April 22, 2009

The publisher of the New York Times and the internet portal Yahoo both revealed plunging profits yesterday as the worst slump for decades in advertising spend by recession-hit US companies hit old and new media alike.

New York Times: the company has sold most of its headquarters and leased it instead. Photograph: Ramin Talaie/Corbis

The New York Times Company, which has 18 papers including the Boston Globe and International Herald Tribune, slipped into an increasingly deep financial hole as it lost $74.5m (£51m) in the first quarter, compared with $335,000 a year ago.

The scale of the company's difficulties emerged a day after the New York Times won five Pulitzer prizes. The group's advertising revenue slumped 27%, although circulation income rose slightly through a rise in newspaper prices.

"Advertisers pulled back on print placements in all categories – national, retail and especially classified," said the NYT Company's chief executive, Janet Robinson.

Staff at the New York Times have been told to take a temporary 5% pay cut and the company has threatened to shut down the heavily loss-making Boston Globe unless unions agree to further cuts.

Robinson warned that the second quarter would also be difficult, with a year-on-year advertising decline of 20-30% forecast. "In time, however, we believe that the economy will grow and the advertising market will improve," Robinson added. "While we are looking forward to that day, we are not waiting for it."

The NYT Company recently obtained a $250m infusion from the Mexican billionaire Carlos Slim. It has put several investments up for sale, including a 17.75% stake in New England Sports Ventures, which owns the Boston Red Sox baseball team.

In Silicon Valley, the struggling online empire Yahoo suffered a 13% drop in revenue to $1.58bn, citing broad drops in spending by customers including troubled car manufacturers and cash-strapped banks.

"Yahoo is not immune to the ongoing economic downturn," said chief executive Carol Bartz, who was appointed at the beginning of the year with a mandate to transform Yahoo's fortunes.

In spite of the drop in sales, cost cuts helped Yahoo beat analysts' expectations with a first-quarter $118m – compared with $537m a year ago, when figures were boosted by a one-off gain of $401m from the sale of an investment in China's Alibaba.com.

Yahoo, which rebuffed a $44bn takeover offer from Microsoft last year, intends to trim its workforce of 13,500 by a further 5% as it adapts to an increasingly austere environment, shedding 600 to 700 jobs.

The company declined to comment on reports that it has resumed talks with Microsoft to co-operate on search advertising in an effort to compete with the market leader, Google. But Bartz made clear that she had no intention of abandoning Yahoo's speciality in internet searches: "I'm well versed enough in the search business at Yahoo to say it's absolutely critical to Yahoo."

Cash-strapped internet users are tending to click on advertisements less often on Yahoo's website, lowering the company's revenue. But Bartz suggested that once the financial crisis ends, there could be benefits as banks and troubled companies "re-introduce themselves" to consumers and re-brand to mend their reputations.

David Garrity, an analyst at Dinosaur Securities, said cuts to Yahoo's sprawling operation were bearing fruit: "We're actually seeing some benefit as far as the bottom line is concerned."

www.guardian.co.uk/media/2009/apr/21/new-york-times-company-ad-slump