THE NEW YORK TIMES: LOTS OF SECTIONS -- SOME SAY TOO MANY -- BUT IT'S HARD TO ARGUE WITH A $1 BILLION PAYOFF

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Six months after it unveiled its colorful six-section reorganization of its editorial pages, The New York Times is riding high on the bullishness of analysts, a steady upswing in stock price and advertising revenues on track to top $1 billion in '98.

So who cares if readers occasionally gripe about all those flippy little sections, or that circulation gains are expected to remain modest?

Arthur Sulzberger Jr., newly appointed chairman-CEO of The New York Times Co., is a happy man these days.

"We are doing very well," he says of the last six months. "Look at the year we've had. In 1987, we embarked on a 10-year and $10 million strategy to re-create this newspaper, and this year we've done it. The stock has skyrocketed, we have had record earnings, record advertising. . . It's been a great year for the market and we've outperformed the market, advertising has outpaced the economy. We're feeling good."

Wall Street analysts also feel good about Times Co. these days.

"For the first quarter of '98, I'm expecting The New York Times newspaper to report ad revenue gains of 8% or higher than the industry average," says Bill Bird, publishing and advertising analyst at Salomon Smith Barney. "The trends have been fairly favorable for The New York Times as well as industry as a whole for the last two years, but currently their move to color is clearly helping the newspaper to produce above average growth for this year and I'm expecting very strong advertising growth for the rest of the year."

Daniel Cohen, senior VP-advertising at the Times, says categories that have been particularly strong since September include corporate, entertainment, insurance, technology, transportation and thanks to the expanding economy, help-wanted classifieds.

CATEGORIES UP

Two of those category increases are directly related to the introduction of new sections.

Entertainment advertisers now have an arts section in which to place ads six days a week, and technology advertisers have been taking advantage of "Circuits," the new national section that appears Thursdays.

Mr. Cohen says he believes '98 ad revenues will easily top the estimated $989 million earned in '97 because the newspaper is now confident it can handle color ad pages in every section every day. Through the fall, while production kinks in the new plant were being worked out, The Times limited the amount of color advertising it accepted.

Now, color advertising is accessible to all advertisers. That means more advertisers will be paying the color premium rates for more pages, which will contribute to boosting total ad revenues over the projected $1 billion mark.

SEES GAINS

Advertisers are giving the color high marks. The Times has "handled the inserting of color very well. It's very natural and gives the news sections an upscale feel," says Melissa Pordy, senior VP-director of print for Zenith Media, New York.

New York Times Co. President Janet Robinson is anticipating some gains in circulation when the March Audit Bureau of Circulations figures are released, especially in national circulation.

CHALLENGE FOR ALL

Stephen Barlo, media analyst at First Boston, agrees modest circulation gains probably have more to do with overall reading habits of the population.

"Circulation remains a challenge, but not just for them, for the whole industry," he says. "The national push for home delivery across the country has driven the circulation up a bit, but they are still trying to get more people to convert from newsstand buyers to home delivery in New York metro area. They definitely need to focus on circulation."

CLOSELY TRACKED

But other analysts are tracking the Times' circulation closely.

"I think the real question for the Times going forward is circulation. [Los Angeles Times Publisher] Mark Willes has an interesting idea and that is that what advertisers want is audience," says one media analyst who asked to remain unidentified.

"If you are delivering less and less, like TV networks and newspapers are trending, advertisers are going to notice and say, `Wait a minute, what's going on here?' " the analyst says. "The L.A. Times has done some crazy things, cutting the price and setting up a new organzation. Not only are they upgrading for advertisers and readers, but they're pushing the circulation harder too and that's smart."

For fourth-quarter 1997, The Times' circulation was essentially flat, down 0.7% for weekday to 1,117,200, while Sunday circulation was off just 0.1% to 1,643,000, according to internal reckoning.

Focus groups indicate readers like the new format because the different sections allow them to bring some sections to work and leave others at home for evening reading.

"From the standpoint of ease to our readers, we've gotten very positive feedback, espcially from our core readers," says Ms. Robinson.

But Mr. Sulzberger says he is happy about his readers with less positive reactions to the new format.

"Does it matter if the section is smaller if that's where the information you need is located? . . . What's wonderful is that people feel a personal identification to the point where the reaction is, `How dare you change our newspaper?' There is an adaptation that is taking place but we knew that would happen."

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