NY Times Co., Knight Ridder Report at Mid-Year Media Review

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By: Jennifer Saba and The Associated Press

(AP) The New York Times Co.’s integration of About.com, an online network of special-interest sites, is going better than expected, the newspaper’s CEO said Tuesday.

Janet Robinson said that revenues at About rose 25 percent in May, and are up a comparable amount in the year to date. She said the integration of About’s sites with the Times’ sites was going “very well.” The Times acquired About in March for $410 million from Primedia Inc.

The two online groups are “learning from each other” and increasing ways to cooperate such as making joint calls to advertisers and selling Times subscriptions on About, Robinson said.

Robinson, speaking at an annual investor conference sponsored by the Newspaper Association of America, an industry group, also said the company’s operating environment remained “challenging.” She cited the proliferation of media outlets, consolidation of several key advertisers in retail and telecommunications and the migration of some classified advertising online.

Last week the company, which also publishes The Boston Globe and the International Herald Tribune, lowered its outlook for advertising revenue growth and said second quarter earnings would come in below year-ago results.

The company now expects overall advertising sales to grow by low to mid-single digits this year, below its previous forecast of mid-single digit growth.

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(Jennifer Saba) The New York Times Co. reiterated its commitment to print during today’s presentation at the Mid-Year Media Review. When asked about the potential growth of print versus online, Leonard Forman, executive vice president and CFO, gave an impassioned response: “It’s a tough business to manage. You can do quite well with 3% to 5% growth,” he said about the industry at large.

“Print will be a strong part of our business. No one is disputing there is a decline. It’s not disappearing. We are expanding the franchise but digital is only part of it.”

While defending the future of print, Forman told investors that online margins are more attractive than broadcasting margins.

Janet Robinson, president and CEO, said the New York Times online increased display ad rates several times in the last 12 months. She’s confident that Times Select — the new initiative that will charge $50 a year for select content like op-eds — will be a success but that the company does not plan to make the site fully paid.

Meanwhile, Martin Nisenholtz, senior vice president, digital operations, said that Boston.com experienced a drop in traffic of 12% when the site started requiring registration. He expects traffic levels to snap back.

As for the second half of the year, Times executives expect revenue to increase in the low to mid single digits. Circulation revenue is forecast to remain at 2004 levels. The technology, telecommunications, and travel categories will be soft while real estate, national auto, fashion, and entertainment are expected to grow. Guidance for Q2 earnings per share is forecast at $.38 to $.42.

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The pessimism surrounding newspaper circulation decline is “off base” according to Tony Ridder, chairman and CEO of Knight Ridder, who addressed a group of analysts at the Newspaper Association of America’s Mid-Year Review in New York this morning. He also predicted a second-half rebound in national advertising.

Fifty-two percent of adults in any given week still read a newspaper, he said, while 60% read a paper on Sunday.

While those numbers still show the product’s strength in readership, Knight Ridder, like many other companies, is feeling the slide in circulation.

KR revealed that total daily circ for the chain is down 2.6% thru May. Sunday circ decreased the same 2.6%. For home delivery, daily circ is down 2% and Sunday slipped 2.3%. Single copy sales suffered the most company-wide, dropping 5.9% daily and 6.1% Sunday. Circulation revenue for the same time period is down 3.1%

Ridder said the company was emphasizing EZ sales, crews, and kiosks to boost sagging numbers. And the company still relies on telemarketing, netting 43% of all its starts compared with 63% prior to the Do Not Call list.

The high percentage of telemarketing starts surprised Merrill Lynch analyst Lauren Rich Fine, who noted the industry has been blaming telemarketing restrictions for recent circulation declines. Arthur Brisbane, Knight Ridder senior vice president, responded, “[Telemarketing] is still an important sales channel for us.”

Ridder also noted that the company’s circulation task force met earlier this year to address ways to build readership which included other formats and “content-lite” editions.

He also said he expects to see national advertising pick up in the second half of the year after slumping in the spring.

Last week, Knight Ridder told investors its second-quarter earnings would be flat with year-ago results, due to charges and weak results at the company’s Detroit operations.

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The E. W. Scripps Company said today that in its upcoming presentation it would report that advertising revenue from the company’s daily newspapers is expected to be up 5 to 7 percent as a result of solid growth in classified advertising, especially help wanted. Some of the projected growth in newspaper advertising revenue this year is related to the negative effect of last year’s hurricanes on ad revenues at its Florida newspapers in the second half of 2004.

On the expense side, newspaper employee costs are expected to be up 4 to 5 percent, newsprint costs are expected to be up 10 to 13 percent and other cash expenses will rise by 3 to 4 percent.

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