The New York Times reported another weak quarter, with revenue declining 4% year over year and operating profit (ongoing) dropping 3%. As at most newspapers, the one bright spot was the Internet business, in which revenue grew 24% to $81 million. Unfortunately, the online business is still tiny: The $324 million annual run-rate represents about 10% of the NYT’s overall revenue base–and about 2% of Google’s.
Unlike McClatchy and other newspaper giants, the NYT at least acknowledges that some of its troubles are secular instead of cyclical (translation: the Internet is eating our lunch). The company has yet to come up with a concrete solution, however. What is (or should be) clear by now is that the traditional newspaper business is in a permanent, unavoidable decline, and that the current model cannot simply be “ported” online. If The New York Times Company is to continue to exist in another 25 years, therefore–whether as a stand-alone organisation or a tiny division of Google–management needs a plan.
Such a plan will involve serious pain–at least as much as the dial-up-centric AOL has experienced in recent years (credit Time Warner for seeing reality and taking the hit). The newspaper industry’s decline won’t be as sudden or precipitous as AOL’s–those 40 and older still love their dead-tree media–but it’s headed to the same place. So the sooner the NYT acknowledges this and starts to deal with it, the better. As at the Journal, if current management won’t own up to reality, the NYT will eventually be in play–regardless of what the Sulzbergers may want, hope, or think.
UPDATE: Douglas McIntyre from 24/7 Wall Street adds that, in June, news for the NYT got even worse: newspaper ad revenue fell another 6.5% with classified down over 17%. Perhaps the decline will be precipitous.