By: Seth Sutel, AP Business Writer
(AP) The New York Times Co. reported a sharp drop in earnings for its third fiscal quarter Wednesday as advertising revenues, which were already on the decline, fell further in the wake of the Sept. 11 terrorist attacks.
The Times posted net earnings of $43.8 million in the three months ended Sept. 30, down 42% from $75 million in the same period a year earlier. Taking out one-time gains and charges, which included expenses related to staff reductions, profits fell 27% to $46.3 million versus $63 million.
Total revenues fell 9% to $696.9 million, compared to $767.7 million in the same period a year ago, and were led by a decline of 16% in advertising revenues to $452.7 million. Excluding revenues from properties that were sold, overall revenues declined 8% and advertising revenues fell 15%.
Earnings per share fell to 30 cents, in line with analyst estimates reported by Thomson Financial/First Call, compared to 37 cents in the year-ago period. Like other newspaper publishers and media companies, the Times Co. warned investors last month that its third-quarter earnings would be affected by the attacks.
Even though the results were in line with estimates, the company’s shares were off $1.56 to $40.43 in early afternoon trading on the New York Stock Exchange amid concern among investors about how long the advertising downturn would last.
The company declined to detail the specific effects on its bottom line from the attacks, in terms of lost newspaper advertising revenues or increased costs for newsgathering and other costs associated with producing the paper.
The company did say that it lost $1.8 million in advertising revenues from its eight television stations as regular programming was interrupted in the wake of the attacks for full-time news coverage.
Chief executive Russell T. Lewis told investors on a conference call that despite the increase in news-related costs, the company still managed to record a 4.8% decline in overall expenses for the quarter. The Times Co. has scaled back its work force this year and made other cost cuts due to the downturn in advertising.
Lewis said the company received huge demand for its papers in the days following the attacks, and for several days printed three times the usual number of newsstand copies.
For all of September, average daily circulation of the paper increased by about 130,000 copies, and Lewis said he is hopeful that a good portion of the new readers will stay with the Times, adding to its circulation base.
“At the New York Times Co., we believe that great journalism is great business,” Lewis said. “This emphasis on quality journalism combined with our continued emphasis on disciplined business practices will allow us to weather the current economic storm and resume our financial growth trend once the current economic clouds begin to subside.”
Lewis added, however, that because the outlook for the fourth quarter remains unclear, the company could not offer investors guidance on how the next several months would play out.
Also Wednesday, the company reported that advertising revenues in its newspaper group fell 15% in September compared to the same month a year earlier. In addition to The New York Times, the company also publishes The Boston Globe and 16 other newspapers. Newspaper publishing makes up 94% of the company’s revenues.
For the first nine months of the year, the company reported net earnings of $370.6 million, which included a one-time gain of $241.3 million from the sale of several golf magazines, compared to $259.8 million in the year-ago period. Excluding one-time effects in both periods, income from continuing operations fell 49% to $128.1 million from $249.5 million.
Nine-month revenues declined 9% to $2.24 billion from $2.45 billion.