December 7, 2024

The New York Times Company Reports a Drop in Profit

Amid the ongoing changes in the industry, the company also announced plans to introduce lower-cost subscription models, part of a broader growth strategy detailed on Thursday.

The company is remaking itself in the face of the struggles in both print and online advertising. In the first quarter, net income was $3.1 million, or 2 cents a share, down from $42.1 million, or 28 cents a share, in the period a year earlier. Income from continuing operations declined to $3.1 million from $8.7 million a year earlier.

Total revenue from the quarter declined 2 percent to $465.9 million. Over all, the company’s advertising revenue declined 11.2 percent to $191.2 million from $215.5 million. Print advertising at the company’s newspapers, which include The New York Times, The Boston Globe and The International Herald Tribune, shrank 13.3 percent. Digital advertising revenue declined 4 percent.

In a continuing bright spot for the company, circulation revenue grew by 6.5 percent as The New York Times stepped up its digital subscription initiatives and raised prices for its print edition. The number of paid subscribers to the Web site, e-reader and other digital editions of The Times and The International Herald Tribune grew to 676,000, a jump of almost 49 percent from the same quarter the year before. Digital subscriptions to The Boston Globe and BostonGlobe.com rose more than 50 percent compared to the same time the year before, to 32,000 subscribers.

“Our first-quarter results reflect our continued strides in reshaping The New York Times Company,” Mark Thompson, the company’s president and chief executive officer, said in a statement. “We will be rolling out other strategic initiatives designed to further leverage The Times brand and newsroom to create new products and services for a wider range of customers, domestically and around the globe.”

At the same time the company released its quarterly earnings, it unveiled more details about a growth strategy that it will introduce in the fourth quarter of this year and early next year. Mr. Thompson said that the company planned to provide more varied subscription plans that would allow readers to pay less for access to “The Times’s most important and interesting stories” or to content in politics, arts or food. For avid readers of The New York Times, a premium subscription would include services like access to events at The Times. The company also plans to get more involved in brand extensions, like games and e-commerce, and growing its conference business to bring in more revenue.

“We want to deepen our relationship with our existing loyal customers, but we also want to use a wider family of New York Times products to reach new customers both here and around the world,” said Mr. Thompson. “The initiatives we are announcing today should be seen as a significant first step in our effort to put The New York Times Company on a path to sustainable growth.”

In recent years, the company has been trying to pare down its assets to focus exclusively on its flagship, The New York Times. In 2012, the company sold its regional newspapers to Halifax Media Holdings. It also sold its remaining stake in the Fenway Sports Group. In the fourth quarter, the company benefited from a $164.6 million gain for selling the company’s stake in Indeed.com, a jobs search engine, and the sale of About Group, the online resource company, for $300 million.

The sales are expected to continue. In February, the company announced plans to sell the New England Media Group, which includes The Globe, Boston.com, The Worcester Telegram Gazette and Globe Direct, a direct-mail marketing company. Days later, the company said it would rename The International Herald Tribune as The International New York Times and said it planned to introduce a redesigned Web site that catered to international audiences. The rebranding is expected to happen in the fourth quarter of this year.

Times executives said they remain hopeful that the economy will pick up later this year. The company expects total circulation revenues to grow by the mid-single digits in the second quarter. Total advertising revenue should improve as well, the company projected.

Article source: http://www.nytimes.com/2013/04/26/business/media/times-company-reports-a-drop-in-income.html?partner=rss&emc=rss

Common Sense: Why Bad Directors Aren’t Thrown Out

Imagine having to run on this track record:

¶ After ousting Mark Hurd as chief executive in 2010 amid messy allegations of sexual harassment, the board hired Léo Apotheker to replace him, even though Mr. Apotheker had been fired as chief executive of the European software giant SAP after just seven rocky months. Most of the board didn’t bother to meet Mr. Apotheker, let alone ask him any probing questions about his tenure at SAP, before rubber-stamping the choice of the board’s four-member search committee.

