MICHAEL LIEDTKEThe New York Times Co.'s drop in advertising revenue won't be as severe this quarter as it was earlier in the year and online ad sales are rising again, raising hopes that the newspaper publisher will regain its financial footing in 2010. The projections released Tuesday by the Times Co. sent its shares up slightly. Despite the modest progress, the Times Co. is still struggling to find the balance that it will need. The amount of ad revenue its print editions are losing exceeds the total coming from Internet advertising. In the fourth quarter, for example, the Times Co. is bracing for a 25 percent drop in print advertising from the same time last year. That would translate into a roughly $97 million decline, to $290 million. Meanwhile, the owner of The New York Times, The Boston Globe and 16 other daily newspapers expects to reap $90 million from Internet ad sales in the fourth quarter. That is based on the Times' statement Tuesday that the company anticipates a 10 percent increase in online ad revenue. The imbalance between the erosion in print advertising and relatively small revenue gains from online advertising has been squeezing newspaper publishers for the past three years. To cope, newspapers have laid off thousands of workers and resorted to other cost cutting to boost their profits.
The Times Co. has trimmed its expenses this year by about $475 million, or roughly 17 percent of the company's 2008 operating costs. It employs 20 percent fewer people than last year and is still cutting jobs ¿ it hopes to eliminate 100 positions in The New York Times' newsroom by the end of this year. The company also has been getting more revenue from readers by raising newspaper prices. Circulation revenue rose 7 percent in the third quarter and is expected to rise 2 percent, or about $5 million, in the fourth quarter. The Times Co. has been considering charging for some of its free online content beginning next year. To compound the trouble facing newspapers, their online ad sales also had been falling most of this year. That trend, though, appears to be reversing as advertisers heartened by the early signs of an economic recovery increase their spending on the Web. Online marketing is less risky because the cost is lower and it typically doesn't require a long-term commitment. Another newspaper publisher, McClatchy Co., provided a similar snapshot of fourth-quarter ad trends Tuesday. The publisher of The Miami Herald, The Kansas City Star and 28 other daily newspapers said it expects its overall ad revenue to decline in the low- to mid-20 percent range. That's better than this year's previous quarters, when ad revenue ¿ newspapers' main source of income ¿ was falling by around 30 percent for the Times Co., McClatchy and other newspaper publishers. McClatchy shares jumped 39 cents, or 15 percent, to close at $3 on Tuesday.
The comparisons to last year are getting easier as this year goes on, given that the financial crisis deepened the recession in late 2008. In the fourth quarter of 2008, for instance, the Times Co.'s print ad revenue was down 20 percent from the previous year. But investors are still heartened to see that the worst may be over after a year in which at least 10 newspaper publishers filed for bankruptcy protection. That includes the owners of major dailies such as the Los Angles Times, Chicago Tribune and The Philadelphia Inquirer. The Times Co. is in better financial shape than it was early in the year, when it sold and leased back part of its headquarters building and borrowed money from billionaire Carlos Slim at 14 percent interest. The company expects to finish this year with total debt of $800 million, down from $1.1 billion at the end of 2008. The company hopes to improve its finances further by selling its 17.8 percent stake in a venture that owns the Boston Red Sox and a cable television network. "We strongly believe we are a company prepared for the challenges of 2010 and the coming decade," Times Co. Chief Executive Janet Robinson told analysts Tuesday at the UBS media conference in New York. Times Co. shares gained 11 cents, or 1.2 percent, to close at $9.01. After falling as low as $3.44 in February, the stock is now up by 23 percent since the end of last year.