New York Times (NYT) 3rd quarter earns headlines

Posted Oct 23rd 2007 3:50PM by Tom Barlow
Filed under: Earnings Reports, Forecasts, New York Times'A' (NYT)

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A week after Morgan Stanley (NYSE: MS) walked away from the New York Times (NYSE: NYT) after futilely trying to reshape its direction, the Times re-energized its brand a bit with a strong 3rd quarter earnings report. Net income finished up 6.7%, while earnings per share were $.10, well above the .05 expectations of analysts polled by Thompson Financial.

The strong earnings came from the News Media Group, which realized an increase in operating profit of 42.9%. Tighter costs controls, an NYT price increase and increased rental income in its new headquarters all contributed to increasing revenues.

The internet side of the business, the About.com group, brought in 34.9% more in revenue. However, due to costs associated with the integration of of ConsumerSearch.com and investments in new business, the expense side of this sector grew also, resulting in a decrease in operating income of 2%. At present, this group contributes only 3% of the total revenues, demonstrating that the company is still firmly grounded in paper and ink.

Included in this quarterly report is a $7.8 million loss from the sale of its share of the Discovery Times Channel. One of the company's gambles, the opening up of the Times' archives, is not reflected in this quarter's report, as it took place so recently. According to the Wall Street Journal (subscription required), the NYT had been bringing in about $10 million annually in e-subscriptions, a figure it should easily be able to exceed by the adoption of an advertising-supported model.

For the fourth quarter, the company expects to take a $14-16 million hit for staff reductions. On a positive note, it projects almost a quarter of a billion dollars in cost savings and productivity gains to be realized in the 2008-2009 time period.

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