NYTimes earnings to provide insights on Web fees

NEW YORK

The New York Times Co. will update investors on its efforts to overcome a devastating drop in newspaper advertising when it reports its second-quarter earnings before the stock market opens Thursday.

WHAT TO WATCH FOR: Things have been so bad for so long for newspapers that it will be considered a good sign if the company shows that its biggest moneymaker, advertising, is falling at a slower rate than it has been. In the first three months of the year, the Times Co.'s advertising revenue decreased by 4 percent, or nearly $14 million, from the same time last year. The company owns The New York Times and 17 other daily newspapers.

As has been the case for the past few years, the Times Co. has been trying to reel in more money from its website and other digital products to offset an unrelenting decline in its print advertising. That drop has plagued the company during the past four and half years.

The latest quarter ushered in one of the Times Co.'s most ambitious move yet. The Times' website now requires a paid subscription to read more than 20 stories per month. The new fees range from $15 to $35 every four weeks for readers who don't already subscribe to the Times, the third-largest U.S. newspaper.

Management is trying to tap a new stream of revenue without shrinking its online audience to the point that the Times' website becomes less appealing for Internet advertisers. The digital fees also could help boost the Times' circulation because print subscriptions include unlimited access to the newspaper's stories on its website and on mobile devices such as the iPad.

That's why analysts may be paying special attention to the Times Co.'s digital revenue and circulation revenue for the quarter.

The second-quarter earnings call also will give Times Co. executives an opportunity to provide more insight into how many readers are paying the online fees, which kicked in at the start of the reporting period. Management has previously said that more than 100,000 subscriptions, some at introductory discounts, had been sold during the first three weeks that the digital fees took effect.

On the cost-cutting side, the Times Co. said last week that it will repay a $250 million, high-interest loan from Carlos Slim, the world's wealthiest person. Repaying the loan next month, even though it wasn't due until 2015, will result in a pretax charge of about $46 million in the current quarter, but it will save the company more than $115 million in interest expenses during the next three years.

WHY IT MATTERS: If the Times Co. can't increase its revenue, it might have to cut even more staff. The company began this year with about 7,400 employees, down 27 percent, or 2,800 workers, from the end of 2007. Further reductions could hurt the quality of the Times Co.'s newspapers.

WHAT'S EXPECTED: On average, analysts polled by FactSet expect earnings of 10 cents per share on revenue of $581 million.

LAST YEAR'S QUARTER: The Times Co. earned 21 cents per share, on revenue of $590 million at the same time last year.