New York Times Co reported higher quarterly profit on cost cuts on Thursday, beating forecasts, but advertising revenue fell 30 percent and a recovery for U.S. newspaper publishers still looks a long way off.
The Times also confirmed it is studying ways to charge for access to its popular website at a time when no clear path has emerged for newspaper publishers to switch primarily to the Internet in a sustainable way.
The company did not address multiple reports in recent months that it is trying to sell the money-losing Boston Globe newspaper. But it said it hopes to sell its stake in the holding company that owns the Boston Red Sox professional baseball team by the end of the year.
Many publishers reported similar results this week and their shares have sunk to historic lows as the recession and the trend of readers abandoning newspapers for the Web sucks away precious ad revenue.
Publishers have slashed jobs and trimmed expenses, making media watchers fearful over the quality of journalism, but the moves have pleased investors, who have sparked a rally in the sector in recent days.
New York Times Co posted second-quarter net income of $39 million, or 27 cents a share, compared with $21.1 million, or 15 cents a share, in the quarter a year ago.
Excluding an income tax gain and various charges, its profit of 8 cents a share surprised analysts, who expected a loss of 4 cents a share, according to Reuters Estimates.
The Times cut operating costs by 20 percent in the quarter, and said it plans to record $450 million in cost savings this year, which is 16 percent of its 2008 cost base. Some of that savings is coming from closing its City and Suburban newspaper and magazine distribution unit.
Revenue fell 21 percent to $584.5 million on a 30 percent decline in ad revenue, missing analysts' estimates. Ad sales at its news media group, which includes its newspapers, fell 32 percent. Online ad revenue, normally a brighter category for publishers, fell 15.5 percent.
USA Today owner Gannett Co Inc , Miami Herald publisher McClatchy Co and Richmond Times-Dispatch publisher Media General Inc , all surprised Wall Street with higher-than-expected profits due to expense cuts, but said ad revenue continued to fall.
The Times has been trying to improve its finances on several fronts.
As newspaper ad revenue falls, the Times and many other publishers are exploring ways to charge for Web access, but in a way that will not dent online ad sales or drive away large numbers of readers.
It also is cutting labor costs. Earlier this week, union workers agreed to pay cuts and other concessions at the Globe, which will result in $20 million in annual savings at the money-losing paper. The Times has already cut pay by up to 5 percent at other properties, including its flagship paper.
The Times is trying to sell the Globe, sources have told Reuters, but the company refused to confirm what it called speculation over the paper's sale.
Earlier this month, the Times said it will sell its classical music radio station in New York to pay debt, and that it hopes to sell its stake in the Red Sox's holding company, New England Sports Ventures, by the end of the year.
Times Co shares rose 26 cents, or 4 percent, to $6.88 on the New York Stock Exchange.
(Reporting by Robert MacMillan; editing by Jeffrey Benkoe)