(Updates shares in sixth paragraph.)
Oct. 20 (Bloomberg) -- New York Times Co. reported a third- quarter profit that topped analysts’ estimates as the publisher of 18 daily newspapers cut costs and began to make strides in its transition to a Web-based subscription model.
Earnings per share, excluding some items, fell to 5 cents, the New York-based company said in a statement today. That compared with the average estimate of 3 cents from analysts in a Bloomberg survey. Digital subscriptions to the flagship New York Times rose about 15 percent, pushing companywide circulation revenue up 3.4 percent as sales of print copies declined.
Times Co. introduced a paid online subscription model for the New York Times in March and started a similar program at the Boston Globe this week. Chief Executive Officer Janet Robinson told analysts today that “significant progress” is being made with the digital products, and also that the fourth quarter is showing early signs of improvement for advertising. Times Co. shares had tumbled to a two-year low in September, when Robinson said the economy had put advertising “under pressure.”
“They’re recovering a portion of that now,” Douglas Arthur, an analyst at Evercore Partners Inc. in New York, said in an interview. “We’re through the bad news now. The company is saying the fourth quarter is off to a good start, and the paywall numbers are not awesome, but pretty good.”
Times Co. said digital subscriptions rose to 324,000 at the end of the quarter, which includes sales on NYTimes.com and those who sign up on devices through third-party partners such as Amazon.com Inc. At the end of the second quarter, the company had 224,000 direct digital subscribers and 57,000 on e-readers.
Times Co. rose 9.2 percent to $7.12 in New York trading. The stock has declined 27 percent this year.
The New York Times Web-based subscription model requires readers who view more than 20 articles a month to pay for access to the site’s content. The introduction hasn’t had an adverse effect on total page views, Robinson told analysts on a conference call today. NYTimes.com had 33 million U.S. page views at the end of August and 47 million worldwide, she said.
“The page view declines were much less than expected,” Robinson said.
The company is starting digital plans aimed at corporations, educational institutions and people who want to share subscriptions, she said.
For the third quarter, Times Co. reported net income of $15.7 million, or 10 cents a share, compared with a net loss of $4.3 million, or 3 cents, a year earlier. Revenue fell 3.1 percent to $537.2 million. Analysts had forecast $540.5 million.
Total advertising revenue slid 8.8 percent, with print dropping 10 percent, and digital falling 4.5 percent, the company said.
“The drop in ad revenues, given the shift over to digital, is understandable,” Edward Atorino, an analyst at New York- based Benchmark Co., said in an interview. “But the growth in paid digital subscribers wasn’t as strong as I expected.”
--Editors: Romaine Bostick, John Lear
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