OMG! New York Times (NYT) Has Solid Quarter

Well, here’s the way to shut up annoying critics who are predicting your company’s demise: post strong numbers. In Q3, this is what the NYT has done.  (Release)

September’s advertising revenue was very strong, up 5.5%, saving the quarter.  However, the release cautions that October advertising is not as strong as September’s (econ weakness?) but is still stronger than the first half of the year.  (The company’s comments about retail advertising in particular have been added to our “recession watch.”)

Key Points:

  • Total revenue up 2%: ad revenue decreased 0.1%, circ up 3.9% (price increase more than offset volume declines).
  • National ads strong (+10.9%), local/regional weak.
  • Digital revenues up 26.5% to $79.7 million, now 10.6% of business, up from 8.5% last year.
  • revenue up 34.5% (organic 26%).  However, About EBITDA lagged significantly, up only 9%.  One third of the extra cost was one-time restructuring (sales), but the rest was increased investment spending and higher content and comp costs).
  • EBITDA up 46% to $80 million ($320 million run-rate).
  • The NYT plans to cut $130 million of costs in 2008.  Most will be process and infrastructure related, but some will involve headcount reductions and shifting of jobs to lower cost geographies.  If we assume half the cuts are headcount-related and that the average per-employee expense is $125,000 a year fully loaded, about 500 jobs will be cut.  Management suggested that the newsroom would not be significantly affected.

Conference Call:

Headline: Improved national ads (including online), Increased circ revenue, cost cutting… (MORE)

Mobile: Big focus.  Movie times, etc. (i.e., circa 1996 Yahoo)

Cost Reductions: Reducing by $230 million in 2008-2009.  $130 million in 2008.  (Assuming half of that $130 million is people, and people earn an average of $125,000 all-in, that’s 520 jobs).

Quarter: Excluding real-estate, ads up 1.4%. 

Ads: Retail ads down, real estate down.  Advertisers like some new formats. 

New England Group: Still sucking wind.  Classifieds hammered.  National ads OK: banking, hospitals.  Soft: automotive, travel.  (Travel is interesting, as Google and Yahoo reported strong travel–so perhaps this is moving online fast).

Regional Group: Ads clobbered, especially classifieds.  Downturn Florida and Cal has hit real estate, recruiting, home furnishings, etc.  Real estate crash affecting lots of categories outside of straight real-estate.

Monster deal: Off to good start.

Circ revenue:
Up because jacked prices in Q4 last year and Q3 this year.  Less than expected drop off in subscriptions.  (This is good news.  Perhaps lots of elasticity here?)

Other revenues: up 10.8%, primarily driven by rental income on new headquarters.  (Now there’s a good business).

About: 34.9% because of higher rates, increased volume, and an acquisition.  Ex acquisition, up 26%.  Op mar declined primarily from investment and higher content/comp costs (with some restruct).  In Q4, expect margin to improve.

Traffic: 44.2 million uniques, up 12%.  28% of online audience.

Online revenue: Higher than peers because of content and about.  46% from display, 23% classifieds, 15% search, 16% other.

Outlook: Sept strong, but visibility limited.  October weaker than Sept, but stronger than first half.

Overall: We are ahead of the newspaper curve (peers in worse shape, flailing).


Newsprint costs down 22%.  14% from prices, rest from less usage.

CAPEX: $71 million, including $18 million for new HQ/  Expect far lower CAPEX next year.  Maintenance capex well below $100 million a year.

Cost Cuts: Exceeding goal of cutting $60-$65 million this year.  This year: $130 million.  Consolidation of printing plant, width, etc.  Majority: standardising, streamlining, consolidating, shifting staff to lower cost places.  Admin, processing, etc.  (i.e., not newsroom)


Boston.  Movies, banking, telecom, drugs, healthcare all doing well.  Weakness: help wanted, real estate, automotive.  Retail: food/drug, apparel, weaker.  Some openings will bring in new advertisers.  What we’re hearing…they are appreciating ability to buy both online/print.  Please to see new products being introduced in retail, luxury goods.

Some strength in entertainment continuing?  Yes, studio strong into October.  Exceptional September.  But very easy comps Sept/Oct.  Expect strength to moderate.  And we are in low visibility, volatile environment.  That hasn’t changed.

National strength detail?  Strong August, Sept.  Big categories: luxury brand categories, fashion, packaged goods, corporate, hotels, books, home furnishing.  Broad based, all showing growth.  Outlook rest of year: Lux brand, corp hotels, continuing growth.  Other categories flat to slightly down.  Boston: Nat’l grew nicely: Pharma, banking, telecom, studios.  In banking, more competition in Boston.  Citibank 30 openings.  Spurred many to do more.  BOFA wealth management, TD Bank North, etc.  On Telecom: Verizon and Comcast in heated competition, spurring lots of spending.  In studio, good product, their fall preview did very well.

TimesSelect: Was a good $10 million business.  But when look at growth in search referrals to and uptick in SEO, we also look at growth of Internet ads–over long term we expect to see scale and inventory benefits accruing and outweighing.  We fully expect to surpass that revenue as we grow web site.

Ad rates next year?  We’re looking now, too early to talk.  Rates will stay with market.

October trends: Seeing growth: Lux brands, hotels, studios, home furnishings, corporate.  Dept stories,tech, telecom, classifieds, media a challenge.  Still early in month.  Volatility of market in NY and Boston makes hard to predict.  At Globe, studio, banks, telecom good.  Apparel, footwear, home furnish and real estate weak.

Non-newsprint cash costs up 1%

Quantify revenue of new products?  (No.)  “Nice amount” at Globe.  IHT: Introducing T-Style magazine.  Lots of luxury advertisers have embraced. restructuring costs: 3 segments of costs:  1) Additional investments (launch in China in a week).  2) one-time restruct charges, sales/dev.  3) higher expenses from compensation, war for talent: technical and sales and guides (increased pageviews).  Roughly a third each, one bucket one time.

Retail numbers:  Seen some softness: computer, food/drug, apparel footwear, department stores.  Fairly challenging for all of our newspapers.  at regionals, retail under lot of pressure.  Much related to housing: home furnishings, home improvement.  We had expected better at Times in September, continuing to October.  Weather is affecting (we think.)  Visibility into Nov/Dec: some vis, but advertisers across board deliberate, last minute decisions.  Especially true in retail.

FTE year to year:  down 4.6%.  wage/benefits inflation 2-3%

About: Core growth 26%, EBITDA of acquisitions not dilutive.

Traffic Numbers: Some competitors claiming uniques much higher than Comscore says.  You seeing this?  We’ve seen this for years Problem for many years.  We skew into work, education, government, etc.  It’s an industry-wide prob.

Internet/Print: Salesforces fully integrated.  Went to larger number across both channels.   Increased penetration.  Allowed us to package more forcefully offers in marketplace.

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