The New York Times' CEO Discusses Q1 2012 Results - Earnings Call Transcript

The New York Times (NYT)

Q1 2012 Earnings Call

April 19, 2012 11:00 am ET

Executives

Paula Schwartz - Assistant Director of Investor Relations & Online Communications

Arthur O. Sulzberger - Chairman, Interim Chief Executive Officer and Publisher of The Times

James M. Follo - Chief Financial Officer and Senior Vice President

Scott Heekin-Canedy - President and General Manager

Analysts

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

John Janedis - UBS Investment Bank, Research Division

Craig Huber

Catriona Fallon

Craig A. Huber - Access 3:42, LLC

Douglas M. Arthur - Evercore Partners Inc., Research Division

Edward J. Atorino - The Benchmark Company, LLC, Research Division

William G. Bird - Lazard Capital Markets LLC, Research Division

Leo Kulp - Citigroup Inc, Research Division

Presentation

Operator

Good day, and welcome to the The New York Times Company's First Quarter Earnings 2012 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to your host, Ms. Paula Schwartz. You may begin.

Paula Schwartz

Thank you, and good morning, everyone. Welcome to our first quarter 2012 earnings conference call. We have several members of our senior managing team here to discuss our results with you including Arthur Sulzberger, Jr., Chairman and Chief Executive Officer; Jim Follo, Senior Vice President and Chief Financial Officer; and Scott Heekin-Canedy, President and General Manager of The Times.

All of the comparisons on this conference call will be for the first quarter of 2012 to the first quarter of 2011, unless otherwise stated. Our discussion will include forward-looking statements, and our actual results may differ from those predicted. Some of the factors that may cause them to differ are included in our 2011 10-K. Our presentation will also include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our corporate website at www.nytco.com.

Now I'll turn the call over to Arthur Sulzberger.

Arthur O. Sulzberger

Thank you, Paula, and good morning, everyone. I'm pleased to say that 2012 is off to a good start. Our first quarter results are a testament to our successful digital strategy. Just one year after launching digital subscriptions at The Times, subscribers to pay digital products across the company totaled approximately 472,000. Our strategy has provided a model for the rest of the industry, and we continue to see reports that a growing number of U.S. newspapers are adopting metered models. Even as the advertising environment remains challenging on both the print and digital fronts, this year we expect to build on that strong start as we embark on our second year of paid digital subscriptions. We are exploring opportunities to deepen our readers engagement through mobile, video and social media, all of which have been growing rapidly. And we are investigating opportunities to further extend The Times brand and expand its global footprint.

As an example, in February, we launched Science Times China, a monthly magazine based on our Science Times coverage, translated into Chinese and distributed in the largest cities in China.

Underlying most of our growth opportunities is our award-winning journalism, the strength and depth of which are unmatched in the industry. It was announced earlier this week that for the second consecutive year, all 3 newspaper units owned by The Times in 2011 won Pulitzer Prizes. The New York Times won 2 for Exploratory and International Reporting. The Boston Globe won for Film Criticism, and the Tuscaloosa News won for Breaking News Reporting.

While the global news environment continues to change dramatically, our quality journalism, with its broad scope and in-depth analysis, positions us as a continued leader in the news space.

Disciplined cost management is a key element of managing our business. Our challenge remains how do we maintain our high-quality journalism while further reshaping our company for the future. This involves the careful balancing of our investments to support our digital initiatives while finding further cost efficiencies across our organization.

During the quarter, we made progress on our search for a new CEO. Our Board of Directors has retained the global search from Spencer Stuart, and we are looking both internally and externally for an executive who meets our needs. We will take the time necessary to find the right person for the role.

And now, I'd like to turn the call over to Jim Follo.

James M. Follo

Thanks, Arthur, and good morning, everyone. Our first quarter results reflect continued strength in the circulation side of our business, led by the introduction about a year ago of the Times digital subscription packages, as well as solid cost management, which together enabled us to achieve 9% growth in operating profit for depreciation, amortization and severance. This growth was despite continued uncertainty in the advertising marketplace.

In the financial results reported earlier this morning, the results of the Regional Media Group, which was sold early in the first quarter, are reported as discontinued operations for all periods presented.

We continue to refine and build upon our digital subscription initiatives in the first quarter. The Times recently reduced its pay meter count to 10 articles from the original 20 in both The Times and BostonGlobe.com, were that digital subscriber basis in the quarter. We are pleased with our progress to date in creating a robust new revenue stream based upon charging for digital access across -- access to our award-winning content.

Overall circulation revenues were again bolstered by these digital pay products, especially at The Times. Total circulation revenues were up 10% for the company and 13% for the the Times Media Group in the quarter.

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