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New York Times Company Reports $74.5 Million Q1 Loss, Worse Than Analysts Expected

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The New York Times Co. fell into a deeper financial hole during the first quarter as the newspaper publisher's advertising revenue plunged 27 percent in an industrywide slump that is reshaping the print media. Its shares dived after the results were released Tuesday.

The owner of The New York Times, The Boston Globe, the International Herald Tribune and 15 other daily newspapers lost $74.5 million, or 52 cents per share, in the opening three months of the year. That compared with a loss of $335,000 at the same time last year, which was break-even on a per-share basis.

The results in the most recent quarter included charges totaling 18 cents per share to cover the costs of jettisoning employees and other one-time accounting measures.

Even with those charges stripped out, the loss was much worse than analysts expected. Analysts surveyed by Thomson Reuters had predicted the New York-based company would lose 4 cents per share.

Revenue for the period dropped 19 percent to $609 million _ about $22 million below the average analyst estimate.

Chief Executive Janet Robinson painted a bleak picture for the spring too, predicting ad revenue will fall in the 20 percent to 30 percent range in the current quarter. The company is being hurt most by lower spending on real estate, automotive, help-wanted and movie ads.

The pain isn't likely to ease until July at the earliest, Robinson said.

"We do see signs and we hear comments from advertisers that lead us to believe that they are saving dollars in the first half to do possibly more in the second half," Robinson told analysts during a Tuesday conference call.

New York Times Co. shares fell 91 cents, more than 15 percent, to close at $4.94.

The disappointing first-quarter performance was driven by a nearly $124 million decline in the Times Co.'s ad revenue from the same time last year. While most of the erosion was concentrated in the Times Co.'s newspapers, its Internet ad revenue sagged by 8 percent, or $3.6 million.

Like other major newspaper publishers, the Times Co. is being hit with a devastating double whammy _ a 16-month-old recession and a marketing shift that has diverted more ad spending to less expensive Internet alternatives. At the same time, many people are doing without newspaper subscriptions because they can read much of the same information for free on the Web.

Although she firmly believes advertising is the best way to make money on the Web, Robinson said the Times Co. is considering charging fees for more of its online content. It's an option more newspaper publishers are mulling as they try to drum up more revenue and preserve their print franchises. The Times Co. itself tried it on two occasions in the past 13 years, only to drop the fees later.

The Times Co. managed to increase circulation revenue slightly in the first quarter, by raising newspaper prices. Pressed by analysts, Robinson declined to provide any information about Times Co. newspapers' readership in the first quarter. The latest circulation figures for U.S. newspapers are scheduled to be released Monday.

To curtail its losses, the Times Co. lowered its first-quarter expenses by 9.5 percent from last year. Robinson estimated the company will save about $330 million annually through various cost-cutting measures before the year is over.

Most of the company's employees in New York are facing a temporary 5 percent reduction in their paychecks through the remainder of the year, and management is demanding even bigger concessions at the company's next-largest U.S. newspaper, The Boston Globe.

If it can't wring $20 million in employee concessions from the Globe, the Times Co. has threatened to shut down the newspaper. After suffering a loss of about $50 million last year, The Boston Globe is on a pace to lose $85 million this year.

Robinson described the ongoing labor negotiations as "critical" to the Globe's survival, but rebuffed analyst questions seeking more details about the talks. A representative of Teamsters Local 259, which represents about 200 drivers who deliver the newspaper, declined to comment.

The Times Co. pinned a big part of its first-quarter losses to the Globe and the Worcester (Mass.) Telegram & Gazette. Ad revenue within this New England group dropped 32 percent in the first quarter.

As a whole, the newspaper division suffered a first-quarter operating loss of $54.3 million. The same division posted an operating profit of $13.3 million in the first quarter last year.

Beyond cutting expenses, the Times Co. has taken several steps to increase its financial flexibility and avoid the debt trouble that has driven other newspaper publishers into bankruptcy protection.

It will save $133 million annually by suspending its shareholder dividends. The company sold most of its midtown Manhattan headquarters for $225 million and will lease the offices instead. It also got a $250 million infusion from Mexican billionaire Carlos Slim at 14 percent interest and gave him potentially valuable stock warrants.

The Times Co. said it recently repaid $250 million in outstanding notes to lower its net debt to $1 billion, with no other major repayments due during the next two years. About three-fourths of the Times Co.'s debt isn't due to be repaid until 2015 or later.

Robinson also told analysts the company is "progressing" in its effort to sell its 17.8 percent stake in a venture that owns the Boston Red Sox and Fenway Park. Analysts have estimated a sale of those holdings could bring $150 million to $200 million.