journal's soon-to-be-launched a New York section.
"We don't shy away from the competition. We never have," Robinson said. "We fully understand how to compete and in fact we enjoy it."
She said the Journal will compete, initially, "by giving away a lot of free advertising."