Earnings Preview: The New York Times to report 2Q

NEW YORK - The New York Times Co. is set to report earnings for the second quarter on Thursday ahead of the opening bell. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The New York Times may be the company's vaunted flagship, but the newspaper's smaller cousin, The Boston Globe, has drawn the most attention recently. The Globe's largest union finally voted to accept wage and benefit concessions Monday after months of back-and-forth.

The Boston Newspaper Guild, representing 700 editorial, advertising and business employees, accepted a pay reduction of nearly 6 percent, plus unpaid furloughs, a freeze on pensions, lower health-care benefits and the loss of lifetime job guarantees. Those steps should bring costs down by $10 million. The deal comes after union members rejected a similar contract and the Times Co. imposed a 23 percent wage cut.

The negotiations were critical for the Times Co., which is expecting $85 million in losses at the Globe this year. The $10 million in cuts approved Monday brings total concessions from Globe unions to $20 million. The cuts should make it easier for the Times Co. to find a potential buyer for the newspaper.

But that will not solve all the company's problems.

The Times Co.'s flagship newspaper faces the same staggering declines in ad revenue that have stung the rest of the newspaper industry. Readers are choosing free news on the Internet and advertisers have followed. But Web ads remain stubbornly cheap, amounting to only a small fraction of most newspapers' revenue.

To raise cash, the company has been selling assets. It announced last week that it is getting out of the radio business, selling classical music station WQXR-FM for $45 million. It is also exploring the sale of its 17.5 percent stake in the Boston Red Sox.

Most employees of the flagship newspaper have had their pay cut by 5 percent through the end of the year to trim costs.

Meanwhile, the company is hoping loyal New York Times readers are willing to pay more for the printed edition, hiking the newsstand price to $2 from $1.50 Monday through Saturday and $5 from $4 on Sundays beginning June 1.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters, who typically exclude special items from their estimates, expect the Times Co. to report a loss of 4 cents per share on sales of $603 million. That compares with a year-earlier profit of 26 cents per share and sales of $741.9 million.

ANALYST TAKE: Ken Doctor, a media analyst with Outsell Inc., said he will be looking to see how the Times Co. has managed its costs.

Two other big publishers, Gannett Co. and McClatchy Co., managed to salvage respectable second-quarter profits with deep cutbacks. But the Times Co. has not resorted to the widespread newsroom layoffs those companies have.

"Clearly they are trying to maintain that flagship New York Times," Doctor said.

WHAT'S AHEAD: Most observers expect the Times Co. to decide soon on the future of nytimes.com. Like other newspapers, the Times has been considering some kind of pay wall to wring more revenue out of the online edition.

The trick is getting enough money from readers who are willing to pay without hurting traffic so much that advertising revenue dries up.

STOCK PERFORMANCE: The company's stock rose 99 cents, or 22 percent, to $5.51 in the second quarter.

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