The New York Times announced its first quarter 2010 results on Thursday. As is the case with most companies when they would rather not talk about the bottom line, the Times instead concentrated on its "operating profit."
A detailed look at the release reveals a group of contracting, money-losing journalistic endeavors propped up by an also-shrinking Internet enterprise.
Here are the first few paragraphs of the company's release:
The New York Times Company (NYSE: NYT) announced today 2011 first-quarter diluted earnings per share of $.04 per share compared with $.08 in the same period of 2010. Excluding severance and the special items discussed below, diluted earnings per share were $.02 per share in the first quarter of 2011 compared with $.11 in the first quarter of 2010.
Operating profit was $31.1 million in the first quarter of 2011 compared with $52.7 million in the same period of 2010. Excluding depreciation, amortization and severance, operating profit was $60.5 million in the first quarter of 2011 compared with $83.3 million in the first quarter of 2010.
"Our operating performance reflects the continuing transformation of our Company, which intersected with an important milestone in the first quarter," said Janet L. Robinson, president and chief executive officer, The New York Times Company. "While the challenges for our Company and for the larger economy are not yet behind us, the recent launch of Times digital subscription packages on NYTimes.com and across other digital platforms brings our plan for a new revenue stream to life, offering us another reason for optimism about the future of our Company.
The term "net income" only appears in the financial statements themselves, and is absent from the roughly 2000-word release. Net income for the quarter was $5.2 million, down 63% from $14.2 million in the first quarter of 2010, which itself was propped up by a $10.2 million gain (per footnote c in the report) on the sale of a paper-mill joint venture.
Focusing on the current quarter, here is my estimate of how the allocation of net income shakes out:
I allocated corporate costs based on revenues, which absent any specific information is as good a rationale as any. The News Media Group eats all interest costs because the Times paid cash and from what I recall did not have to borrow to buy About in 2005. Though entirely allocated to the News Media Group, the "Other items" could arguably favor About Group even more, as they include a $5.8 million gain on the sale of job listing aggregator indeed.com (the News Media Group really doesn't deserve credit for that), a $5.7 million loss on the paper mill joint venture sale (News Media Group-related), and $1.4 million in income taxes.
Note that About Group's operating profit of $14.3 million is almost half of the company's $31.1 million in operating profit. Absent a favorable change in direction, it seems that the Times will not likely be able to continue counting on About to keep spinning off enough income to cover up everyone else's losses. About's revenues were down about 9% from a year ago, while its operating profit was down about 14%.
Thus as stated earlier, the Times is "a group of contracting, money-losing journalistic endeavors propped up by an also-shrinking Internet enterprise." If you expected another establishment press entity to expose this inconvenient truth about the Times, forget about it: Michael Liedtke's coverage at the Associated Press Thursday afternoon didn't even recognize the existence of the About Group.
Given what the Times's various publications have done to poison the well of fairness and objectivity over the years, I can only echo Instapunditeer Glenn Reynolds in saying "Faster please."
Cross-posted at BizzyBlog.com.
