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NY Times Q1 Earnings Beat Estimates on Digital Advertising

The New York Times CompanyNYT delivered better-than-expected first-quarter 2015 bottom-line results. Quarterly earnings came in at 11 cents a share that beat the Zacks Consensus Estimate of 8 cents, and surged 57.1% year over year. The strength witnessed at digital advertising and effective cost management supported the bottom line.

Including one-time items, the company reported loss of 9 cents a share, down substantially from earnings of 1 cent in the prior-year quarter.

In the reported quarter, The New York Times Company registered an increase in the number of its digital subscribers, a rise in both circulation and digital advertising revenues and a decline of 2.6% in adjusted operating costs. However, the quarter saw a decline in print advertising revenue. Management now expects adjusted operating costs to decline in the low-single digits in the second quarter of 2015.

The New York Times Company's top line dropped 1.6% year over year to $384.2 million, following an increase of 0.2% in the fourth quarter of 2014. Revenues also came in line with the Zacks Consensus Estimate of $384 million.

Circulation revenue grew 0.8% to $211.5 million primarily on the company's digital subscription initiatives and rise in the home delivery price of The New York Times. Circulation revenue from digital-only subscription packages jumped 14.4% to $46.1 million. Management now projects total circulation revenue in the second quarter of 2015 to increase at a rate in line with the quarter under review.

Total advertising revenue came in at $149.9 million, down 5.8% year over year. Print advertising revenue declined 11.1%, while digital advertising revenue climbed 10.7% to $42.3 million. The company saw a decline of 7% in the display advertising category but an increase of 1.9% in the classified advertising category. The diversified media conglomerate hinted that total advertising revenue in second-quarter 2015 would decline in the mid single-digit range.

Total adjusted operating profit jumped 4.5% to $59.2 million, while adjusted operating margin expanded 90 basis points to 15.4%.

Other Financial Aspects

The New York Times Company ended the quarter with cash and marketable securities of about $847.8 million, and total debt and capital lease obligations of approximately $427.7 million. The company incurred capital expenditures of about $5 million during the quarter. Management now foresees total capital expenditures between $35 million and $45 million for 2015.

Conclusion

Advertising, which remains a significant source of revenue, is largely dependent on the global financial health. Softness in advertising demand has been weighing on The New York Times Company's performance. Consequently, the company is trying every means to shield itself from the impact of an unstable market and contemplating on new revenue generating avenues. The company had offloaded assets that bear no direct relation to its core operations in order to re-focus on its core newspapers and pay more attention to its online activities.

The New York Times Company has been adding diverse revenue streams, such as a pay-and-read model, to make it less vulnerable to economic conditions. The company is also adapting to the changing face of the multiplatform media universe, and has already included mobile and reader application products in its portfolio. Other publishing companies such as Tribune Publishing Company TPUB , Gannett Co., Inc. GCI and The McClatchy Company MNI are also trying to adapt to different revenue generating ways.

Despite hiccups in the economy, what still promises revenue generation is The New York Times Company's pricing system for NYTimes.com, which was launched on Mar 28, 2011. The company notified that the number of paid digital subscribers reached 957,000 at the end of the reported quarter, rising 47,000 sequentially and almost 20% year over year.

The New York Times Company, which carries a Zacks Rank #3 (Hold), remains committed to streamline its cost structure, strengthen its balance sheet and rebalance its portfolio.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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