NYTCo Profits Plunge As Revs Slip; Digital Dollars Up Modestly

Despite the general strength of the advertising recovery, the New York Times Company (NYSE: NYT) experienced significant profit loss and a slight decrease in revenues in Q1. In a statement, CEO and president Janet Robinson sought put the NYTCo’s numbers in context, saying it reflected “continuing transformation,” as the company unveiled the metered paywall across its digital offerings a few days before Q1 ended. (paidContent’s Staci D. Kramer has the specifics on the paywall’s performance).

Specifically, digital dollars were up a modest 4.5 percent in Q1, as the search-reliant About Group continued to struggle on the revenue front due to changes in Google’s algorithm.

Since the paywall launched in the U.S. on March 28, the results certainly don’t reflect the success or failure of that effort. More than that, the NYTCo’s problems are similar to what’s been plaguing most newspaper publishers for years: declining print advertising. Apart from that, Q110 represented a significant comeback amid the devastating effects of the recession, so this year was bound to look a bit weaker.

In addition, the weak global and national economic recovery is also a factor that has stymied publishers efforts to keep last year’s momentum going and the NYTCo is in no different position from anyone else.

In terms of revenues, while digital ad spending grew 4.5 percent at the NYTCo, it could not fully offset the 7.5 percent decline in print dollars in Q1. Digital now comprises 28 percent of advertising revenues (in the case of total revenues, digital comprises 17 percent). Despite the abnormal conditions last year, it has to be noted that NYTCo online revenues were up 18 percent in Q110.

About Group: Print issues aside, the About Group came off a particular strong year in 2010, but Q4 saw a mild decline in revenues of around 3 percent. The main guide site is heavily dependent on search — roughly 80 percent of its traffic is driven by searches — and the recent changes that Google (NSDQ: GOOG) has made to its algorithm has resulted in softer pageview activity lately, which in turn, has affected its cost-per-click advertising.

For Q1, About Group revenues decreased 10.2 percent to $31.1 million and that trend is expected to continue into Q2. In the face of lower ad dollars, the unit’s operating profit decreased 13.9 percent to $14.3 million.

Google has said that adjusted to its algorithm in order to “reduce rankings for low-quality sites” and provide higher rankings for sites “with original content and information such as research, in-depth reports, thoughtful analysis and so on.” Google says the changes impact 11.8 percent of the queries on its search engine.

While About.com has aggressively — and for the most part, successfully — fought the negative tag of “content farms,” it’s content is similar to those of Demand Media (NYSE: DMD) and related “how to” sites by providing “evergreen” content. Still, About has gone to great lengths to stress that it’s content is generally well-written by experts in a given field and not composed of “keyword bait.” Nevertheless, to Google’s search engine, it all looks the same at this point.

Digital, in general: Across the NYTimes.com, About.com, Boston.com, other NYTCo-owned websites, total digital revenues grew by a healthy 6.1 percent to $95.9 million. The modest 4.5 percent increase in digital ads came in at $83.6 million.

Within the News Media Group, which houses the flagship newspaper, The Boston Globe, International Herald Tribune and other smaller papers, digital ads jumped 14.9 percent to $53.9 million. That impressive showing was attributed to strong growth in national display advertising.