By Russell Adams
February 3, 2011
New York Times Co. reported a 26% decline in fourth-quarter profits as accelerating declines in print advertising raised uncertainty about the near-term prospects for a newspaper-industry recovery.
The recent results from Times Co. and Gannett Co. indicate advertising growth remains elusive for many publishers even as declines have moderated from their crippling 2009 levels. That is putting more pressure on profits as those companies run out of room to cut expenses and increase revenue from consumers.
Revenue from print advertising and circulation at the Times's newspapers, which together account for about 80% of company revenue, declined 7.2% and 3.6%, respectively. The print-advertising losses more than offset growth in the Times's digital businesses.
"The advertising marketplace was volatile during the quarter," Times Co. Chief Executive Janet Robinson said in a prepared statement. "The progress we made on the print advertising front in October and November was not sustained in December due to a combination of difficult year-over-year comparisons and advertiser caution about the economy and consumer spending."
Fourth-quarter net income was $67.1 million, or 44 cents a share, compared to $90.9 million, or 61 cents per share, in the same period a year earlier. The year-ago results include a $32.4 million after-tax gain from a pension freeze.
Total revenue was down 2.9% to $661.7 million. The company had about $597 million in net debt at the end of the year.
In order to tap a new revenue stream as readers migrate away from the printed paper, Nytimes.com soon will begin to charge its most frequent visitors. Readers will get free access to a certain number of articles before they are prompted to sign up for a subscription for additional material. The Times hasn't released details of the pay-wall system.
A person familiar with the matter said the company is planning to offer several subscription packages that incorporate access to the Times online and on other digital devices like Apple Inc.'s iPad. Executives have discussed offering a basic online subscription for under $10 a month and a more comprehensive digital offering, including the Times's iPad app as well as full online access, for around $20 a month, the person said. A print subscription to the Times will come with full online privileges at no additional cost, the Times has said.
Times Co. executives said they hope to create a pay system that introduces a subscription revenue stream without eating into online advertising, which is more than $100 million a year on nytimes.com, according to people familiar with the matter.
In the division that includes the websites for the Times, the Boston Globe and other newspapers, digital advertising revenue increased 20% to $67.5 million due mainly to growth in national display advertising. Total digital revenue in the period increased 11% as the segment was dragged down by a 3% decline in revenues at About.com.
Total revenue in the newspaper group declined 2.9% to $626.5 million.
This article was very interesting to me because I know that ad revenue is the main component in keeping newspapers successful. For the ad sales to go down is a very bad sign for the newspaper industry in general. I think that having subscriptions on personal computers and cell phones will raise revenue and hopefully in the coming quarters there will be a rise in ad sales.
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