Earnings: Internet Still Best Story NYTCO Has To Tell In 3Q05; About Ad Rev Up 67 Percent

Updated to include earnings call: But About.com and the News Media Group’s internet properties couldn’t save the New York Times Company from a drop of 52 percent in profits to $23.1 million, or 16 cents a share, for 3Q05 compared to $48.3 million, or 33 cents a share, in 3Q04. The company missed the Thomson estimate by 1 cent. The 3Q05 profits were dented by a $12.4 million pre-tax charge for layoff/buyout costs.
News Media Group Online revenues were up 30.5 percent for the quarter, reflecting what NYTCO president and CEO Janet Robinson describes in the earnings release as “very robust advertising revenue growth.” The online ad revenues combined with higher print rates helped the group show a 1.7 percent increase in ad revenues and an ever-so-slight uptick in total revenue.
About.com continues to improve, with a profit of $3.8 million on $14.2 million in 3Q05 revenues and an estimated 67 percent boost in ad revs for 3Q05. By comparison, About brought in approximately $36 million in revenues for all of 2004. NYTCO is still accounting for About, though, and isn’t expected to contribute to the bottom line until 2007.

From the call (more to come):

TimesSelect: During her prepared remakrs, Robinson said the preliminary response to TimesSelect has been very good, “well ahead of expectations.” In fact, NYTimes.com had record traffic in September, aided by interest in Hurricane Katrina and increased search engine optimization. Later, the subject came up again when an analyst asked whether the Worcester subscription model of charging for access to the site or including it in print subs is a model for the company. Martin Nisenholtz, SVP-digital operations, said Worcester was never meant to be a model but was an idea from that paper’s publisher. He wouldn’t give any numbers but said a few thousand paying for online access to a small paper would be expected. “I think the model that we’re pursuing and that is proving out to be a better test market is the TimesSelect model. … As Janet said, it’s early days but our initial view of this is very, very positive. We’re seeing incredible conversion rates off of our free trial – very high, 90-plus. … We’re also seeing terrific cooperation from our columnists including a new entry — Maureen Dowd will be doing a special email. This kind of highly differentiated, specialized tiering approach is I think the approach not only that we’ll be taking over the next several months and years but we think that the newspaper industry in general will as they did in regard to our registration.” I had the sense he wasn’t referring specifically to the content/services mix in TimesSelect as much as the concept of blending advertising revenue with a significant pay stream.

– They see some anecdotal evidence that the archive access provdied with TimesSelect (100 articles a month) isn’t cannibalizing the B2B licensing to companies Lexis-Nexis, Factiva, and the like. Nisenholtz: “There was some concern from the community that this would be begin to overlap but we’re not seeing that at all and that’s very good news for us. We’re seeing a distinct consumer usage pattern emerge as opposed to a B2B pattern.”

– About.com was underachieving when it came to ad rates. Nisenholtz: “We have pushed very hard on the rate side. Our rates are up September over September 81 percent so we have increased rates but we think there’ds more to do. We’re not done yet optimizing rates.” About is also making strides in volume; the combination accounts for the improvements in revenues.

– Some talk about the Indeed.com investment. The Times acquired a 14 percent interest in the job metasearch engine and holds a seat on the board; it’s seen as a first-mover entry into metasearch for the company. The service is being integrated into About.com. Nisenholtz: “We are looking at additional opportunities in metasearch as well. We think it’s an exciting trend and we think it could be a game-changing trend over time.”

mp3logo1.gif Updated: You can download the audio of the conference call from here (11.6 MB, 1hr & 7 mins).

Earnings release | September Revenues |

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