Monday, November 05, 2007

New York Times, Tribune Co. Report Good Profits

After all the pissing and groaning they have done over recent months about their languishing fortunes, it is noteworthy that both the New York Times and the Tribune Co. surprised Wall Street in recent weeks by reporting returns that were better than expected. Both institutions easily made a profit in the third quarter.

At a time when the sub-prime mortgage crisis has sent many other big corporations reeling, such as Merrill Lynch and Citibank, both of which dismissed their CEOs in the last two weeks, the results at the two big newspaper companies look pretty good.

To deal with the one closest to home first, the subdued headline back in the Business section of the L.A. Times on Oct. 25 read,"Tribune profit falls less than expected."

Net profit at the Tribune Co. in the third quarter was $152.8 million, down from $164.3 million from the same period a year ago, but still 38 cents a year, beating the 26-cent average of stock analysts' estimates. The figures sent Tribune stock higher, and were hailed as meaning that the deal with real estate Sam Zell was surer to go through (although Tribune is still awaiting a decision by the FCC whether to allow the company to continue to own both newspaper and TV outlets in the same city, as is presently the case in Los Angeles).

Newspaper advertising sales did fall 9% below the levels of a year ago at the Tribune, but since the subprime crisis sent housing ads plummeting 26%, this was not perhaps so bad.

And now, with a sale of the Chicago Cubs supposedly pending in the next few months, and the sale of Tribune papers in Greenwich and Stamford, Ct., already announced, the income at the Tribune Co. seems headed for a better balance still. I'm not ready to call CEO Dennis FitzSimons by nice names, but he may not have been quite as inept in the third quarter as in the past.

Over at the New York Times Co., a slight gain was posted over a year ago, also bettering the estimates of Wall Street analysts. Its stock price also rose, as a result.

In a more comprehensive Oct. 24 article, also in its Business section, the New York Times reported that profits ran $13.4 million in the third quarter, up 6.7% from a year ago. The New York Times executives, customarily not as greedy as the Tribune executives, ready to keep more news personnel working and the news hole bigger, have traditionally been accepting of smaller profits. Still, the New York Times Co., which also owns other papers such as the Boston Globe and the International Herald Tribune, reported it had been able to pare operating costs by 1.5% under a year ago, payroll costs were down 4.6%, and the company said it expected to spend at least $14 million on further buyouts in the fourth quarter.

At the same time, the Morgan Stanley firm on Wall Street, which had been pressing the Sulzberger family to reduce its voting control of the New York Times company, has now sold its 7.2% share of NYT stock, and will not continue to pressure the company to reduce the editorial quality of its product. Good riddance!

It's worth noting that while Tribune and NYT were up, Gannett newspapers and McClatchy newspapers were down, Gannett by 10.5% and McClatchy by a whopping 54.7% in the third quarter compared to a year ago. (Maybe FitzSimons has been freelancing at McClatchy, and not paying so much attention to Tribune).

The New York Times Co. realized profits of 9 cents a share, while the analysts had expected only 5 cents. Operating profit rose 57.1% to $28.1 million for the quarter.

Advertising revenue actually rose at the New York Times Co. 5.5% for the quarter, stopping the slide that had been taking place there. Ads particularly rose for new films and fashions. And the successful New York Times magazine reported the highest number of pages of advertising since 1984.

Advertising revenue overall at the International Herald Tribune was up 3.7%, but it continued to fall, 5.7%, at the Boston Globe. The subprime crisis hurt New York Times papers in Florida and California, where advertising was down 11.6%.

In part by reducing page size, the New York Times was able to reduce its newsprint expenditures by 22%, and it said that cost savings realized by finishing its new headquarters building on New York's West Side would contribute to $230 million in smaller expenditures in the next two years.

Altogether, the picture for both Tribune and NYT indicated newspapers are not dead yet, thank goodness. Maybe, the pessimism in the business is overblown.

--

It's never too bad a day when both Muslim fundamentalists and lawyers are being smashed, as is reported in Pakistan today. Also, it's reported that the U.S. will keep up foreign aid to the Musharraf regime. The bottom line in Pakistan is that it's never been anything but autocratic. Better that the autocrats in this case are on our side rather than al-Qaeda's. And that Pakistan's atomic weapons stay out of the extremists' hands.

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