Can Congress Help the New York Times?

The headline is grim at the New York Times Company (NYT): quarterly results were worse than expected, far worse than the same quarter last year, and the company says it won't get any better in this current quarter. The Times Co., which also owns the Boston Globe, as well as a bunch of other newspapers around the U.S., posted a $61 million loss (excluding one time items) on a 19 percent decline in revenue. It's taking a toll on the stock, which was off as much as 18 percent in Tuesday's trading, and down over seventy five percent for the year. The big story is advertising, which declined 27 percent across the company. Even online ads, which generated so much growth between 2005 and 2007 declined, and classified ads, once newspapers' bread and butter, were down by almost half.

Ouch.

CEO Janet Robinson is optimistic about the second half of the year, saying that advertisers are holding onto their cash to spend later in the year. Which seems, well, optimistic. And she's confident that when the economy recovers in 2010 and beyond, newspaper revenues will recover along with it. But wait - newspaper ad revenues were on the decline before the economy fell off a cliff. Aren't advertisers finding more efficient, targeted ways to reach consumers? Yes. Isn't the classified newspaper ad business dead? Yes.

Robinson has been rightfully criticized for passing on the opportunity to sell the struggling Boston Globe to Jack Welch, among other things. But at least she acknowledged on the earnings call yesterday that the company is going to have to find some new ways to generate revenue online, which could include reviving a subscription service. She insists that the current ad model is best, which seems over-confident, to say the least. We'll see if these "explorations" into other revenue models create some new ad opportunities.

There is a shard of good news: the company doesn't need any additional capital.

The NYT Co. has done tons of work in the past year restructuring its debt and generating cash, between cutting its dividend, attracting investment from Mexican billionaire Carlos Slim, and doing a $225 million sale-leaseback of its Manhattan headquarters. The company has also done a great job of cutting costs. If the ad market were to rebound, that would put the company in a strong position. And that's a big IF.

But should the New York Times even be a public company? The government is now getting involved. Senator John Kerry is chairing a subcommittee hearing on the future of journalism. On May 6 Kerry and crew will address the economic recession's impact on media. Back in March Senator Benjamin Cardin introduced a bill aiming to allow newspaper companies to restructure as non-profits with a variety of tax breaks. That could work out for some of the companies like the Sun-Times Media Group, which filed for bankruptcy protection last month. But moguls like Sam Zell, who took the Tribune Company private and Rupert Murdoch, who bought Dow Jones (NWS), weren't looking to get into the non-profit sector. They're still going to try to squeeze a profit out of this wilting business.

Comments

[Moon Kil Woong:]

As we saw with banks, apparently Congress and the Fed and Treasury can violate any sense of free market capitalism. Should they help keep newspapers solvent? No. But neither should they help keep AIG so.

I'd rather give a dying paper $10 million than a dying insurance company $140 billion. When will the madness end? Only when the people take their angst out by voting out anyone Republican or Democrat who approves giving away taxpayer dollars for bailouts.

They say the uS would be a lot worse off if AIG were allowed to fail. I really wonder about that. After trillions spent on banks and their axis of evil, we will never know what would have happened if we had just said no. What we do know is that the financial damage they have caused has dwarfed 9/11 by about 50x (excluding the stock crash that preceded both of them). Talk about home grown financial terrorism.

Apr 23 04:24 AM

[TCK:]

NYT is already an arm of the democrat party. Why not take away the pretense and just start writing checks to them also ? We already do that with NPR and PBS !

Apr 23 08:51 AM

[notsosmart:]

top management just got big raises.cost cutting? just another part of the ponzi. union phonies. push against the union in boston,love it in ny. why anybody bothers with this paper is beyond me.

Apr 23 04:01 PM

[ksh777:]

I think maybe helping the Times as a public service might not be such a bad idea. What is the alternative? See the death of journalism becuase it is not profitable?

Apr 25 01:38 AM