The New York Times Company has continued the trend of appalling results from US media groups, plunging to a $US78.5 million quarterly loss after a 27% plunge in advertising revenue.
The result was worse than expected by the market and the company’s shares fell more than 15% in response.
The result follows losses for another newspaper group, MediaGeneral, a 60% fall in earnings at Gannett Co, the country’s biggest newspaper group, and a 45% drop in earnings at NBC Universal. Not helping were big losses at the Boston Globe newspaper which seems to be on the way to being shut, unless staff agree to big wage and cost cuts.
The company is asking all employees for a 5% wage cut, and wants deeper cuts in printing and non-newsroom costs in Boston. The bad resukt came a day after the New York Times newspaper won five Pulitzer Prizes, the highest honour in US journalism.
Even though it raised money in the quarter and managed to push out debt repayments, the company remains trapped in a vice of plunging revenues, rising debt costs and slowly falling operating costs.
Revenue fell 18.6% to $US609 million in the quarter, but operating costs only fell 9.5%, meaning the losses widened in the quarter from an operating loss in 2008 of around $US335,000.
At the company’s news media group, which includes its daily papers, first-quarter ad revenue fell 28%. That produced an operating loss of $US54.3 million from its News Media Group, compared to a profit of $US13.3 million a year ago, primarily on “significant” losses at the New England Media Group, which includes the Globe, the Worcester Telegram & Gazette and their websites.
“Like many companies across America and in our industry, the challenges we face intensified in the first quarter,” said Janet Robinson, president and chief executive of the New York Times.
“Advertisers pulled back on print placements in all categories — national, retail and especially classified. Digital revenues also declined, although modestly, as a result of the weakening economy. Circulation revenue increased slightly as we benefited from price increases at our newspapers.
“At this time, and it is early in the quarter, we believe the rate of decline in ad revenues in the second quarter will be similar to that of the first,” Ms Robinson said in her statement. She said the company is “looking to chop more than $US330 million out of expenses this year.”
The Times Co said it finished the quarter with $US294 million in cash, including $US250 million held in escrow to complete the redemption of notes, and $US1.3 billion in total debt, excluding $US250 million of notes in the process of redemption. The company said it had sufficient capacity under its revolving credit agreement to repay $US44.5 million in notes due at the end of 2009.