New York Times Company (NYT)

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See all Bulls Reasons Bulls: Reasons To Buy Reputation for quality journalism is powerful 0% agree Reputation for quality journalism is powerful The New York Times’ reputation for quality journalism gives it a powerful brand name. It stands out as one of the world’s best newspapers. View or Edit Reason 0 votes 0% agree Significant efforts to build websites like nytimes.com 0% agree Significant efforts to build websites like nytimes.com The New York Times has made efforts to improve the appeal of its websites, particularly NYTimes.com by focusing on increasing its digital offerings and creating blogs. View or Edit Reason 0 votes 0% agree About.com is bolstering online division 0% agree About.com is bolstering online division About.com has allowed the New York Times Company to improve its position in competition for online advertising. It is quickly becoming an extremely successful website. View or Edit Reason 0 votes 0% agree See all Bears Reasons Bears: Reasons To Sell Boston Globe struggling from stalled regional economy 100% agree Boston Globe struggling from stalled regional economy The Boston Globe has struggled financially as it faces decreases both in advertising revenue and circulation due in part to the region’s stalled economy. View or Edit Reason 1 votes 100% agree Steady decline in its advertising revenue because of online 100% agree Steady decline in its advertising revenue because of online As a result of increasing competition from other media sources and websites like Google (GOOG), the New York Times Company has seen a steady decline in its advertising revenue both in print and online. View or Edit Reason 1 votes 100% agree News sources such as blogs turn people away from newspapers 50% agree News sources such as blogs turn people away from newspapers The New York Times must compete against the new growth in unconventional online news sources such as blogs, which have caused people to turn away from print newspapers. View or Edit Reason 2 votes 50% agree Send the authors a comment or suggestion I feel as newspaper companies turn to the web they will see Google taking market share from them ... more [Dismiss] [Done] See All Suggestions

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The New York Times Company (NYSE: NYT) is a media conglomerate that owns print, online and other media properties, including the namesake newspaper. Print media has faced financial difficulties across the industry due, in large part, to the rise of the internet. While print media remains the company's core business, the New York Times Company has also broadened its focus into other media outlets, including online news. In 2007 the New York Times earned $3.2 billion in revenues.^[1]

[edit] Business Overview

Founded by Henry Jarvis Raymond and George Jones, the New York Times hit the newsstands on September 18, 1851 under the name of the New-York Daily Times. Since 1951, the New York Times has been published by the Sulzberger family and today Arthur O. Sulzberger Jr. is the chairman of the New York Times Company.

Over the years, The New York Times has made a number of acquisitions expanding the company from the publisher of a single newspaper into a media conglomerate. The Boston Globe merged with the New York Times Company in 1993 and more recently, the New York Time bought out the Washington Post's stake in the International Herald Tribune to become its sole owner. The New York Times has also expanded its online business by building up a number of websites and recently purchasing About.com.

[edit] Divisions

The New York Times Company breaks its financial results into four divisions: New York Times Media Group, New England Media Group, Regional Media Group and About.com. In 2007 NYT reported total revenues of $3.2 billion.^[2]

• The New York Times Media Group is the company's biggest segment, generating 64% of total revenue in 2007. This division includes The New York Times newspaper, NYtimes.com, the International Herald Tribune, and Baseline.
• The New England Media Group generated 19% of total revenues in 2007 and includes the Boston Globe, Boston.com, the Worcester Telegram & Gazette and Telegram.com.
• The Regional Media Group includes fourteen regional daily newspapers and was the source of 19% of the company's total revenues in 2007.
• The About.com Group includes all operations from About.com generated 3% of total revenues in 2007.^[3]

The New York Times Company owns 18 daily newspapers, including the New York Times, the International Herald Tribune and the Boston Globe, as well as over 30 websites, including About.com and two New York radio stations.

[edit] Revenue Categories

The New York Times reports revenues in three categories: Advertising, Circulation, and Other. The advertising category includes all revenues from both print and online advertising across all four of the company's divisions. Circulation revenues come from the sale of the company's print publications. The Other revenue category includes revenues from wholesale delivery operations, news services and syndication, commercial printing, digital archives and rental revenues.^[4]

[edit] Advertising

Advertising revenue is the main source of revenue for the New York Times Company. This includes both print advertising and online advertising in the company's various newspapers and on its websites. Print advertising revenue has seen a steady decline, due in large part to the increasing popularity of the Internet and online advertising. In 2007 print advertising fell by 8.1%, compared to 2006. To compound the challenges from the Internet, the company also faces tough competition to recruit advertisers from other traditional media companies and publications such as the Yellow Pages.

