In various investor settings over the past few months, New York Times Company (NYSE: NYT) executives had made sure to mention that advertising was trending lower in Q3. Those warnings helped it beat analysts estimates, who had been expecting EPS of 3 cents per share, as the NYTCo ended Q3 up 5 cents a share, having turned around from last year’s loss.
In the meantime, it’s continuing to make progress on its metered paywall, saying that it had 324,000 paid digital subscribers — compared to 224,000 in Q2 — along with paid and sponsored relationships giving the NYTimes.com over 1.2 million digital users. On the other side, things were looking more difficult for the About Group, which saw revenues plunge 20.8 percent.
About continues to be plagued by fall cost-per-click rates — attributed to the changes Google (NSDQ: GOOG) made last year in its search algorithm, which was designed to weed out SEO gaming of its system. Display advertising is also faltering at About, which the company said has been dented by the weak economy, even though display revenues in general continue to rise for total online market. In addition, About acknowledged that competition has eaten away at its pageviews.
The group is currently in the middle of turnaround plan under Darline Jean, who recently restructured its guide operations team. While About’s operating profit sank 31.2 percent to $9.5 million in Q3, it was at least able to reduce expenses by 13 percent.
Slightly worse than warnings: A few weeks ago, speaking at the Goldman Sachs Communicopia conference, NYTCo CEO Janet Robinson warned investors that digital revenues would be down 2- to 3 percent due in part to About’s problems. She also said that trends were showing 8 percent declines in Q3 ad revenue, with a 10 percent drop in print.
In the end, those early warnings weren’t too far off the mark, as total ad revenue fell 8.8 percent — along with a 3.4 percent drop in circulation revenues. Digital fared worse than previously thought, falling 4.5 percent during the quarter, again, due to spending pullback from marketers wary of the negative economy.
News Media mixed: The unit that houses the NYTCo’s flagship newspaper fared a little better — or a little less worse — than the rest of the company. Overall, total revenues fell 2 percent to $511.5 million and advertising slid 7.3 percent.
On the plus side, circulation revenues and other revenues increased 3.4 percent thanks to the continued growth of the digital subscriptions related to the NYTimes.com’s metered paywall that was unveiled last spring. Essentially, the effect of the digital component has “moderated” the home delivery declines, as the company has offered a digital/print package that encourages signing up for both versions of the NYT. By itself, however, the number of print copies of the NYT being sold have continued to decline.
The group’s digital advertising dollars gained 6.2 percent, which still out-weighed by a 10.4 percent drop in print ad revenues.