PrintJune 25, 2007
NYT print advertising decline close to 15% a year?
I have been covering the failure of Pinch Sulzberger's business strategy, as documented in its latest earnings report, showing what the PR release called a "9.1% decline" in advertising revenue at the Times Media Group. But it now appears that this number might disguise as much as it shows, hiding a much more serious decline in print advertising revenue.
At Yahoo Finance, a very interesting analysis by Scott Karp uses the company's published data to estimate the annual rate at which the actual print advertising revenue is declining, and finds:
May 2006 to May 2007, print ad revenue for the News Media Group decline[d] $19.2 million or 14.4%, [emphasis added] dwarfing the $2.8 million increase in online ad revenue. Not a great advertising trend ratio.
Over a year ago, Jack Risko and I undertook a similar analytical process of pulling together numbers from a variety of company reports to calculate the decline in the metropolitan New York print editions of the Times, historically the highly-profitable core of the company. We found that despite the rosy rhetoric, the local paper version of the Times has been in a severe long term decline (which is the reason the Company is shutting down a comparatively new large printing plant in New Jersey and laying off skilled blue collar workers) as a legacy of the stewardship of Pinch.
It is probably legal for a company to report accurate numbers in a way that forces analysts to undertake considerable work in order to calculate the most relevant data to determine the actual business performance of relevant business units like the New York local newspaper business of the Times, or the entire print edition advertising decline. But it hardly serves the best interests of shareholders for management to keep them in the dark until they light the candle of financial analysis. Scott Karp writes:
"If I were in a shareholder of a newspaper or any print based media company, I'd be demanding that financial reporting breakout the absolute amount of print and online revenue, rather than concealing the actual amount by which increasing online ad revenue is offsetting decreasing print ad revenue - or rather the degree to which it's failing to."
He's right, of course. But Pinch Sulzberger can tell the majority owners of his stock to go push some numbers if they want this most relevant data. His tenure in the publisher's job depends on the votes of the family trust that controls a majority of the voting shares, in a two-class system.
The bottom line: we know that the local and national print editions of the New York Times are declining at a rapid annual rate, somewhere between approximately 10% and 15% a year, but probably close to the higher figure. And management has no interest in giving investors and the public a more accurate picture of the state of the disaster.
Thomas Lifson is editor and publisher of American Thinker.
