New York Times (NYSE:NYT) reported an improved quarter yesterday, but its struggles continue to a certain degree, partially reminiscent of the previous quarter. Advertising revenues -- an important aspect of the health of newspapers -- remain a stumbling block for the newspaper bellwether, and it's a sting compared with the fortunes of another rival this week.
New York Times reported profits up 4% to $75.7 million, or $0.50 per share, and sales up 3% to $823.9 million. Though advertising revenues improved, in its press announcement, the company warned, "The pace of advertising revenue growth slowed throughout the period, and this trend has continued in July."
Its newspaper group's ad revenues eked out a mere 1.7% increase. Its strongest suit by far was its New York Times Digital Internet properties, which enjoyed a 26.7% increase in ad sales, while its broadcast group grew 10.7% in the quarter.
The company said that in the second quarter, it participated in cost-containment measures, and it will continue to use that strategy the rest of the year.
New York Times' ad sales increased 3.9%, but its circulation revenues remained flat compared with the same time last year. Such results mark a departure from those of Gannett (NYSE:GCI). Fool contributor Nathan Slaughter gave Gannett's quarter a "9.5," observing such upbeat signals as a whopping 15.5% increase in its ad revenues.
Given Gannett's upbeat quarter, it lends to more disappointment when looking at New York Times, which many would have hoped would follow suit. Not to mention, some areas of advertising are downright sizzling -- look at Yahoo!'s (NASDAQ:YHOO) recent fortunes, built in part on red-hot online ad revenues.
Several days ago, I observed that New York Times is attempting an interesting -- but perhaps, ultimately financially irrelevant -- summertime bid for more readers and advertising by serializing several novels. In response to the strength in the Times' Internet properties, perhaps its recent content agreement with CNET (NASDAQ:CNET), one of my personal favorite sources, will help jazz up the technology sections for both TheNew York Times' and The Boston Globe's online editions.
Investors will want to watch whether the company will continue to lag the industry or jump-start ad revenue growth in the months to come. For now, a forward price-to-earnings ratio of 21 sounds like a high price to pay for shares of the company, considering that with many signs pointing to ad recovery, New York Times seems a bit behind the times.
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Alyce Lomax does not own shares of any of the companies mentioned.
