Digital Ad Revenue Falls at The New York Times Co.

Digital Circulation Continues to Prove a Bright Spot

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First-quarter revenue at The New York Times Co. slipped 0.3% from a year earlier as circulation revenue grew but ad revenue fell, the company said today.

Perhaps more worrisome, digital ad revenue fell 10.3% across the company. That was primarily because of declines at the division, but the News Media Group, which includes The New York Times and The Boston Globe, saw digital ad revenue dip 2.3% as well, the company said.

The News Media Group's print ad revenue fell 7.2%, while circulation revenue, aided by digital subscription offerings, grew 9.7%.

Those results exclude the regional newspapers that the company sold in December for $140 million.

The company expects second-quarter ad revenue to be "similar to the level experienced in the first quarter," it said.

The Times Co.'s annual revenue has fallen every year since 2006 as the publishing industry has lost ad dollars to web companies. But charging for unfettered digital access has proved to be a bright spot. The company recently moved to boost its online subscriptions by further restricting the number of free articles people can read on The Times website from 20 to 10 articles a month.

Paid subscriptions to all the company's digital publications, including the Times, the International Herald Tribune and the Globe, totaled 472,000 as of March 18. The company hasn't broken out online subscriptions to The Times website alone since September, when there were 324,000 such paying readers.

"The paid subscriptions aren't quite enough to make a major difference to the declines in print advertising," said Leo Kulp, a Citigroup analyst.

The Times Co. has operated without a permanent CEO since Janet Robinson was fired in December, a development that has helped drive down its stock price despite gains in online subscriptions, according to Douglas Arthur, media analyst with Evercore Partners Inc.

The Times Co. will bring in an estimated $90 million this year from digital subscriptions, Mr. Arthur said. "If they keep that up, online could turn into a real business in the next year or two," he said.

The stock rose on Thursday after the results, which were better than analysts had expected. Overall first-quarter profit grew more than sevenfold, largely on gains from the sale of the regional newspapers. "Costs were better than we thought and there appears to be a lot of upside in these results," said Citigroup's Mr. Kulp.

U.S. newspapers lost $10 in print-advertising sales for every dollar gained online last year, Pew Research Center said last month. In 2010, newspapers lost $7 in print advertising for every dollar made from digital outlets.

-- Bloomberg News --

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