Profits in the first quarter of 2006 are down more than two thirds: from $111 million to $35 million. To be fair, last year's profits were inflated by a one—time gain on the sale of its headquarters office building. Without the gain, profits are still down one—sixth, however, from 30 cents a share to 24 cents a share.

Gross sales, minus the effect of the acquisition of about.com, were up an anemic 1.1 percent, below the level of inflation. Excluding about.com, advertising revenues grew less than one percent. The flagship New York Times did better than the New England newspapers Pinch Sulzberger foolishly acquired, with ad revenues up an unimpressive 2.2 percent.

The company is bailing out of another foolish diversitification investment, the Discovery—Times cable channel. According to the AP:

The Times also said it has exercised its right to require Discovery Communications Inc. to buy the 50 percent stake the Times owns in their jointly owned venture Discovery Times Channel.

The sale price will be determined by an independent appraiser, who has yet to be named. The Times said the price would be determined by a formula, with a floor of $80 million and a ceiling of $135 million.

Ordinary (class A) shareholders do not control the election of the board of directors, so the inept management of hereditary CEO Pinch Sulzberger faces no danger of ouster for its poor performance. Unless, of course, class B shareholders, his relatives, get tired of seeing their legacy diminish in value.

Keep your eye on the dividends.

Hat tip: Richard Baehr

Thomas Lifson   4 13 06

Update: The Tribune Company, publisher of the Chicago Tribune and Los Angeles Times, has jsut reported its profits. See a trend?