Lots of good news: NYTimes profits slide; S & P downgrades credit rating

NYTimes profits slide; S & P downgrades credit rating

Oct 23 07:26 PM US/Eastern


The New York Times Co. reported a steep drop in third-quarter profits on Thursday, the latest gloomy earnings report in an industry battered by online competition and falling print advertising revenue.
The New York Times Co. said net profit fell by 51.4 percent in the third quarter to 6.5 million dollars, or five cents per share, from 13.4 million dollars, or nine cents per share, in the same period a year ago.

The company, which owns About.com, The Boston Globe, International Herald Tribune and 16 other daily newspapers besides the flagship The New York Times, said overall advertising revenue fell by 14.4 percent during the quarter.

Shortly after the release of its results, Standard & Poors said it was lowering the Times's credit rating to "BB-," or junk status, while Moody's Investors Service said it was placing it on review for possible downgrade.

Moody's changed the rating outlook for the company to negative from stable in July. A further downgrade would reduce it to junk status. Both companies said the moves were based on the uncertain outlook for newspaper advertising.

Print advertising revenue has been declining at newspapers across the United States as circulation drops, more readers go online for their news and advertisers shift their dollars to the Internet.

The New York Times's share price rose slightly on Wall Street on Thursday, gaining 0.19 percent to close at 10.70 dollars, but was down 3.74 percent to 10.30 dollars in after-hours trading.

The Times said print advertising revenue fell by 18.5 percent in the third quarter while online revenue from NYTimes.com and other websites rose by 2.5 percent.

"The decline in print advertising revenues this quarter accelerated as the economy slowed," New York Times chief executive Janet Robinson said in a statement.

While print advertising revenue fell, online advertising revenue grew by 10.2 percent in the quarter to 74.4 million dollars, The New York Times said, and now accounts for 12.4 percent of revenue, up from 10.6 percent in the third quarter of 2007.

It said total revenue fell 8.9 percent in the quarter to 687 million dollars from 754.4 million in the same quarter last year.

Circulation revenue rose by one percent due to an increase in home-delivery and newsstand prices for the paper.

The company said it managed to reduce operating costs by 6.8 percent during the quarter and "given the adverse economic conditions, we will continue our strict cost discipline."

The New York Times also indicated in its statement that it may cut its dividend. "Our board of directors plans to review our dividend policy before the end of this year to determine what is most prudent in light of the overall market conditions," said Robinson.

It also said it was looking at writing down the value of assets in its New England Media Group, which includes the Boston Globe, by 100 million dollars to 150 million dollars.