New York Times Now Making Money

The New York Times Co. made money last year! A $20 million profit for 2009. Revenue fell more than 11% in the fourth quarter—but it's declining less than last year. Silver linings! Celebratory year-in-review internal memo below.

From: NYTIMES MAIL
Date: Wed, Feb 10, 2010 at 10:31 AM
Subject: On the Record from Arthur and Janet
To: NY TIMES INTERNET

Vol. 2 2010: Ending the Year Profitably

We are delighted to report that as a result of your dedication, courage and innovation, our Company ended the year profitably. As you can see in our earnings press release, 2009 ended far better than it began, with advertisers increasing their rate of spending across our newspapers, Web sites and other platforms during the fourth quarter. As we reported, operating profit increased both for the quarter and year.

Our fourth quarter and year-end numbers were a result of countless difficult decisions and sacrifices that were made at The New York Times, New England and Regional Media Groups and the About Group to restructure our cost base. We had to say goodbye to many colleagues and found ways to do our work more efficiently and productively.

As a result of all these actions, we have continued to reposition the Company to grow as a business while enhancing our ability to achieve our core mission: providing our audiences with high-quality news and information.

You have our gratitude for all we were able to achieve last year.

The fourth-quarter improvement in advertising trends was, of course, only part of the story. We also continued to aggressively pursue a long-term strategy that enhanced our Company financially and journalistically while providing new ways to compete in a media industry with proliferating news and information options. Specifically:

* We secured strong performance on costs by focusing relentlessly on increasing productivity and efficiency, achieving approximately $475 million in operating cost savings in 2009.

* We reduced the Company's debt by over $290 million to $769 million from its balance at the end of 2008. This means that our debt load is now far more manageable.

* We continued to diversify our revenue streams by introducing an array of new products and extending our reach to new audiences. Constant innovation and reinvention are core competencies for the Company, and we see examples of this wonderful digital creativity at all of our Web sites.

* We leveraged our brand strength to grow profitable circulation revenue, as we believe – and have been proven right – that continued strong user demand for our high-quality news and information is a testament to the value they provide.

* We also sold WQXR, our New York City classical radio station, for $45 million, and used the proceeds to reduce our outstanding debt.

With of all this said, revenues were still down for the quarter and year, and we are still in the midst of a challenging business environment. In almost every On the Record, we have talked about making the transition from a company that operated primarily in print to one that is increasingly digital and multiplatform in delivery. With that in mind, we wish to point out that online revenues are becoming a more important part of our mix, with Internet businesses contributing almost 14% of our total revenues and 22% of our ad revenues in 2009.

Last month, we announced that NYTimes.com has decided to introduce a new metered model in 2011 to create a second online revenue stream. We are already hard at work at executing this plan, and it is our expectation that this new effort will improve our ability to grow our Company.

Of course, the metered model will be one of our major 2010 initiatives, but there is more to do. While it would be helpful to have a greater sense of where the economy is heading, we are confident that we can build on our increasingly solid foundation. We will continue to streamline costs, strengthen our balance sheet and enhance our digital businesses. We recognize that the quality of our journalism is at the heart of our Company's success, but we also acknowledge that quality journalism can only survive as part of a profitable business organization.

For more information about our fourth-quarter earnings, please see the Company's release, available at http://www.nytco.com/investors.

Arthur and Janet