The New York Times Company’s online advertising revenue is very much dependent on its ability to attract traffic. In 2005, the company acquired About.com for $410 million to shore up its online offerings. The site offers advertisers a way to reach targeted audiences (e.g., travel) and was one of the fifteen largest sites in 2005 by traffic. Recently, About.com's advertising revenues increased by 22.5% in January compared to the same period the previous year. About.com generates about 90% of its traffic through search engines such as Google (GOOG), meaning that the site is very much dependent on the policies and business tactics of online search companies. About.com contributed approximately 3.2% to the overall revenue of the company in 2007.

The New York Times has also tried to attract viewers by improving its other websites such as NYTimes.com, the online version of its flagship newspaper. It has increased the quality of its online features to include blogs and short videos as a supplement to its paper content. In June 2008 New York Times announced plans to merge its website with that of the International Herald Tribune. Merging the two websites is an attempt by the New York Times to expand their appeal to online advertisers.^[5] In September 2008, the New York Times rolled out a social media function, called TimesPeople, to encourage users to stay longer on the website and increase ad revenue.

[edit] Circulation

Though the age of the Internet has diminished the importance of the circulation of print newspapers, it nevertheless remains an essential factor to newspapers’ profitability. This includes both newspapers sold on newsstands as well as subscriptions. New York Times’ average paid weekday and Sunday circulation decreased by 5.3% from 2.74M in 2006 to 2.60M in 2007. This is part of a larger trend across the United States where a number of newspapers have experienced falls in circulation.

Circulation is a key determinant of the New York Times Company’s ability to draw advertisers, and it is very much affected by the regional economic conditions. The New York Times newspaper has been relatively less affected because of its wide national coverage and availability.

Furthermore, localized newspaper markets in the company's portfolio faced similar struggles in 2007. For example, the New England Media Group, which includes The Boston Globe, saw declining revenues. In 2007, the New England Media Group’s revenue fell by 6.8% from 2006. This is related to the stagnant economy in Massachusetts, which has made it difficult for the Boston Globe and other regional newspapers to attract readers and has caused circulation, and therefore advertising, to fall.

[edit] Other Media Properties

At the end of 2006, the New York Times Company sold its television broadcasting assets to the Oak Hill Capital Partners, a private equity firm for $575 million, to focus on improving the quality of its digital offerings and their connection to the newspaper content. It currently holds two radio stations in the New York area.

[edit] Trends and Forces

[edit] The Internet is a major threat to print media

The growth of Internet advertising has posed serious challenges to the company's core business, print media. This growth has forced companies to find new means of reaching readers and recruiting advertisers. From 2006 to 2007, print advertising revenues declined 8.1% while online advertising increased 18.4%. Net advertising revenues for the company declined 6.1% in 2007.

While the New York Times Company has struggled to respond to this problem, it has taken steps to improve its own online offerings. The company acquired About.com, an Internet portal site, in 2005 and has improved its flagship NYTimes.com site in order to attract online advertisers. The company generated 10.2% of its revenue from online advertising during 2007, and increase of 18.4% from 2004.They neither lead nor lag their main competition in this area; Dow Jones (DJ), which owns the Wall Street Journal, sourced over 10% of revenue from online advertising while Gannett (GCI), which owns USA Today, realized 5% from the Internet channel.

[edit] Economic Conditions and Streamlining Costs

In addition to Internet advertising, the company faces additional challenges from two macroeconomic conditions: weak regional economies and increases in newsprint costs. The effect of a weak economy in New England, where the company owns the Boston Globe and other newspapers, has been exacerbated the overall decline in print advertising revenues as several key advertisers have dropped out. On top of this, the company is also greatly affected by prices in the newsprint industry, which have risen steadily in the past several years.

Newsprint prices greatly affect operational costs for the New York Times Company. A number of newsprint factories have shut down and companies have merged and consolidated in recent years due to excess supply over demand for newsprint in North America. These rising newsprint prices have placed a burden on all newspaper companies by increasing their operational costs .

The New York Times Company is making efforts to cut its printing costs by using lighter weight printing paper and will move in 2007 to a smaller paper format. This combination is estimated to save the company $10-15 million each year. Other newspapers have adopted similar measures, including Dow Jones' Wall Street Journal, which started printing on smaller sized paper to diminish their printing costs and increase margins in 2007.

Reduction in newsprint expenses is part of an overall trend to streamline the business. Overall the New York Times Company has reduced its costs by $215.1 million in the last two years and expects to continue this trend in 2008.

[edit] Content

One key asset for the company is its content, as it continued to produce quality news (the New York Times newspaper alone has won 95 Pulitzer Prizes^[6], more than any other newspaper) and develop non-news assets such as travel and style. However, the Internet has challenged even this advantage due in large part to the advent of user-generated content such as blogs.

