NYT: Revenue plummets, debt is junk

by Mathew on October 23, 2008 · 8 comments

Is the New York Times running on fumes, as Henry Blodget says at Silicon Alley Insider? I would argue that it’s probably even worse than that. It’s not just running out of gas — it’s only firing on one or two cylinders, the points and plugs are shot and the coolant system is about to blow. In its most recent results, the newspaper company reported that its cash flow (earnings before interest, taxes, etc.) fell by more than 50 per cent, advertising revenues collapsed by double digits, and its debt has just been rated “below investment grade” — or what is known in the investment business as “junk” — by the Standard & Poor’s bond-rating agency.

Ad revenues for the company’s traditional media operations, including the New York Times newspaper, fell by 14 per cent in September. Ad revenues for the online operations, including About.com, climbed by 14.5 per cent — but those operations still only account for 12 per cent of the business. The bottom line: Online ad revenues in the year to date climbed by about $10-million to $79-million, but ad revenues for the company’s traditional businesses fell by about $200-million to $1.2-billion. Even if online ad revenues were to increase ten-fold, it still wouldn’t make a dent in those losses. Classified sales alone were down by 25 per cent.

In just the last six months, the company’s stock price has fallen by 50 per cent, to a recent close of about $10, making the New York Times Co. worth $1.5-billion instead of $3-billion. In 2004, the company was worth more than $6.5-billion. In other words, in the past five years the Times has lost over 75 per cent of its value. The ironic thing, of course, is that the newspaper’s website and web operations have become more and more successful, with traffic exploding ever since it removed the pay wall that used to enclose its columnists and other features.

According to Nielsen Online, the paper had 20 million unique visitors in September, an increase of about 37 per cent over the same period last year. When Boston.com and About.com are included, it had about 50 million unique visitors, which makes it one of the largest Web media properties around. But no matter how quickly it grows, it’s still not enough to stem the relentless tide of red ink coming from the newspaper side.

  • bbluesman

    Hmm, have noticed that they'r placing banner ads up on header by logo the last few days. That's new.

  • Reader

    What about the Globe and Mail?

  • http://carrieanddanielle.com Daniel Gibbons

    It's going to be very interesting to see how all this pans out. I'm probably in a minority when I say that I think it will be tragic if the NYT isn't able to continue to offer the quality of content and true investigative journalism that puts them head and shoulders above other news outlets. Whenever I read blogs blindly celebrating the death of print (which I know isn't what you're doing here), all I can think is that the baby is being thrown out with the bathwater.

  • Rob Hyndman

    I guess I have to wonder how, if the NYT, one of the strongest media brands on the planet, can only scrape chicken feed together in online revenues, the big ad-driven social media sites are worth anything near what is claimed :)

  • http://www.mathewingram.com/work mathewi

    Well, the NYT is doing pretty well online — growing strongly, and making pretty good money. Their problem is that all of that is a drop in the bucket compared to the money they're losing on the paper business. Online-only properties don't have that problem.

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  • Gordon Livery

    As a business owner I've seen software and the internet destroy my business by giving all the things people used to pay me for. The internet takes all peoples talents and things they could do to earn a living and gives them away to others in a one shot software deal. In many cases others who have not studied those skills properly are using that software to give away the business for free just to get attention on the internet. Where four of us were able to do business, there is only now just myself and what I have now will soon be gone. But that's not the worst of it. There's not much I can retrain for that will pay a living wage anymore. Computers are not our friends, they promote poverty and steal time.

  • Gordon Livery

    As a business owner I've seen software and the internet destroy my business by giving all the things people used to pay me for. The internet takes all peoples talents and things they could do to earn a living and gives them away to others in a one shot software deal. In many cases others who have not studied those skills properly are using that software to give away the business for free just to get attention on the internet. Where four of us were able to do business, there is only now just myself and what I have now will soon be gone. But that's not the worst of it. There's not much I can retrain for that will pay a living wage anymore. Computers are not our friends, they promote poverty and steal time.

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