NYT Rewrites Its Own History

It's good work if you can get it, writing the headline to your own obituary -- and the newspaper industry can.

Welcome to this, one of the sadder weeks in journalism history, when The New York Times NYT reported results so dismal and without long-term promise that they should make anyone with ties to the newspaper industry quake.

And what did The New York Times itself venture to say about this wretched earnings report? "Times Co. Records Small Loss for Quarter."

A small loss. That was quick, mild and easy, huh? Boy, does the business media hate when the media industry's in flux. Don't forget the time when the Times Company was more forthright about its monthly sales than the coverage that followed it. Or back two Christmases ago, when the business media insisted that newspaper margins were safe, despite lame top-line growth. I could go on and on.

The headline might be technically accurate, but don't be thrown. The article itself properly reported that performance "fell far short of both analysts' expectations and its $23.9 million profit in the quarter a year earlier. The loss was a fraction of a penny per share, compared with the average analyst forecast of earnings of 14 cents and the 17 cents earned in the first quarter of 2007."

Got that? The company was supposed to earn 14 cents, down from last year. And it missed that by, uh, more than 14 cents. To report that and run with a headline about the company's "small loss" is an exercise in wishful thought and willful naïveté. And it does not get at how rapidly business is declining.

The piece then blamed the economy before acknowledging that online advertising revenue, until now portrayed as the ultimate savoir, has actually been tanking badly:

"Perhaps more worrying was that the growth in digital ad revenue slowed as well -- to 16 percent from 21.6 percent a year earlier. The company, which owns the flagship Times newspaper, The Boston Globe, The International Herald Tribune and 16 smaller papers, has been aggressively investing in its online properties to offset declines in paper advertising."

Not too long ago, this growth had been running in the 40% range and in this quarter's monthly sales numbers, we even touched down on single digits. Should investors stay with them? This is the operative question that should have led the article.

Jon Friedman at MarketWatch gets his first coveted Business Press Maven "Nod of Approval" for pointing out what the Times -- and a lot of other news outlets -- neglected to mention:

"This year was expected to be a lifeboat for advertising-oriented concerns, thanks to the prospect of an exciting presidential race and the Beijing Olympics enlivening the ad picture."

Can you imagine what these results will look like next year, with no election or Olympics? They won't even be able to pass off a "small loss" headline.

Another item to keep in mind: The move from online to print is always framed as a "transition." But it is not that clean. First off, as online growth rates slow, the implication that there can be a transition, to make up for the several billion in print revenue, is absurd. Moreover, it is also not a clean transition in that it involves "cannibalization." Especially for companies like the Times that give away the goods for free, many print readers have migrated to the Web, where they are worth far less to the company. Any growth online comes at the expense of the newspaper.

And that doesn't make for a pretty headline.

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