New York Times Falls as Advertising Declines Outweigh Digital Growth

New York Times (NYT) - Get Report  was falling on Tuesday as a decline in overall advertising sales outweighed the positives of a surge in digital subscriptions. 

Shares in the New York media company were dropping 3.7% to $12.40, reflecting both a sharp decline in global markets and a $14 million net loss on a 9% drop in print advertising. Total ad sales decreased 6.8% to $140 million as digital ad sales fell 1.3%. 

New York Times has dropped 7.6% this year.

Profit excluding some items was 10 cents a share, the company said Tuesday in a statement, exceeding analyst estimates of 8 cents a share. The U.S. newspaper publisher added 67,000 net digital subscribers, its largest quarterly total in three years and a 22% increase from a year ago. Revenue of $379.5 million was 1% lower than a year ago but exceeded analysts' consensus forecast of $377.5 million.

But while the 14% jump in digital-only subscriptions to $54.2 million reflects the direction CEO Mark Thompson aims to take the company, the drop in total advertising illustrates the challenges facing the publisher of The New York Times. Total advertising in the current quarter is expected to decline at a "rate similar" to the first quarter, the company said.

"We had a more challenging quarter in both print and digital advertising in large part due to conditions impacting the entire advertising marketplace," Thompson said in the statement. "We remain confident in our ability to grow our digital advertising revenue in the long term, and we are continuing to invest in ad product innovation."

Adjusted operating profit declined to $52 million in the first quarter from $59 million in the same period a year ago.

The Times is investing in video journalism to sell advertising and attract readers. It plans to invest about $50 million this year to bolster its international digital offerings in an effort to win subscribers and advertising sales outside the U.S., Thompson said in an investor conference call.

This week, The Times introduced six new video series in business, sports, music and science in addition to new virtual reality projects that it plans to use to sell advertising and increase digital subscription.

The Times is aiming to expand its digital audience as print readership continues to erode amid a 10-year decline in total advertising sales for legacy newspapers. Circulation accounts for more than half of the company's revenue, up from more than a third in the fourth quarter of 2011. Circulation revenue from digital-only subscriptions increased 13% to $52.1 million.

Operating expenses were little changed from the same quarter a year ago at $352 million.

Cost-cutting and consolidation remain a high priority. The Times last month said it will close its editing and prepress print production operations in Paris, eliminating or forcing the relocation of as many as 70 jobs. The changes are part of an effort to redesign its international print newspaper and simplify the editing and production process.