New York Times
reported Thursday that its third-quarter earnings dropped 39% on lower revenue, layoff costs and a loss related to the sale of its stake in the Discovery Times Channel.
The Old Gray Lady earned $14 million, or 10 cents a share, for the quarter, down from the $23.1 million, or 16 cents a share, it recorded for the same quarter last year.
The results include an after-tax charge of $4.3 million, or 3 cents a share, related to staff reductions, and an, after-tax loss of $4.3 million, or 3 cents a share, from the sale of a 50% stake in the Discovery Times cable channel.
Analysts, on average, had expected the media conglomerate to report earnings of 12 cents a share, according to Thomson First Call. That forecast doesn't include the one-time items.
New York Times' revenue for the quarter came in well short of analysts' estimates. The company reported a top line of $739.6 million, down 2.4% $757.8 million last year. Analysts, on average, expected revenue of $787 million.
Shares of New York Times were recently down 39 cents, or 1.7%, to $22.86.
"Our third-quarter results reflect the continued weakness in the print advertising marketplace," the company said in a press release. "We are, however, strongly encouraged by the discipline our teams have shown in holding the line on operating costs, which were virtually flat with the third quarter of last year."
The company's advertising revenue declined 4.2%, circulation revenues were down 1.3% and other revenue increased 8.9%.
"Print advertising remains challenging, especially in categories such as studio entertainment, help wanted and automotive where we are experiencing declines," the company said. "The slowdown in the advertising market that began in the third quarter is expected to continue through the end of the year."
The company's total costs rose 0.1% for the quarter to $719.1 million. Excluding staff reductions, its costs were up 0.8%. Newsprint costs fell 2.2% due to lower consumption, but newsprint prices rose 8.9%.
Its operating profits dropped to $20.5 million, down from last year's $39.4 million, due to the revenue declines.
In addition to a weak advertising market and rising newsprint costs, New York Times is struggling to adapt its business model to online distribution. In the third quarter, Internet-related revenue made up 8% its total revenue, and it's on track to exceed $250 million by the end of the year.
The company's Internet-related businesses generated $62.8 million in revenue, up from last year's $50.5 million. These businesses include its digital archives, NYTimes.com, Boston.com and About.com.
About.com, which New York Times acquired earlier this year, continued to be a bright spot for the company. The division had a 29% increase in quarterly revenue to $18.3 million, due to higher display and cost-per-click advertising and e-commerce revenue. Its operating profit increased to $6.4 million from $3.8 million.
Revenue from its news media group fell 3% to $721.3 million from $743.6 million. Advertising revenues decreased 5.1% due to weakness in print advertising at The New York Times Media Group and the New England Media Group, partially offset by higher online advertising revenues across the News Media Group.
Circulation revenue slid 1.3%, mainly due to weakness from
The Boston Globe
. On Oct. 1, New York Times raised the newsstand price of the Northeast edition of its
to $5 from $4.50, which is the same price as the national edition. Home-delivery prices are scheduled to increase 4% on Nov. 6. The company expects the two price hikes to add approximately $12 million to circulation revenue in 2007.
Other revenues increased 8.3% thanks to the introduction of TimesSelect, its online subscription site for certain
New York Times
articles; higher commercial printing revenue; and revenue from Baseline StudioSystems, an online database and research service for information on the film and television industries the company acquired in August.
Results from its Broadcast Media Group weren't included in its report, since the company recently announced it will sell those assets.