The current economic scenario does not look promising for
publishing companies, who are bearing the brunt of waning print
advertising demand, and
The New York Times Company
(
NYT
) is no exception. However, the company witnessed sturdy
circulation growth during the six-month period ending September
30, riding on the back of digital subscription initiatives.
According to the data released by Audit Bureau of Circulations
(ABC), total average circulation, including print and digital,
registered an increase of 40% to 1,613,865 for Monday to Friday
publications and 28% to 2,100,893 for Sunday editions during the
period.
Notably, digital circulation outpaced the print circulation.
For weekdays, average digital circulation rose more than twofold
to 896,352, whereas average print circulation dropped 6.9% to
717,513. Average digital circulation for Sunday surged 129% to
850,816, while average print circulation fell 1.8% to
1,250,077.
The data suggests that print circulation is continuing to lose
its grip, whereas digital circulation is gaining traction, as
more and more people are visiting the company's website through
smartphone and iPad applications. However, the only respite for
print editions is the Sunday home delivery circulation, which saw
a marginal increase of 0.6% to
998,080.
Apart from The New York Times, Wall Street Journal, the
flagship newspaper of
News Corporation
(
NWSA
) also experienced rise in circulation and holds on to its
leading position as per the data available from ABC. Circulation
for daily newspapers rose 9.4% to 2,293,798. However, USA Today,
the iconic brand of
Gannett Co., Inc.
(
GCI
) saw its circulation declining 3.9% to 1,713,833 but remained at
the second position. The New York Times occupied the third
position.
Although, The New York Times Company is blessed with sturdy
total circulation, yet its advertising volume continues to remain
under pressure as advertisers are shying away from making any
upfront commitments, in an economy which is showing an uneven
recovery. Total advertising revenue slid 8.9% to $182.6 million
in the third quarter of 2012. Print advertising declined 10.9%
during the quarter.
The sluggish advertising compelled The New York Times Company
to post a loss per share of 1 cent that significantly missed the
Zacks Consensus Estimate of earnings of 8 cents but remained flat
compared with the prior-year quarter.
To mitigate this, the company is diversifying its business and
adding new revenue streams. The company is also streamlining its
cost structure, strengthening its balance sheet and restructuring
its portfolio. The company is offloading assets that bear no
direct relation with the core operations in order to refocus on
its core newspapers and pay more attention to its online
activities.
Currently, we have a long-term Neutral recommendation on the
stock. However, the stock holds a Zacks #4 Rank that translates
into a short-term Sell rating, indicating lower-than-expected
third-quarter 2012
results.
GANNETT INC (GCI): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis
Report
NY TIMES A (NYT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research