By: E&P Staff
The New York Times Co. Wednesday reported that it had written down the value of the Boston Globe and other papers in its New England Media Group by $814 million — well more than half the $1.1 billion purchase price for the Globe alone 13 years ago.
The New England non-cash write-down, combined with charges related to staff reductions and accelerated depreciation on its soon-to-be-shuttered Edison, N.J. printing plant, drove the Times Co. to a fourth-quarter 2006 loss of $648 million, or $4.50 a share. In the same period in 2005, the Times earned $63.2 million, or 43 cents per share.
Excluding the charges, the company earned $87.9 million, or 61 cents a share, for the 2006 quarter — an increase of 41.9% over the year-ago period.
Revenue was up 4.3% in the quarter, the Times Co. said, to $931.5 million from $893.1 million a year ago.
The New England newspaper write-down suggested lower metro newspaper valuations — pressured by such secular forces as the Internet and falling print advertising, and shocked by the sale at a loss of the Minneapolis Star Tribune — may be here to stay.
The Times Co. bought the Globe in 1993 for $1.1 billion, and followed up with the purchase of The Telegram & Gazette of Worcester, Mass., in 2000 for $296 million.
In a memo to Globe staffers, Publisher Steve Ainsley sought to reassure them that the the non-cash charge is a “required accounting adjustment” that ?should have no effect? on the paper?s focus, mission, or long-term strategy.
?In other words, this is not money going out the door,? he wrote. ?While the charge is not surprising — the Company said last fall that this could happen and it’s certainly been reported in the press — it is difficult for all of us who care deeply about the Globe and the T & G. All of us know the reasons why this has occurred — including consolidation among important customers and the shift from print to online advertising — but that does not make it any less painful.?
Ainsley noted that Times Co. CEO Janet Robinson called the Globe “an important asset” in a speech two weeks ago, and reiterated that the paper is not for sale. He also said there “are some encouraging signs on the horizon” for the paper, including the opening of unspecified new stores in the Boston market.
The big write-down also comes as the Sulzberger family-controlled Times Co. has come under more pressure from shareholders over its swooning stock price, which is down 18% for the year. Last week, Morgan Stanley Investment Management, a large shareholder, reiterated its criticism of the dual-stock structure that allows the Sulzberger?s to elect the majority of directors. The family has said it does not intend to restructure corporate governance.
In its fourth-quarter report, the Times Co. indicated newspaper performance company-wide remained weak.
Total News Media Group revenues increased 3.5%, but that was mainly due to an additional week in quarter. Excluding the additional week, total revenues decreased 2.1%, the Times Co. said.
Similarly, ad revenues were up slightly, 0.4%, because of the extra week, and decreased 4.8% when the week was excluded. The company blamed the performance on lower print advertising revenues at the flagship New York Times and the New England papers.
Circulation revenues for the quarter, excluding the additional week, were up 0.7%, mostly because of higher prices at The New York Times Media Group partially offset by fewer copies sold, the Times Co. said. October 1, The New York Times raised the newsstand price of the Northeast edition of the Sunday Times from $4.50 to $5.00, and in November increased home-delivery prices of the Times 4%.
Robinson said there are signs of improvement among newspapers.
Online businesses have grown strongly, she noted. Overall revenues from online operations increased 35% excluding the quarter?s additional week, and its highly touted purchase of About.com is paying off Robinson said: ?In its first full year under our ownership, About.com turned in an outstanding performance with revenue growth up an estimated 50% excluding the additional week.?
Newsprint expense eased in the fourth quarter, the company said, decreasing 7.5% excluding the extra week. It said it expects the cost of newsprint to decline in 2007.
Also for 2007, the Times Co. said, it expects ad rates at the Times and regional papers, mostly in the South, to increase in the ?low-single digits,? and to be flat or slightly up at the Globe.
Revenues from Internet-related businesses should grow 30% to $350 million in the year, mostly, it said, from organic growth.
Related: NYT Co. Chief: ‘Boston Globe’ Still Important