New York Times Moves Toward Netflix Model as Ads Tumble

New York Times Moves Toward Netflix Model as Ads Tumble

New York Times Co. (NYT), the newspaper publisher betting its future on a shift toward digital subscriptions, posted lower sales last quarter as it failed to attract enough readers to make up for a steeper ad decline.

Advertising dropped more than 11 percent to $191.2 million in the first quarter, while subscription sales rose 6.5 percent to $241.8 million, the company said today in a statement. Total revenue fell 2 percent from a year earlier to $465.9 million, missing analysts’ estimates of $470.5 million on average, according to data compiled by Bloomberg. Excluding some items, profit was 4 cents a share, matching estimates.

The results represent Mark Thompson’s first full quarter as the company’s chief executive officer, following his arrival from the British Broadcasting Corp. last November. Thompson announced new strategic initiatives today in a bid to revive growth. The effort includes a lower-priced subscription plan, as well as a higher-priced option that would include access to events. The company also aims to entice more readers and advertisers with online videos.

“We mean to grow our business by launching new products and services based on the unique strengths of Times journalism and by investing in the rapid expansion of existing operations,” Thompson said in a statement.Times Co.’s stock fell 1.1 percent to $8.91 at 9:51 a.m. in New York. The shares had gained 5.5 percent this year through yesterday.

Advertising Market

The publisher continues to cope with an industrywide ad slump. While more businesses are shifting their marketing budgets online, digital ads sell at much lower rates than print advertising. That’s forced the company to rely more on subscription revenue.

The company’s so-called paywall, enacted in 2011, has encouraged Internet users to sign up for subscriptions. Paying readers climbed to 676,000 at the end of March, a 45 percent gain from a year earlier.

In a bid to streamline its operations, the company has refocused on its flagship media brand over the past two years. It has sold assets unrelated to the New York Times newspaper, including About.com, its regional newspapers and a stake in the Boston Red Sox baseball franchise.

The company is currently in the process of selling its Boston Globe unit and rebranding the International Herald Tribune as the International New York Times. After the sale of the Globe, the company will solely consist of the Times newspaper and related assets.

Net income fell 93 percent to $3.14 million, or 2 cents a share, from $42.1 million, or 28 cents, a year earlier. One-time gains in the first quarter of 2012, such as the sale of the company’s stake in Fenway Sports Group, bolstered profit in that period.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net