New York Times swings to 4Q profit, but revenue falls and it takes more writedowns

The New York Times Co. posted lower fourth-quarter revenues Thursday but swung to a profit following a big loss in the same period a year ago, when it wrote down the value of The Boston Globe and the Worcester Telegram & Gazette.

The Times earned $53 million (euro35.64 million) in the final three months of 2007 versus a loss of $648 million in the fourth quarter of 2006, which included an $814.4 million (euro547.68 million) charge to write down the value of its struggling New England newspapers.

After seeing higher revenues in October and November, advertising weakened in December, having a "significant effect" on the quarter, CEO Janet Robinson said in a statement. Despite increases in national advertising, classified and retail advertising fell amid overall weakness in the economy, she said.

The earnings were equivalent to 37 cents per share, compared with a loss of $4.50 per share a year earlier. Excluding write-downs in both periods, the earnings came out to 44 cents per share in the most recent period and 46 cents a year earlier.

Analysts polled by Thomson Financial had predicted 48 cents per share for the fourth quarter of 2007, but those estimates did not appear to account for an increase in costs for staff reductions, which rose by 4 cents per share from the same period a year earlier.

Total revenues fell 7.1 percent to $865.8 million (euro582.25 million) from $931.5 million a year ago. The decline was exacerbated by the presence of an extra week in the calendar period of the year-ago quarter, but the revenues still came in below the estimate of $881 million (euro592.47 million) from analysts polled by Thomson Financial.

Advertising revenues fell 9.1 percent. Excluding the effect of the extra week, total revenues fell 1.7 percent and advertising revenues fell 4.1 percent.

Classified advertising tumbled 20.2 percent in the quarter, also excluding the effect of the additional week, while retail advertising fell 8.2 percent and national advertising edged up 2.4 percent.

During the most recent quarter the Times took a non-cash charge of $7.1 million (euro4.77 million) to write down the value of its 49 percent share in a Boston-based venture that publishes a free daily newspaper there called Metro Boston. That represents nearly half of the Times's original investment of $16.5 million (euro11.1 million) in the venture with Metro International S.A., which was announced in January of 2005.

The Times also took another $11 million (euro7.4 million) write-down in the fourth quarter on further value erosion at the Worcester newspaper.

The Times also owns the International Herald Tribune and the About.com Internet business. The Times said revenues at its About group rose 36.8 percent to $30.7 million (euro20.65 million) in the quarter.

Excluding the write-downs as well as depreciation and amortization in both periods, the Times reported operating income from continuing operations of $159.2 million (euro107.06 million) in the latest period versus $169.8 million in the same period a year ago.

The Times wrote down the value of its New England newspapers last year, saying they had been hit hard by the consolidations of key advertisers, a poor economic climate and greater competition from online media. The charges represented about 60 percent of the combined purchase prices of the Globe and the Worcester paper.

For the full year, the Times earned $208.7 million (euro140.35 million) or $1.45 a share, versus a loss of $543.4 million (euro365.43 million) or $3.76 per share in 2006. Revenues fell 2.9 percent to $3.2 billion (euro2.15 billion).