NY Times shows the newspaper industry is in trouble

Posted on April 17, 2008 by pat

Let this sink in for a minute:

The New York Times Company, the parent of The New York Times, posted a $335,000 loss in the first quarter — one of the worst periods the company and the newspaper industry have seen — falling far short of both analysts’ expectations and its $23.9 million profit in the quarter a year earlier.

If you needed any more proof that the newspaper industry was doing historically bad this should be it. We’re not talking about the NY Times Co. having poor profits by industry standards (the 15-20% range). We’re talking about the company having one of its worst quarters ever.

The NY Times Co. is a diversified company, but it is their newspaper business that is faltering:

The poor showing stemmed from The Times Company’s core news media group, which includes The Times, The Boston Globe and The International Herald Tribune, as well as several regional newspapers.

Conversely, Internet properties like About.com are showing strong growth within the company. About.com had an operating profit of $12.6 million, up 9.5% from a year ago.

Anyone who denies the newspaper industry is in a historic (not cyclical) funk is blind. This industry needs radical change if it is even to survive.

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  • icon@icon.org

    Ok, so newspapers, mirroring the economy in general, are having a tough
    year. Their loss was directly related to drops in Aviation, automobile
    and telecom advertising, all of which are taking a bath now, too. Much
    of the decline was related to the downturn in the Florida and California
    housing markets. HELLO?!?!? As though those segments aren’t ever going to come back?

    Jesus Christ on a stick, listening to you is like having General Motors listen to me
    because I work at Jiffy Lube. Which I don’t. But you might as well.

  • http://blog-o-blog.com Zac Echola

    To the commenter above – markets move towards the margins. That’s basic econimcs. The problems we’re seeing in the industry now may have short term issues with the recent housing bust, but that doesn’t explain why newspapers have failed to adapt their strategies in the past decade to weather a storm like this (which has been largley overhyped. There are still more jobs and money in the US today than in the heyday 90s for newspapers).

    The fact is that newspapers have been losing ground with advertisers for years, especially in the housing market. That industry created their own classified systems because newspaper sites didnt plug that hole.

    So now when we hit a bump in the road we start firing to manage short term overhead. That is reasnable if you’re looking at quarterly reports but horrible long term. Smaller companies have come in with models that eat newspaper profits. These cmpanies are thriving still in the current market situation. And by and large newspapers have not reacted to these companies with products of their own.

    It is time to get out of the past.

  • http://blog.thescoop.org/ Derek Willis

    Pat,

    The statement that About.com is “carrying the company” is absolutely, demonstratively false. From the NYT story you link to, About’s profit was $12.6 million. The core media unit that you referred to had an operating profit of $68.5 million, excluding an $18.3 million charge. So even including that charge, the core media unit’s profits were near 4 times About.com’s.

    As a Times employee, I sincerely hope that all of our units have splendid profits, and it’s quite true that financially the company did not do as well as last year, and that the industry faces tough times in general. But before you go off spouting assertions to fit your needs, please check your facts.

    Derek Willis

  • http://www.patthorntonfiles.com pat

    @Dereck,

    I respect you and have nothing against your company. I’m willing to see this from your side. Maybe I’ll change a few words in my post. Carrying might be a little strong.

    But here are a few things that stand out:

    1. Revenue and profits are down at the company.
    2. Many of the write downs and charges are related to the print side of the company, such as buyouts and plant closings.
    3. Revenue at about.com is up 25% and so are operating profits. It’s one of the sectors of the company showing strong growth. And it’s one of the companies most valuable assets.
    4. If things were going well with the NY Times Co. digital properties, the company wouldn’t have had to cave to two hedge funds and allow two dissident board members on: http://www.alleyinsider.com/2008/3/new_york_times_caves_allows_two_dissident_board_members
    5. 4. The people who forced their way onto the NY Times Co. board believe About.com is worth about twice what the NY Times Co. paid for it in 2005. That is one reason they recommend selling it.

  • http://blog.thescoop.org/ Derek Willis

    I didn’t say you had anything against the company, and I don’t believe that. And yes, it’s clear that About.com’s profits are rising while the newspaper group’s are not, but that’s no reason to imply, let alone state, that About is carrying the company. A little perspective is needed, methinks.

    Nobody is saying that things are going great either at the NYT or the industry as a whole. To cherrypick numbers and present them out of context doesn’t exactly sound like a worthwhile enterprise to me – particularly from a journalist – and neither does a constant stream of posts that demand change but give few actual examples (let’s get beyond Twitter, shall we?). I’d rather build something. What are you building?

    Derek

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