The New York Times Company draws much of its business, both in terms of advertising and circulation, through the quality of its content. One of the New York Times' greatest assets is its name. The paper has an outstanding reputation for quality journalism and the New York Times Company has won 115 Pulitzer prizes, outdoing any other news organization.

The New York Times is trying to leverage its journalism reputation. In September 2007 the company discontinued its online subscription product known as TimesSelect. TimesSelect was a fee-based service that allowed subscribers to access content on the New York Times website that was unavailable to non-subscribers. By discontinuing the service the company is foregoing subscription revenues in an effort to obtain higher site traffic. In 2007 Nytimes.com reached 14.7 million average unique monthly visitors, up from 12.4 million in 2006.

[edit] Comparison to Competitors

 New York Times Company

	Select All  |  Select None Metrics Average Sunday Circulation Newsprint Used Raw Material Costs Number of Pre-prints Operating Income Advertising Revenue Average Weekday Circulation Circulation Revenue Advertising Volume in Inches Net Income Cancel

	Select All  |  Select None Companies Belo (BLC) Daily Journal Corp. (S.C.) (DJCO) Gannett (GCI) E.W. Scripps Company (SSP) Gatehouse Media (GHS) Journal Register Company (JRC) Journal Communications (JRN) Lee Enterprises (LEE) Media General (MEG) McClatchy Company (MNI) New York Times Company (NYT) Washington Post Company (WPO) Cancel

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Company	Data From	Advertising Revenue	Average Weekday Circulation	Circulation Revenue	Advertising Volume in Inches	Net Income
E.W. Scripps Company (SSP)	2006	$1.77B[7]	1.13M[8]	$123M[9]	Add	$353M[9]
Gannett (GCI)	2007	$4.94B[10]	5.25M[11]	$1.25B[12]	82.8M[13]	$975M[14]
McClatchy Company (MNI)	2006	$1.43B[15]	2.84M[16]	$195M[15]	Add	($156M)[15]
New York Times Company (NYT)	2006	$2.08B[17]	2.18M[18]	$890M[17]	20.3M[19]	($543M)[20]
Washington Post Company (WPO)	2006	$1.36B[21]	681K[22]	$783M[21]	2.61M[22]	$324M[21]

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[edit] Print

The New York Times Company's serious print competitors include the Wall Street Journal (owned by News Corporation (NWS)) and USA Today (owned by Gannett (GCI)). It also faces some competition from papers such as The Washington Post. A key advantage for the New York Times Company is its strong reputation for quality journalism, which helps to sets it apart from others.

The New York Times newspaper is first in circulation ahead of USA Today and the Wall Street Journal. In terms of revenue the New York Times Company exceeds Gannett and trails News Corporation, which is a large media conglomerate.

[edit] Online

One reason the Internet has dramatically affected the newspaper industry is because it has become cheaper to reach audiences. In 2006, it was estimated that the average newspaper advertising CPM (or cost per thousand viewers) was around $25, while the comparable metric for Internet hovered around $5. In addition, Internet advertising companies such as Google and Yahoo! have implemented performance-based business models allowing advertisers to pay only when a viewer activates a desirable action (such as clicking).

Dow Jones has responded to serious Internet competition for advertising revenue by expanding online and acquiring a number of Websites.

[edit] References

1. ↑ 2007 Form 10-k, SEC Filings and Forms, Page 21.
2. ↑ 2007 Form 10-k, SEC Filings and Forms, Page 21.
3. ↑ 2007 Form 10-k, SEC Filings and Forms, Page 23.
4. ↑ 2007 Form 10-k, SEC Filings and Forms, Page 23.
5. ↑ "NYT and IHT study Web merger", www.iht.com, Published June 23, 2008.
6. ↑ www.nytimes.com, Retrieved April 24, 2008.
7. ↑ Source:SSP form 10-k pg. f-27
8. ↑ Source:SSP form 10-k pg. 6,8
9. ↑ ^{9.0 9.1} Source:SSP form 10-k f-27
10. ↑ Gannett 2007 10-K page 25
11. ↑ Gannett 2007 10-K page 26
12. ↑ Gannett 2007 10-K page 25
13. ↑ Gannett 2007 10K page 25
14. ↑ Gannet 2007 10-K page 22
15. ↑ ^{15.0 15.1 15.2} Source:MNI form 10-k pg. 11
16. ↑ Source:MNI form 10-k pg. 3
17. ↑ ^{17.0 17.1} Source:NYT form 10-k pg. 31
18. ↑ Source:NYT form 10-k pg. 2,4 & 5
19. ↑ Source:NYT form 10-k pg. 32
20. ↑ Source:NYT form 10-k pg. 20
21. ↑ ^{21.0 21.1 21.2} Source: WPO form 10-k pg. 49
22. ↑ ^{22.0 22.1} Source: WPO form 10-k pg. 6