• by Paul Gough , April 12, 2004

Has The New York Times broken out of its slump?

The Times and sister newspaper Boston Globe have borne the brunt of the newspaper ad recession, which started in the middle of 2000. Most of the newspaper industry emerged from the darkest moments last year, although the help-wanted remained a sticking point for the newspapers in the larger and more manufacturing-oriented markets. The Times and the Globe had remained mired longer by virtue of the location of their markets.

But those storm clouds showed more signs of lifting Monday, when The New York Times Co. reported stronger advertising revenues in March, and finished the quarter up about 3 percent compared to the first quarter of 2003. Categories like national, retail, and classified--either slightly negative or flat as soon as a month ago--were in positive territory, thanks to a boost in March. Employment classifieds continued climbing out of the depths in New York and Boston.

"We're very encouraged by what we see in the advertising market," said Janet Robinson, chief operating officer of The New York Times Co. It's critical for the company, which derives 66 percent of revenues from advertising.

National advertising was up 11.5 percent in March and 3.9 percent through the end of the month, with classifieds and retail up in the low- to mid-single digits. Total advertising revenues rose 3.1 percent to $529 million in the first quarter, which includes the results of the newspaper group, the International Herald Tribune, New York Times Digital, and its broadcast stations group. The newspaper division contributed $744.8 million in revenues in the first quarter, up 1.3 percent compared to the same period a year ago, primarily because of higher advertising rates. The broadcast stations group's revenues rose 8.8 percent to $35 million, and New York Times Digital's revenues grew 31 percent to $25.7 million in the first quarter.

Strong categories at The New York Times in March included transportation, financial, and banking. The retail category was mixed, with more department and home furnishing stores ads unable to overcome a decline in mass market and fashion/jewelry stores. Automotive and telecom were also doing well. The branding campaigns for technology companies like Microsoft and Hewlett Packard that ran last year in the first quarter and have been considered for this year have been pushed further into 2004, Robinson said.

While Wall Street was surprised by The Times' better-than-expected results, analysts cautioned that the company was still behind others in improvement.

The most consistent leader in that department would have to be Gannett Co. Inc., the McLean, Va.-based multimedia company that publishes USA Today and 100 other daily newspapers, and has 22 television stations. Gannett reported another month and quarter of advertising growth, with the strength of the last two weeks of March surprising even newspaper executives. Gannett's newspaper ad revenues in March rose 13.5 percent on a 4.4 percent increase in run-of-press volume. Classified rose 16.1 percent on a 5.1 percent increase in ROP volume. National advertising revenues rose 20 percent on a 13.7 percent increase in volume. Local advertising revenues were up 8.6 percent on a 2.2 percent rise in volume.

Gannett said its small- to medium-sized advertisers grew at a faster rate than the company's largest accounts. Among local advertising, all categories were strong except department stores and consumer electronics.

At USA Today, advertising revenues were up 25 percent on a 16 percent increase in paid ad pages in March. Year-to-date revenues were up 10 percent, although the paid ad page count is up only slightly. Travel, retail, telecom, and financial services were the big gainers in March at USA Today.

Gannett's results reflect a better advertising market compared to an uneven 2003, said Douglas H. McCorkindale, president and chief executive at Gannett. Employment classified has improved each month of the quarter in 2004--up 17 percent overall. About 70 percent of Gannett's domestic newspapers' help-wanted revenues rose over 2003's levels, with some markets like Westchester County, N.Y., Asbury Park, N.J., Phoenix, and Fort Myers, Fla., registering double-digit gains. But that's primarily because those markets have fallen farther and have more to make up.

Yet neither The Times or Gannett wanted to declare the newspaper recession over, with both companies having holdings in areas that aren't fully recovered.

New York Times Co., Chief Executive Officer Russell Lewis defended his company's conservative estimates of mid-single-digit growth in advertising revenues for 2004. Although the company's fortunes have changed for the better since the predictions were made at an investor's conference in December 2003, The Times hasn't made any changes upward or downward.

Lewis acknowledged that signs were looking up.

"We're not going to declare victory prematurely ... We're not going to get ahead of ourselves," Lewis said. Gannett executives seemed to agree, saying that it didn't expect growth in 2004 to occur on a straight line.

"We are not seeing a full recovery," McCorkindale said Monday. That's particularly evident in big manufacturing centers like Detroit, where Gannett owns a daily newspaper. Detroit continues to be the weakest of Gannett's larger markets. "We're not seeing a pickup there," he said.