In Wake of Profits Plunge: NYT Co. Looks to Control Costs

By: Jennifer Saba

The New York Times Co. will keep turning the screws to tighten costs as the company — along with every other newspaper player — tries to weather the economic slump affecting newspaper advertising revenue.

Executives said during a Q2 earnings call that the company is looking to outsource more functions including IT as well as “pursuing other production efficiencies” at its Regional Media Group.

Chief Executive Janet Robinson could not give much detail as to how July ad trends were shaping up but she offered, “Many of the advertising budgets are tightening up. … We have to plan accordingly which is exactly why we are continuing to focus on the cost-side of the business.”

This afternoon, Goldman Sachs headlined its analysis of the Times: “Great franchise, lousy industry.”

It’s expected to be tough going for the second half of the year. Robinson declined to forecast 2009 — but noted that the housing market is not expected to start a recovery until the latter half of 2009 at the earliest.

On the circulation front, the company said it was raising the newsstand price of its flagship paper from $1.25 to $1.50 effective Aug. 18. Robinson pointed out the increase in circulation revenue in Q2, up 2.5%, as evidence of the “strength” of the New York Times brand despite recent price hikes.

When asked to give an advance on circulation data for the six months ending September 2008, executives said only that the March 2008 statement was the last period to cycle against cuts in the other-paid category. Come the fall, Sunday circulation should outperform its prior drop of 9% this fall.

Some other interesting points to come out of the call:

* Online pricing of display units has held steady across the company and even increased, confirmed Martin Nisenholtz, senior vice president of digital operations.

* Around 11% of New York Times subscribers also take The Wall Street Journal

* Executives would not comment much about its relationship with digital reader Amazon Kindle but offered subscription trends were small but good.

* At the beginning of 2008, the newsroom of the New York Times employed 1,350. It’s down about 100 staffers from that number since the company announced a buyout earlier this year. At the end of 2007, the newsroom was staffed at its highest level it had ever been, said Catherine Mathis, senior vice president of corporate communications.

* No call would be complete these days without a question about debt. The company has tapped $375 million from an $800 million line revolver. And yes, an investment grade rating is still important to the company, executives said, even as it tries to balance the interest of shareholder value.

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