New York Times Co. posts $648 mil Q4 loss
EmptyNEW YORK-- The New York Times Co. took a charge of $814.4 million Wednesday to write down the value of The Boston Globe and the Worcester Telegram & Gazette, which have been struggling amid advertiser consolidation, a weak regional economy and competition from the Internet.
The write-down represents a drop in value of about 60% from the prices the Times paid for the two newspapers -- $1.1 billion for the Globe in 1993, and $296 million for the Worcester paper in 2000 -- and reflects the broader troubles facing many other newspapers, especially major market dailies, as readers and advertisers increasingly go online.
The charge reflects an accounting adjustment to the carrying value of the newspapers, based on the company's assessment of their deteriorating operating results, but doesn't represent any actual loss of cash.
The Globe has been moving to cut costs and said last week that it would close its three remaining foreign bureaus. Also, 125 jobs are being eliminated at the Globe and the Worcester paper through buyouts and other steps, the Globe said earlier this month.
The Times had been expected to take a write-down on its New England properties, and made the disclosures as part of its quarterly earnings report Wednesday.
The charge swung the company to a net loss of $648 million or $4.50 per share for the three-month period ended in December. Excluding the charge, earnings rose to $87.9 million, or 61 cents per share, versus a profit of $63.1 million, or 43 cents a share, in the same period a year ago.
Revenue rose 4.3% to $931.5 million, which came in well ahead of analysts' estimates of $904 million. The period contained an extra week compared with the same period a year ago, and December revenue came in stronger than expected.
Merrill Lynch analyst Lauren Rich Fine said the Times' earnings per share excluding nonrecurring items came to 56 cents versus her estimate of 44 cents and the estimate of most analysts of 46 cents because of better than expected revenue and cost controls.
Despite the hefty accounting charge, investors welcomed the better-than-expected operating results and pushed the company's shares up 19 cents to close at $23.09 on the New York Stock Exchange.
Advertising revenues at the New England properties declined again in the fourth quarter, falling 6.1% in the period and 9% for all of 2006.
On a conference call with analysts, Times Chief Executive Janet Robinson said the Globe had been especially hurt by the consolidation of key advertisers including Filene's, which is now part of Federated Department Stores Inc., a major retailer that also owns Macy's. However she said that several retailers had announced plans to expand in Boston, which could help results in the future.
New England's economy has grown at a far slower rate in recent years compared with most other areas of the country, especially the South and Southwest, and most economists expected the trend to continue in coming years.
Newspaper and other traditional media outlets are facing mounting competition for both advertising dollars and readers amid the booming growth of the Internet as a medium for delivering news, information and entertainment.
Newspapers are expanding their own operations on the Web as well, but so far that growth has been generally outpaced by the declines in their print business. One of the lingering problems is that prices for online advertising remain relatively low compared with traditional media.
A transaction announced last month also reflected the sliding values for major-market newspapers. McClatchy Co., the second-largest newspaper company in the country after Gannett Co., said it would sell its largest newspaper, the Star Tribune of Minneapolis, to a private equity firm for $530 million, well below the $1.2 billion paid for the property eight years ago.
The New York Times also said Wednesday it had restated financial results for the fourth quarter and full year of 2005 and the first three quarters of 2006 because of a reporting error related to its pension plans.
The changes had a relatively small effect on profits, reducing earnings per share in 2005 by 4 cents per share to $1.74 and also to reduce earnings per share in the first three quarters of 2006 by 4 cents per share.
The restatements had a greater effect on the company's balance sheet, adding about $100 million in liabilities and about $30 million in assets.
In addition to the Times and the Globe, the company also publishes the International Herald Tribune and 15 other daily newspapers. It has agreed to sell its nine TV stations.
Another newspaper publisher, Richmond, Va.-based Media General Inc., reported a gain of nearly 27% in fourth-quarter earnings on higher revenue from broadcasting.
The company earned $31.6 million, or $1.33 per share, compared with $25 million, or $1.05 per share. Revenue rose 26% to $294.7 million.
Earnings from newspaper publishing fell 10.4%. Excluding an extra week in 2006, publishing ad revenue declined 3%.