The New York Times Co warned on Wednesday that print newspaper advertising will continue to decline, sending shares down nearly 9 percent, even as the company slashed costs to reach a higher-than-expected fourth-quarter profit.
The results, like that of other U.S. newspaper publishers, show that revenue declines are easing as the economy improves and advertisers are taking ginger steps back into the market. Even so, they are reducing what they spend on print media anyway, keeping newspapers' long-term futures uncertain.
U.S. newspapers have been among the media sectors hit hardest by the ad slump, though the Times said advertisers had started to increase their rate of spending across its papers and websites during the quarter.
Still, visibility remains limited for advertising, said Chief Executive Janet Robinson
In the first quarter of 2010, we expect the rate of decline for print advertising to continue to improve modestly from the fourth quarter, she said in a statement.
Ad revenue at the news media group, which includes The New York Times, Boston Globe and other papers, fell 15 percent in the fourth quarter from a year earlier.
Total fourth-quarter revenue fell 11.5 percent to $681.2 million, compared with the average analyst estimate of $653.2 million, according to Thomson Reuters I/B/E/S.
Income from continuing operations was 48 cents a share, compared with 19 cents a share a year ago. Excluding severance costs and items, profit was 44 cents a share, beating the analysts' average forecast of 38 cents a share, according to Thomson Reuters I/B/E/S.
The Times cut operating costs about 15.5 percent.
With the decline in print advertising only partially offset by growth in digital ads, The New York Times has raised prices on its print editions and unveiled plans to charge for some of the news on its website in 2011.
Circulation revenue rose 2 percent because of higher subscription and newsstand prices.
Online revenue, including About.com and its news websites, grew 11 percent. In the first quarter, digital ad sales should be in line with the fourth quarter, Robinson said.
The Times is working with makers of new devices, like Apple Inc's iPad, on new ways to reach readers.
RED SOX GAME IN EXTRA INNINGS
The Times has sold some of its assets in recent years, including its television and radio stations, as it tries to cut costs. While it canceled plans to sell the Globe and the Worcester Telegram & Gazette in Massachusetts, it said it still wants to sell its stake in the Boston Red Sox baseball team.
It has been more than a year since the Time confirmed that it wants to sell the stake. But Robinson said the process is taking longer than expected and described it as complicated. She offered no other details.
The Times has other ways to cut costs. Executives said the company expects overall head count to fall in 2010, a process it has begun in recent years. At the same time, it plans to hire more people for its digital operations.
On a brighter note, the Times said it cut its debt by more than $290 million to $769 million at the end of 2009, excluding $67 million in letters of credit. Analysts and media experts watch the Times's debt closely, especially after it took a $250 million loan from Mexican billionaire and telecommunications tycoon Carlos Slim.
Shares were down $1.01, or 8.65 percent, at $10.66 in afternoon trading on the New York Stock Exchange.
(Reporting by Yinka Adegoke, editing by Maureen Bavdek, Gerald E. McCormick and Robert MacMillan)