NYT: A Good Month's a Reprieve, Not a Pardon

One reporter I talked today said the New York Times people he talked were "giddy." Well, why not, enjoy the day. The Times reported 3Q numbers that surprised everyone -- unexpected "above-expectation" reporting hardly within recent memory.

The Times reported earnings up 6.7%, with total revenue UP, I repeat UP, 5.5%.

Compared to other recent earnings like Gannett's (Newspaper Revenues -- -5.6%), McClatchy's (Newspaper Revenues -- -9.2%) and Media General's (Newspaper Revenues -- -6.7%), that's great news. Wall Street thought so too. In an up day at the market, NYT stock caught an upwind, closing up an unbelievable 9.83%. Observers would have the day to enjoy the irony that Morgan Stanley, long a public critic of the Sulzbergers, finally threw in the towel just a week ago. It sold its 7.2% stake near the 52-week low. So today's rise would have been worth about $19 million, not bad even by Wall Street standards.

Maybe the Times execs will have some time to savor their small triumph. Though their advice that October looks less of a turnaround than September and more like a return to that troubling first half doesn't bode well.

Neither do the classifieds and retail numbers:
----Classifieds down 14.4%, with the shared real estate+ woes of the rest of the industry;
----Retail down 7.3%, as department store consolidation and the move to web ads takes a continuing toll.

The bright spots, though, clearly, are affirmations of the Times strategy:

----National revenue was up 10.9% for the quarter, pumped by a good September. The growth was attributed to Movies (always episodic) and Financial, which may have been putting on a post-credit panic happy face for Times readers. National is key to offset what will certainly be continuing classified and retail decline, and is the centerpiece to build the Times into the clear #1 global English-language news brand. Its #4 rankings in Comscore, and increasing duration numbers -- up to 36 minutes a month (exceeded only by the Foxies, who are pulling 48 minutes) show early successes at pre-eminence. That's particularly important as Rupert Murdoch takes over the Journal in November and apparently plans to put the Times in his sights.
----Circulation revenue was up 4.1%, an early sign that the price increases the Times has put into place for the print flagship Sunday and daily editions may be working. Too early, though, to know. We've got to see how much churn -- loss of readers unwilling to pony up -- is caused over the next six months. For the Times itself, this revenue is more important than for most dailies. Most dailies see something close to an 80/20 split in ad/circ revenues. The Times, given its strong readership and pricing, sees a whole company split of 72/28.
----Online is chugging along. The newspaper-related sites maintained their heads above the 20% water line, at 23.3%. About.com keeps pumping out profits, up 29%, apples to apples to last year, without the ConsumerSearch.com, UCompareHealthCare.com and Calorie-Count.com acquisitions added in. With them, the company showed a 39% increase in non-newspaper, online revenues. It's not a lot of money, but it helps offset those classified and retail declines.

As the Times looks out into next year, it may see a twin landscape developing. The Times itself, post Times Select, embracing of blogging, increasingly learned of SEO and SEM, and able to assert its preeminent place on the web, while maintaining its sufficiently in print, may be in decent shape. But the rest of the company, the New England Group (mainly The Boston Globe) and the southeastern-based New York Times Regional Group exhibit all the deep problems of the rest of U.S. local newspaper industry. Look at the 3Q numbers there: Ad revenues down 3.8% in New England and 12.2 at the Regional Group, both pulled way down by real estate and auto ad woes. And those non-New York Times properties are responsible for more than a third of the company's newspaper revenues, about 38% of them.

So let the Times raise a few glasses in celebration and toast Morgan Stanley in particular, affirming the two-class share system for now. But this quarterly report will probably be remembered more as a brief reprieve than a pardon.

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