There may be a light at the end of the tunnel for The New York Times Co. (NYT), but right now it's still too far off to see with the naked eye.
On Wednesday morning's second-quarter earnings call with analysts, president and CEO Janet L. Robinson said the dismal trends that have afflicted the paper and its corporate kin all year are all but certain to continue through the end of 2008, and probably well beyond.
"We certainly see a tough second half if the economy continues to act the way it's acting now," Robinson said. "I think it's clear that many of the advertising budgets are tightening up, not to say they're totally going away. There may be more opportunity to loosen up at end of third and fourth quarters, but right now people are tightening those budgets and really saving dollars to use at a later date."
Asked whether this year's bad news (including an 82 percent drop in second-quarter earnings) could be next year's good news, in the sense of setting a low bar for year-over-year comparisons, Robinson demurred, noting that one major predictor of ad revenues suggests the pain will continue unabated for a year or more. "There are signs certainly from some sources that say the housing market will not improve until the latter half of 2009 at the earliest," she said. "But I think it's very early for us to be projecting our thoughts regarding that."
That's not to say there aren't a few glimmers here and there in the darkness. Online revenues were up 13 percent in the second quarter, and the company has been able to wring out revenue increases on the circulation side by hiking up home-delivery fees and newsstand prices and by eliminating heavily-discounted subscriptions. Robinson announced the Times will raise its newsstand price by 25 cents, to $1.50, on Aug. 18, prompting an analyst to ask whether the move would generate $10 million more in annualized revenue. "It's a bit more nuanced than that," answered the paper's chief financial officer, Roland Caputo, explaining that "contractual obligations with wholesalers" limit how much of the extra money the Times can pocket.
With ad spending looking soft for the foreseeable future, the Times Co. is largely looking to cost savings to improve its bottom line. But one major initiative, the downsizing of the newsroom by 100 positions, has been less successful than was hoped. The Times Co. adjusted its estimate for the cost of buyouts in 2008, originally pegged at between $30 million and $35 million, up to $40 million to $50 million. (A spokeswoman says the higher range reflects not a plan to eliminate more positions but merely the difficulty of estimating the expense of buyouts in the first place.)
This article has 3 comments:
Venkatraman
NY Times and every major newspaper has to figure out a compelling digital business model. The early attempt at charging did not go well because the consumers were not enthused to pay for online content. Just as music industry is slowly coming to grips with a digital business model (orchestrated by Apple), the newspaper industry needs a new business model that has at its core a revenue model that is a mix of advertisement and subscription. The question is will NY Times and others architect such a business model or will it require someone outside to do it. Google News is still in its infancy. So, NY Times has a chance to step up and do something. But, it requires bold moves.. and out-of-the-box thinking. It requires cooperation with other newspapers and a new set of competencies. Will NY Times win? It is a multi-billion dollar question!
The charts show that NYT is trading at its 10 year low, and its put/call option open interest ratio reached the 100% percentile reading on July 15th.
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Since the New York Times is one of chrished tradition, I hope that the threatened attack by abusise shorting will not materialize, or that the SEC will put a stop to it under its new anti-abusive-shorting rules.