The New York Times Co
A day after The New York Times newspaper won five Pulitzer Prizes, the highest honor in U.S. journalism, the results sent its parent company's shares down as much as 16 percent.
The Times reported a first-quarter net loss of $74.5 million, or 52 cents a share, compared with a loss of $335,000, or nil cents a share, in the quarter a year ago.
Excluding severance and other charges, the company would have reported a loss of 34 cents a share. Four analysts were expecting losses from 3 to 6 cents a share, according to Reuters Estimates.
Revenue fell 18.6 percent to $609 million. Operating costs fell 9.5 percent.
The Times's performance highlights the travails of U.S. newspapers, which are trying to sustain themselves despite plunging ad sales, debt and mounting losses.
The Times' results are similar to other publishers, such as USA Today owner Gannett Co Inc
Still, Wall Street and the public pay close attention to whether the Times -- one of the most storied names in U.S. journalism -- can juggle multiple problems until the recession eases and ad revenue picks up again.
The problem facing the Times and other publishers is that ad sales keep worsening as the finance crisis drags on and more people go online to read news for free. At the same time, it is trying to maintain its prize-winning flagship paper, which costs hundreds of millions of dollars to run each year.
The Times also is facing the repayment of hundreds of millions in debt, but took multiple actions during the quarter to repay some of it and push back other due dates until a time when it thinks ad sales will improve.
There were a lot of moving pieces, but the key takeaway is that cost cuts were not enough to offset the revenue declines, Wachovia analyst John Janedis wrote in a note to investors.
At the company's news media group, which includes its daily papers, first-quarter ad revenue fell 28 percent.
The Times said its New England Media Group, which includes the Globe and Worcester Telegram & Gazette, contributed to significant losses at its news media unit. The Times bought the Globe for $1.1 billion in 1993. The paper could lose $85 million this year. The Times has threatened to close it.
CUTTING THROUGH LOSSES
Second-quarter ad declines, Times Chief Executive Janet Robinson said, look similar to the first.
As a result, the Times is cutting costs by shaving employee pay by up to 5 percent. It wants New York Times and Boston Globe union members to agree to those cuts to prevent layoffs.
In time... we believe that the economy will grow and the advertising market will improve, Robinson said. While we are looking forward to that day, we are not waiting for it.
The company expects to cut operating costs by more than $330 million, though that excludes up to $150 million in depreciation and amortization, as well as layoff charges.
Online revenue, which accounted for nearly 13 percent of the Times Co's revenue in the quarter, fell 5.6 percent to $78.2 million.
Some of the online revenue at the Times comes from its online question-and-answer service About.com, where revenue fell 4.7 percent because of lower display ad sales. Its operating profit rose 6 percent to $9 million.
Aside from falling ad revenue, the Times has taken steps to ease its debt burden. It suspended its dividend, sold its share in its New York City headquarters building and borrowed money at high interest from Mexican billionaire Carlos Slim in exchange for making him one of the company's top shareholders.
At the end of the quarter, the company had cash and cash equivalents of about $294 million, while debt stood at about $1.3 billion. Not counting notes that it was redeeming at the time, debt was about $1 billion.
The company's shares fell 54 cents to $5.31 in morning trade on the New York Stock Exchange.
(Reporting by Robert MacMillan, editing by Dave Zimmerman and Derek Caney)