The New York Times Co. fell into a deeper financial hole during the first quarter as the newspaper publisher's advertising revenue plunged 27 percent in an industrywide slump that is reshaping the print media. Its shares dived Tuesday.
The owner of The New York Times, The Boston Globe, the International Herald Tribune and 15 other daily newspapers said Tuesday that it lost $74.5 million, or 52 cents per share, in the opening three months of the year. That compared with a loss of $335,000 at the same time last year, which was break-even on a per-share basis.
The results in the most recent quarter included charges totaling 18 cents per share to cover the costs of jettisoning employees and other one-time accounting measures.
Even with those charges stripped out, the loss was much worse than analysts expected. Analysts surveyed by Thomson Reuters had predicted the New York-based company would lose 4 cents per share.
Revenue for the period dropped 19 percent to $609 million — about $22 million below the average analyst estimate.
New York Times Co. shares fell 83 cents, 14 percent, to $5.02 in morning trading.
The disappointing performance was driven by a nearly $124 million decline in the Times Co.'s ad revenue from the same time last year. While most of the erosion was concentrated in the Times Co.'s newspapers, its Internet ad revenue also sagged by 8 percent, or $3.6 million.
Like other major newspaper publishers, the Times Co. is being hit with a devastating double whammy — a 16-month-old recession and a marketing shift that has diverted more ad spending to less expensive Internet alternatives. At the same time, many readers are canceling their newspaper subscriptions because they can read much of the same information for free on the Web.
The Times Co. did manage to increase circulation revenue slightly in the first quarter, by raising newspaper prices.
The ad slump hasn't eased so far in the second quarter, prompting Times Co. Chief Executive Janet Robinson to caution the three months ending in June could result in another advertising decline in the 20 percent to 30 percent range.
"In time, however, we believe that the economy will grow and the advertising market will improve," Robinson said in a prepared statement. "While we are looking forward to that day, we are not waiting for it."
To curtail its losses, the Times Co. lowered its first-quarter expenses by 9.5 percent from last year. Robinson estimated the Times Co. will save about $330 million annually through various cost-cutting measures before the year is over.
Most of the company's employees in New York are facing a temporary 5 percent reduction in their paychecks through the remainder of the year, and management is demanding even bigger concessions at the company's next-largest U.S. newspaper, The Boston Globe.
If it can't wring $20 million in employee concessions from the Globe by early May, the Times Co. has threatened to shut down the newspaper to avoid further losses. After suffering a loss of about $50 million last year, The Boston Globe is on a pace to lose $85 million this year.
The Times Co. pinned a big part of its first-quarter losses to The Boston Globe and the Worcester (Mass.) Telegram & Gazette. As a whole, the newspaper division suffered a first-quarter operating loss of $54.3 million. The same division posted an operating profit of $13.3 million at the same time last year.
To save $133 million annually, the Times Co. recently suspended its shareholder dividends. To raise money to pay down debt, the company sold most of its midtown Manhattan headquarters for $225 million and will lease the offices instead. It also got a $250 million infusion from Mexican billionaire Carlos Slim at 14 percent interest and gave him potentially valuable stock warrants.
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