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NEW YORK (AFX) - The New York Times Co. reported flat second-quarter earnings Tuesday and also said it plans to reduce the width of its flagship newspaper by an inch and a half and close one of its two New York-area printing plants.
Several other major newspapers already publish in the smaller size, including Gannett Co.'s USA Today, the largest-selling daily. Dow Jones & Co.'s Wall Street Journal plans to move to the smaller size early next year. Publishers say readers prefer the smaller size, which also saves money on newsprint.
Higher paper costs were one factor holding back the Times' second quarter earnings, which came in at $61.3 million, or 42 cents per share, versus $60.8 million, also 42 cents per share, in the same period a year ago. In addition to the Times, the company also publishes The Boston Globe, the International Herald Tribune and 15 other daily newspapers.
The latest figures include a charge of $5.3 million, or 4 cents per share, related to a staff reduction program announced last year. Excluding the charge, the results were ahead of the 44 cents per share that analysts polled by Thomson Financial had been expecting.
Despite beating the earnings estimate, the company's shares fell 51 cents, or 2.2 percent, to close at $22.67 on the New York Stock Exchange.
Revenues rose 1.6 percent to $858.7 million, but that gain was offset by a 2.9 percent increase in costs, including a 7.4 percent increase in newsprint.
The changes at The New York Times will go into effect by the second quarter of 2008, and will save about $42 million a year. The 250 job cuts associated with the changeover account for about one-third of the Times' total production work force of 800.
The company said it would take a charge for eliminating the jobs but the size and timing of the charges weren't yet clear.
The Times said it plans to sublease its facility in Edison, N.J., and consolidate its New York area production at its newer plant in College Point, Queens. The savings will come from $30 million in lower operating costs and $12 million in lower newsprint consumption.
The move will reduce the paper's width to 12 inches per page from 13.5 inches, while the length will remain the same, company spokeswoman Catherine Mathis said.
At the same time it is reducing the page size, the paper will also add more pages, keeping the total reduction in news space to about 5 percent. Bill Keller, the paper's executive editor, told the Times: "That's a number that I think we can live with quite comfortably," saying the changes would require tighter editing and putting some news in digest form.
"It's painful to watch an industry retrench," Keller said. "But this is a much less painful way to go about assuring our economic survival than cutting staff or closing foreign bureaus or retrenching our investigative reporting or diluting the Washington bureau."
Janet Robinson, CEO of The New York Times Co., said in a statement that the paper's editorial and design staffs are "exploring opportunities for adapting The Times's signature look and feel while also making the paper more user-friendly."
The Times also said its online revenues jumped to $66.1 million from $49 million in the year-ago period, which includes all Internet-related businesses such as its digital archives, the Web sites for its newspapers and the Internet business About.com, which it acquired in early 2005.
The company said Internet-related business now accounts for 7.7 percent of its overall revenues, up from 5.8 percent in the same period a year ago. Newspaper companies across the industry are looking to beef up their online revenues as more readers and advertising dollars move to the Internet.
The company's peformance varied by region, with the New England papers, anchored by The Boston Globe, reporting a 10.4 percent decline in advertising, which the company attributed to a tough economic climate there and the consolidation of key advertisers including the retailers Macy's, part of Federated Department Stores Inc., and Retail Ventures Inc.'s Filene's. The New York Times and associated businesses had a 1.4 percent increase in advertising.
The Times also said Tuesday that its chief financial officer, Leonard Forman, will retire next year after a successor is named. Forman, who is 61, became the CFO in 2002. The company said it has hired the executive search firm Heidrick & Struggles to assist in the search. Copyright 2006 Associated Press. All rights reserved. This material may not be
Copyright 2006 AFX News Limited. All Rights Reserved.
