The sluggish advertising trend is weighing upon The New York Times Company (NYSE:NYT), the diversified media conglomerate, prompting an update on its third-quarter 2010 outlook.
The publisher of The New York Times, International Herald Tribune, The Boston Globe and 15 other daily newspapers now expects total revenue to decline by 2% to 3% compared with a growth of 1.2% witnessed in second quarter 2010, stemming from the uncertainty among advertisers influenced by the sluggish economic recovery.
The New York Times is witnessing a fall in print advertising and circulation revenues, as well as slowing growth in digital advertising. The Zacks Consensus Estimate for third quarter 2010 revenues was $564 million, reflecting a fall of about 1% from the prior-year quarter – better than the company’s current outlook.
The newspaper publisher now expects print advertising revenues to drop by 5% in third quarter 2010 versus a decline of 6% registered in the previous quarter. Circulation revenues are expected to fall by 5% compared with a growth of 3.2% in second quarter 2010.
The New York Times indicated a decelerating growth in digital advertising revenues to 14% in the quarter under review from a growth of 21% experienced in second quarter 2010. The company also noted a 1% to 2% rise in operating costs in the third quarter. For the fourth quarter, management anticipates operating costs to be similar to the prior-year quarter, irrespective of higher newsprint prices.
Consequently, management expects to post third quarter earnings (excluding one-time items) in the range 3 cents to 5 cents a share that dovetails with the current Zacks Consensus Estimate of 5 cents. Including one-time items, The New York Times expects a loss of 5 cents to 7 cents a share.
We observe that the company faces a significant risk of high dependence on advertising
