In addition to seeing its advertising revenues continue to decrease due in part to the weak economy, The New York Times Co. (NYSE: NYT) swung to a loss on a $161.3 million write-down of assets at the Regional Media Group, which houses the local papers around the country. This follows the earlier good news that the company would indeed be paying the $250 million Carlos Slim loan back early as promised. In the meantime, digital revenues remained largely strong in the face of the usual print declines, while the About Group is continuing to struggle.
Compared to the past few quarters, the NYTCo appeared to have arrested some of the negative advertising issues it had been experiencing, though it was only able to slow the declines, not reverse them. Still, for the newspaper business, reducing declines can still be counted as something of a victory.
As usual, digital was the strong suit — see our Staci D. Kramer’s closer look at how the NYTimes.com’s metered paywall has been doing — and how that appears to at least helped it hold on to print subscribers.
In the meantime, the About Group had its third consecutive rough quarter due to lower ads related to search, which is how most users of the guide site and its properties find their way to the unit’s content.
Highlights from the Q2 earnings included:
– In all, advertising revenues slipped 4 percent, circulation revenues were flat and other revenues decreased 1.0 percent.
– Total News Media Group, which houses the flagship newspaper, saw revenues fall 1.3 percent to $548.9 million. Advertising revenues declined 2.5 percent.
– Digital advertising revenues were up a slight 2.6 percent to $84.6 million, which partially offset a 6.4 percent decrease. Earlier this year, the NYTCo had said display was looking anemic, but today says that national sales of graphical ads appear strong.
– Digital ad dollars now account for 28 percent of total company revenues, compared with 26.2 percent a year ago.
– In the first half of 2011, the NYTCo’s total digital ad revenues were up 3.5 percent to $168.2 million.
– Circulation revenues for the News Media Group were maintained, as the introduction of digital subscriptions at The Times offset the slow march of print declines.
– The increase in digital advertising revenues within the News Media Group jumped 15.5 percent.
About Group revenues decreased 17.3 percent to $27.8 million from $33.7 million mainly due to lower cost-per-click and display advertising. The problem had begun plaguing the unit, which includes the eponymous guide site along with ConsumerSearch and Calorie-Count, starting in Q4. The CPC problems were attributed largely to changes in Google’s algorithm.
However, display revenues have been trending downward as well, so all the blame cannot be laid at Google’s feet. Although About.com, which recently marked its 15th anniversary, has largely been able to avoid being tagged as a “content farm,” the NYTCo conceded that competition “in the content space” was hurting its traffic as well. In all, About’s operating profit dropped 24.4 percent to $11.6 million.
During the quarter, the company installed Martin Nisenholtz, the NYTCo SVP of digital operations who engineered the 2005 acquisition of About, to help turn things around. With display ad dollars likely to remain strong in general — barring another economic calamity, naturally — it is nevertheless likely that things could continue to get worse before they get better, perhaps by the Q4 holiday season.