Poor 1Q Results for New York Times

The magnitude of the ad revenue decline was felt nearly equally across the board. At all three major media divisions, quarterly ad revenue declined by 27%, 32%, and 29% at its New York Times, New England, and Regional Media Groups, respectively. Advertising categories that witnessed the most precipitous erosion in sales were retail, which checked in with a 25% decline, and classifieds, where sales fell by a remarkable 45% over the same period last year. Its About.com digital/online unit, once a dependable beacon of growth, weighed in with a 5% revenue decline, to $27 million (4% of revenue), versus 25% growth during the same period a year earlier.

What is probably some of the most aggressive and unprecedented budget cutting in the Times company's history resulted in a substantial reduction in expenses, including a nearly 15% decline in total production costs and a 4% decline in selling, general, and administrative costs. Despite the benefits these lower expenses provided, they were not enough to offset the more rapid and punishing decline in revenues. As a result, first-quarter earnings before interest and taxes (excluding one-time special charges) narrowed to just 3% of revenues, versus 9% during the same period a year earlier. With little to no visibility regarding a sustained recovery in ad spending, we expect margins to continue to come under pressure, as declining revenues continue to push up against the publisher's highly fixed cost structure.