Welcome to 2010, where a revenue decline of 3 percent can be applauded as a “significant improvement.” The New York Times Co. (NYSE: NYT) reported a revenue drop of 3.2 percent for Q1, which truly is an improvement over Q409’s 11.5 percent decline. It’s also a sign that cutting costs isn’t the only factor in the company’s swing to $12.8 million profit after a $74.4 million loss in the same quarter last year.
But the company’s Q1 numbers also point to another reality: online ad revenue can’t replace lost print ad dollars 1-for-1. Between About.com and the News Media Group (primarily NYTimes.com), online ad sales now account for 26 percent of the company’s ad revenues, up from 20 percent in Q109. But increased online ad revenue of 18.3 percent in Q1, including a standout 30 percent increase at About.com and
12 11.2 percent rise for news, wasn’t enough to overcome the print ad revenue decline. The 18 percent digital growth helped offset the 12 percent drop in print, but the result was still a 6 percent drop in total ad revenue. It’s not quite running in place; more like three steps forward and four steps back. Overall, NYTCo’s digital efforts accounted for 15.4 percent of Q1 revenues, up from 12.9 percent a year ago: $90.4 million compared with $78.2 million.
More details from Q1:
About Group: The 30 percent ad growth, fueled by “strong growth” in cost-per-click and display advertising, helped push the group’s revenues to $34.7 million, up 29.3 percent from $26.8 million in Q109. It also led to an operating profit of $19.5 million, up 61.7 percent from $12 million in Q109.
News Media Group: Revenues declined nearly 5 percent to $553.2 million from $580.3 million. A 12.3 percent drop in print advertising was “partly offset” by digital gains of 11.2 percent. In dollars, digital ads brought in $46.9 million, with the increase attributed to “strong growth in national display advertising offset in part by lower classified advertising.” The constant print rate increases kept circ rev up 4 percent. The group slashed operating costs by 18.4 percent to $504 million if you include severance, etc.; roughly 14 percent if you don’t.