September 20, 2005
NYT to cut 4 pct of work force
By Michele Gershberg
NEW YORK (Reuters) - New York Times Co. on Tuesday said it
would cut about 4 percent of its work force, or 500 jobs, and
warned that weaker newspaper advertising and rising costs could
reduce earnings to less than half of Wall Street forecasts this
industry struggles with a lackluster ad market, increased
newsprint costs and circulation declines with readers turning
more often to the Internet for news.
Shares in the New York Times fell almost 2 percent in
after-hours trade as the company announced its second job cut
program since May, when it planned to eliminate 190 positions.
The publisher of the New York Times, Boston Globe and
International Herald Tribune warned that third-quarter earnings
per share would be in a range of 11 cents to 14 cents compared
with 33 cents a year earlier. The forecast includes expenses of
4 cents to 6 cents per share for its previous job cut program.
Analysts on average had forecast earnings per share of 25
cents, according to Reuters Estimates.
The company will cut about 500 jobs over six to nine months
beginning in October, including 250 positions at the New York
Times Media Group and about 160 at its New England Media Group.
The reductions include about 80 newsroom positions in total --
45 at the Times and 35 at the Globe.
Separately, Knight Ridder said it would cut 100 jobs
combined at its Philadelphia Inquirer and Daily News
newspapers. It warned last week of a 20 percent quarterly
The New York Times and rivals have expanded their online
offerings to combat falling margins, but the scope of Internet
revenue has yet to replace newspaper advertising. In August,
the Times' About.com unit helped push total ad revenue up 1.7
percent. Excluding the information site, ad revenue fell 1
"If the (ad) budgets are getting cut, they are not getting
cut online," said Christa Quarles, analyst at Thomas Weisel
Partners who rates New York Times shares at "peer perform."
"How do you transition your core (newspaper) business to being
online? I don't think anyone has solved that
creative-destruction dilemma yet."
LOWER AD GROWTH SEEN IN 2005
Quarles said the New York Times Co trades at the higher end
of peer valuations on a price-to-earnings basis. Company shares
are down more than 21 percent since the start of 2005, compared
with a 10 percent drop for rival Knight Ridder Inc. and a
nearly 15 percent decline for Gannett Co. Inc..
New York Times Co. Chief Executive Janet Robinson said the
company would "aggressively reduce costs" across its businesses
and grow its Internet operations to offset the weak ad market.
"In September, our largest month in the quarter,
advertising has been challenging," she said.
"We continue to benefit from very strong double-digit
advertising growth at our digital operations, particularly
About.com," Robinson said. "But elsewhere, advertising is
weaker than expected."
The New York Times said it was too early to assess the cost
of the latest job cuts. The company lowered the range of its
2005 revenue projections, expecting ad revenue growth to be in
the low-single digits from a previous forecast of low to
New York Times shares fell to $31.51 on Inet from their
close of $32.13 earlier on Tuesday.
(Additional reporting by Deena Beasley in Los Angeles)