New York Times. (Duncan Alfreds, Fin24)
New York - The New York Times said it would cut jobs, including about 7.5% of its newsroom positions, as advertising revenue dwindles and new digital products fail to live up to expectations.
The publisher plans to eliminate 100 newsroom jobs and a smaller number of positions elsewhere, offering buyouts and resorting to layoffs if enough employees do not leave voluntarily, according to a letter to staff.
The New York Times, like many of its newspaper and magazine counterparts, has been under relentless pressure to replace an evaporating pool of print advertising dollars - once the lifeblood of newspapers - with digital ads and money from subscriptions.
But some new products aimed at drumming up additional revenue are not "achieving the business success we expected", executive editor Dean Baquet said in the letter.
NYT Opinion, a mobile app dedicated to opinion content, will be shut down because it is not attracting enough subscribers, Baquet said. He added that he will "seriously reconsider some of what we do from the number of sections we produce to the amount we spend on freelance content".
The paper's first African American editor, Baquet took charge of the newsroom in May after his predecessor, Jill Abramson, was abruptly ousted.
The news was not entirely gloomy.
The company anticipates that digital revenue will increase 16% in the third quarter, its best improvement since 2010. That news helped send the company's shares up 10.2% in afternoon trading.
A sense of stability in the digital businesses will boost the stock, Jefferies LLC analysts wrote in a note, but they warned against relying on just one quarter of improvement.
The digital uptick will not be enough to offset the drain of print dollars since overall ad revenue is expected to be "flat" for the quarter.
Adding to those burdens is the slowdown in subscription revenue that has accounted for a growing share of total revenue. With the addition of 40 000 digital subscribers, the company expects "modest growth" in total circulation revenue.
Operating costs are expected to rise in the low to mid-single digits, excluding severance, resulting in lower profits for the quarter and the year.
"It's a reminder that the combination of the continuing secular pressure on our high margin print advertising revenue and the need for investment in the future is impacting our profitability and for this reason, we are now focused on cutting our costs," New York Times chair Arthur Sulzberger jnr and CEO Mark Thompson wrote in a memo to staff.
The Times has cut jobs several times over the past six years - 100 in 2008, another 100 in 2009, and 30 more at the beginning of 2013, according to an article on its website on Wednesday.
At the end of 2013, the newsroom had 1 330 staffers.