Third-Quarter Newspaper Advertising Shows Uneven Results

The New York Times announced lackluster third-quarter earnings results on Wednesday, including modest advertising revenue gains that were somewhat offset by declining profits and sluggish circulation growth.

Meanwhile, on Tuesday Gannett Co. painted a brighter picture, reporting double-digit income growth. And Knight Ridder today reported a rise in third quarter profits due to a modest increase in advertising sales.

While the Times President and Chief Executive Officer Russell T. Lewis championed the company's use of "strong financial discipline" during the current period, Chief Operating Officer and Executive Vice President Janet Robinson warned of a still uncertain newspaper advertising market. "We continue to see an uneven monthly pattern," she said.

Although advertising revenue for the company as a whole increased 3.7 percent in the quarter, revenue for The New York Times Media Group, which includes the flagship newspaper, rose just 2.3 percent. Overall operating profit in the third quarter decreased 9.1 percent to $84.3 million, as the company was hit hard by a 9.8 percent increase in newsprint expenses.

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Advertising dollars were a bit stronger for the New England Media Group, which includes The Boston Globe (up 4.7 percent in revenue) and the company's Regional Media Group (up 5 percent). Robinson acknowledged that "small market papers are outperforming larger market papers."

Circulation was essentially flat for the company, and was actually down slightly for the Times Media Group, slipping 0.9 percent. In presenting a positive spin, officials at the Times touted plans for eight new distribution sites to increase the availability of the paper nationally.

As for advertising, Robinson said that the company's goal to increase its color capacity by 40 percent overall was paying dividends with advertisers, and that national advertising and retail categories had shown improvement during the third quarter. On the flip side, classified advertising has declined, while transportation, live entertainment, and real estate were also cited as weak spots.

On the global front, Robinson said that although the "European market remains challenging," the International Herald Tribune has increased its staff of reporters while making gains in circulation.

The clear bright spot for the company continues to be its online properties. The New York Times Digital group enjoyed what Robinson termed "robust growth"--jumping by 32 percent in ad revenue, buoyed by strong display advertising and classified ads.

The company's growing Broadcast group also performed well, as revenues increased 9.0 percent, enjoying a boost from political ads.

Meanwhile, on Tuesday, Gannett Co., the country's largest newspaper publisher and owner of USA Today, reported strong net income growth of 11.2 percent. Officials claimed that advertising revenues had been solid--though dampened somewhat by the effects of several hurricanes in Florida.

"Our newspaper operations posted strong year-over-year gains in advertising, most notably in classified employment and real estate," said Gannett President and CEO Douglas H. McCorkindale.

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