¶ In 2011, H.P.’s directors unanimously approved the acquisition of the British software maker Autonomy for $11.1 billion, a deal that was considered wildly overpriced even at the time. Less than a year later, H.P. wrote off $8.8 billion of that and claimed it had been defrauded. (Autonomy officials have denied the allegations, which are being investigated by authorities in both the United States and Britain.) Some consider Autonomy to be the worst corporate acquisition in business history. In fiscal year 2012, H.P. wrote off a total of $18 billion related to failed acquisitions and other missteps.

¶ With Mr. Apotheker at the helm and the board backing his strategic initiatives, H.P. announced that it was considering abandoning its giant personal computer business, then changed its mind. After Mr. Apotheker had been on the job a disastrous 11 months, the board demanded his resignation, and then paid him more than $13 million in termination benefits.

Shareholders might have forgiven what Fortune magazine called a “tawdry reality show” if the stock had performed well. But from the time Mr. Apotheker was hired in September 2010 until he left in 2011, the stock went from more than $45 a share to a little more than $22. Despite a recent rally, shares are still below $24, even as the Dow Jones and Standard Poor’s 500-stock indexes are hitting new highs.

“You really couldn’t have a stronger case for removing directors,” Michael Garland, executive director for corporate governance in the New York City comptroller’s office, told me this week. “There’s been a long series of boardroom failures that have harmed the reputation of the company and repeatedly destroyed shareholder value over an extended period of time.”

Yet all 11 H.P. directors were re-elected on March 20.

H.P. is hardly an isolated case. According to Patrick McGurn, special counsel for one of the major shareholder advisory services, Institutional Shareholder Services, shareholder efforts to remove directors in uncontested elections rarely succeed or come close, even in egregious circumstances. Last year, there were elections for 17,081 director nominees at United States corporations, according to the service. Only 61 of those nominees, or 0.36 percent, failed to get majority support. More than 86 percent of directors received 90 percent or more of the votes. Of the 61 directors who failed to get majority approval, only six actually stepped down or were asked to resign. Fifty-one are still in place, as of the most recent proxy filings.

“People are calling them zombie directors,” Mr. McGurn said. But that hasn’t stopped them from serving on boards for what is typically lucrative compensation for relatively little work. (H.P.’s directors received a mix of cash and stock payments ranging from $292,000 to $380,000 in 2012.

While the H.P. board has been largely reconstituted since the debacle of Mr. Apotheker’s appointment, all but one (Ralph Whitworth, a well-known value investor who joined in November 2011) approved the disastrous Autonomy deal. Raymond Lane, seen as an ally and supporter, at least initially, of Mr. Apotheker, was named chairman at the same time Mr. Apotheker took the helm. Working closely with Mr. Apotheker, Mr. Lane proposed five new directors. John Hammergren, chief executive of the McKesson Corporation, has been on the board for eight years, and G. Kennedy Thompson, chief executive of Wachovia before it was forced into a merger with Wells Fargo during the financial crisis, has been a board member for seven years. Mr. Hammergren was on the search committee that recommended Mr. Apotheker’s appointment.

In its proxy materials, H.P. didn’t address the company’s record under these directors, but nonetheless recommended that shareholders vote for the entire slate, citing the risk of “destabilizing” the company by changing directors in an “abrupt and disorderly manner.” As to Mr. Lane, Mr. Hammergren and Mr. Thompson, it repeatedly cited their “experience” in running global companies, but said nothing about their roles in selecting Mr. Apotheker or other directors, the Autonomy acquisition, other failed strategic initiatives or, indeed, anything at all about their tenures at H.P.

This article has been revised to reflect the following correction:

Correction: March 29, 2013

An earlier version of this article used outdated figures for the board’s compensation in 2012. The directors received a mix of cash and stock payments ranging from $292,000 to $380,000 in 2012, not $290,000 to $355,000, which was the payment range for 2011. The earlier version also misstated the compensation of Mr. Lane, the board chairman, for 2012. He received neither a cash award nor equities in 2012, though he received two large equity awards in 2011.
 

Article source: http://www.nytimes.com/2013/03/30/business/why-bad-directors-arent-thrown-out.html?partner=rss&emc=rss