This summary is based on the fourth quarter fiscal 2007 earnings call conducted by The New York Times Company (NYT) on January 31, 2008.
President and CEO: Janet Robinson
SVP and CFO: Jim Follo
President and GM of the New York Times: Scott Heekin-Canedy
SVP, Digital Operations: Martin Nisenholtz
SVP, Corporate Communications: Catherine Mathis
Key Investors Issues
- Earnings per share were 37 cents as against a loss of $4.59 in the prior year quarter.
- The advertising revenue of the company continued to decline due to soft advertising climate.
- The digital business of New York Times grew 18% in the quarter and generated $95.2 million or 11% of the company''s revenues.
Fourth Quarter Fiscal 2007 Financial Highlights
The firm reported fourth quarter EPS from continuing operations of 37 cents compared with a loss per share of $4.59 in the fourth quarter of 2006.
In the 2006 fourth quarter, the firm had two items that make quarterly comparisons difficult. One was the non-cash charge of $5.11 per share for the write for the write-down of intangible assets of the New England Media Group. The second was an additional week due to the fiscal calendar.
In the fourth quarter of 2007, the firm had a non-cash charge of 3 cents per share for the write-down of the company''s 49% investment in Metro Boston, which publishes a free daily newspaper in the Greater Boston area and a non-cash charge of 4 cents per share for the write-down of intangible asset at the Worcester Telegram & Gazette, whose results are included in the News Media Group.
Excluding these special items, fourth quarter EPS from continuing operations in 2007 would have been 44 cents compared with 46 cents in the fourth quarter of 2006. In the fourth quarter, operating profit before depreciation, amortization, decreased 6% to $159.2 million, compared with the $169.8 million.
Ad revenues at the News Media Group decreased 5.6%.
Real estate advertising, the largest classified category, continued to be affected by the nationwide slowdown in the housing market.
At the Times Media Group, ad revenues decreased about 3% in the quarter, while the firm saw an improvement in ad revenues in October and November due to strong national advertising. December was noticeably weaker, down 13%. The management believes that part of this was due to an overall softening of the economy, part was due to fewer days in which to buy advertising before Christmas in fiscal December, and part was due to the shift of T: Holiday publication into November in 2007 from December in 2006.
National print categories that performed well in the quarter included financial services, which benefited from strong branding and retirement campaigns, as well as ads seeking to restore consumer confidence hurt by the subprime mortgage crisis.
Entertainment, which had a very strong October particularly with color ads, and fashion, which had a good quarter, due to continued spending by luxury advertisers and a strong performance by the T: Holiday magazine.
In total, luxury print advertising, which makes up about 10% to 11% of the Times Media Group, revenues were up mid-to-high single digits. The main national print categories, where the firm saw declines were technology products, where several large advertisers reduced spending and more dollars shifted online; healthcare, where a host of pharmaceutical companies did not repeat campaigns that ran in the prior year; and transportation, as airline print expenditures were down from their very strong showing in the fourth quarter of 2006 when they introduced new campaigns.
Classified advertising decreased in all three major categories: real estate, recruitment, and automotive. Retail advertising revenues were down mainly due to decreased advertising from mass market and department stores.
New products benefited the company in the quarter. One area where the firm had notable success was in the introduction of international T magazine, which focused on fashion, beauty, travel, and home design. In early December, the firm launched T Online, an exciting new web offering that was acclaimed by readers and the luxury advertisers it targeted. The firm plans to continue to develop the T franchise.
Other revenues at the News Media Group rose 5%, similarly as the result of rental income from space leased out in the firm’s new headquarter, an additional commercial printing revenues.
The New England Media Group continues to grapple with the soft advertising climate.
Fourth quarter advertising revenues decreased 10% due to weakness particularly in the classified retail categories. Ad revenues in the national category declined in the fourth quarter, as a result of the technology, pharmaceutical, and media categories.
