NY Times Co. returns to profitability in 2Q
Posted by Simon Day on July 24, 2009 at 1:24 PM
The New York Times Co. turned a profit in the second quarter, registering "better-than-expected" profits despite a further fall in advertising revenue, the Wall Street Journal reported Thursday.
Second quarter profits came in at $39.1 million, or 27 cents a share, compared with 2008 profits of $21.1 million, or 15 cents a share, for the same period.
Second quarter profits came in at $39.1 million, or 27 cents a share, compared with 2008 profits of $21.1 million, or 15 cents a share, for the same period.
The profit came as the Times Co. made significant cost cutting measure across its newspapers and asset sales. Operating costs were reduced by 20 percent in the second quarter, which The Times expects will save $450 million by the end of the year, according to The New York Times. The company also had a tax benefit of $37.7 million, based on changes in the estimated income taxes in the first half of 2009.
The Times Co. is the most recent in a number major U.S. publishers to report second quarter profit jumps, after Gannet Co., McClatchy Co., Journal Communications Inc. and Media General Inc. all announced net profit increases.
According to Chief Executive Janet Robinson, the Times Co., also followed its fellow publishers with progressive reductions in advertising revenue declines, with a 29 percent decline for June after 35 percent in April and 30 percent in May.
"Based on what we have seen so far in July, we expect the advertising environment to continue to be challenging," Robinson said, according to The Times. "We believe the rate of decline will moderate slightly in the third quarter from what we experienced in the second quarter."
As cost cutting reaches its limits, newspaper publisher are hoping that predictions of an ad market recovery will materialise allowing restructured publications to take advantage of increasing advertising revenue.
Asset sales and cost cuts are all part of an effort by the publisher to shore up its financial position in the face of heavy debt maturities and dwindling cash flow in the years ahead. It already has raised cash through a sale-leaseback deal on part of its new Manhattan headquarters, and it accepted a high-interest loan from Mexican business magnate Carlos Slim.
Advertising revenue at the Times Co. was down 15.5 percent in the second quarter but still made up 21 percent of the Times' total revenue against 18 percent in 2008. The company's chief advertising officer, Denise Warren, attributed the decline to a reduction in ad buys as part of the advertising industry's larger downturn and an increase in competition.
The Times Co. is the most recent in a number major U.S. publishers to report second quarter profit jumps, after Gannet Co., McClatchy Co., Journal Communications Inc. and Media General Inc. all announced net profit increases.
According to Chief Executive Janet Robinson, the Times Co., also followed its fellow publishers with progressive reductions in advertising revenue declines, with a 29 percent decline for June after 35 percent in April and 30 percent in May.
"Based on what we have seen so far in July, we expect the advertising environment to continue to be challenging," Robinson said, according to The Times. "We believe the rate of decline will moderate slightly in the third quarter from what we experienced in the second quarter."
As cost cutting reaches its limits, newspaper publisher are hoping that predictions of an ad market recovery will materialise allowing restructured publications to take advantage of increasing advertising revenue.
Asset sales and cost cuts are all part of an effort by the publisher to shore up its financial position in the face of heavy debt maturities and dwindling cash flow in the years ahead. It already has raised cash through a sale-leaseback deal on part of its new Manhattan headquarters, and it accepted a high-interest loan from Mexican business magnate Carlos Slim.
Advertising revenue at the Times Co. was down 15.5 percent in the second quarter but still made up 21 percent of the Times' total revenue against 18 percent in 2008. The company's chief advertising officer, Denise Warren, attributed the decline to a reduction in ad buys as part of the advertising industry's larger downturn and an increase in competition.
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