New York Times Not Shifting Enough Resources To Online Properties (NYT)

| About: New York (NYT)

The New York Times (NYSE:NYT) bought internet guide service in March 2005. It now has 29 million visitors a month and ranks No. 56 in worldwide web traffic. Between that business and other online operations like, web businesses are now 7.5% of the revenue at The New York Times Company, based on Q1 06 numbers. ( was about 2% of revenue for the quarter.) A year ago, the percentage was 4.5%. The revenue pot for the entire company in the period was $832 million.

Operating profit at NYT for the first quarter was $68.3 million, a big drop from $208.1 million a year earlier. But, operating profit was $7.6 million, and this does not include the contributions from other online properties which are not broken out. So, online operating profits were over 11% of of the NYT total. With contributions of web operations beyond, which are not shown as a separate line item, one might surmise that they were much higher. (See The New York Times Company Q1 2006 Earnings Conference Call Transcript)

The balance of the business was very rough. The New York Times newspaper barely grew in the quarter. The New England Media Group portion of the company saw a 7.2% drop in ad revenue. Broadcast revenue was essentially flat.

Making the case that the newspapers or broadcast properties are going to get The New York Times Company out of the woods is almost impossible. The stock market has all but given up on the company. The share price, which was above $45 two years ago, now stands at $25. One large instititional investor, Morgan Stanley Investment Management, is on the war path because of the poor results.

The most troubling aspect of the situation at The New York Times Company is that it does not effectively use the large circulation of its newspaper products like the daily paper or to promote traffic to And, that's an important tactical mistake. Improved traffic will almost certainly increase revenue at a greater rate during a period when the company really needs it..

With the stock going down at the current pace, investors should hope the company will do whatever it can to promote the most financially promising business under its roof. The goal for the NYT and all the other major newspaper companies should be to have online revenue replace attriting newspaper advertising and circulation revenue faster than these disappear.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also president of when it was the 10th most visited website in the world, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc. and has served on the boards of and Edgar Online. He does not own securities in companies he writes about. McIntyre can be reached at