2006 ANNUAL REPORT New Products
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The New York Times Company Over the past year, we have been adapting and transforming Strategy The New York Times Company to improve its financial performance and position it for success well into the future. Our strategy is centered upon five critical areas that address the changes in our markets: * We are enhancing the positions of our strong brands through the introduction of innovative new products and services across media platforms; * We are aggressively pursuing leadership positions in key content verticals, both in print and online; * We are building a vibrant, long-term innovation capability that helps us anticipate consumer preferences and create ways of satisfying them; * We are increasing our operational efficiency and reducing both fixed and variable costs; and * We are continuing to rebalance our portfolio of properties and to exercise financial discipline as we allocate capital for the benefit of our shareholders. And we are proud to say that we are successfully executing on all of these fronts. TO OUR FELLOW SHAREHOLDERS: The New York Times Company, like many other companies in our industry, is in the midst of an extra- improving ordinary transformation unlike any we have seen in our lifetimes. opera- Well-respected, long-standing organizations successfully endure by tional closely adhering to what has always made them great while making efficiency the changes necessary to compete in a rapidly evolving world. Our and colleagues understand what it takes to succeed in this era, and are working reducing hard to create exceptional journalism while mastering new technologies. costs has We are proud of what we have operations and management arthur janet l. been a accomplished, but we also recog- processes, and both acquired and sulzberger, jr. robinson nize much more needs to be done to sold businesses and investments Chairman President and CEO priority improve our financial performance. based on their strategic fit. for us. As we are well aware, our chal- Our journalistic colleagues lenges are considerable as reflected continue to demonstrate their in last year’s results. For 2006, we unwavering commitment to reported a net loss of $543 million reporting, editing and photo- or $3.76 per share (on a diluted graphy of the highest quality. Over basis) as a result of a non-cash the past year these efforts were rec- COST SAVINGS charge of $814 million ($736 million ognized with numerous awards, As a result or $5.09 per share) for the write- including three Pulitzer Prizes, a of steps we have down of assets at our New England Polk and an Alfred I. duPont- taken over the Media Group (NEMG). In 2005, Columbia University Award. past two years, diluted earnings per share (EPS) we have reduced were $1.74, which included a gain ADHERING TO OUR STRATEGY costs and realized on the sale of real estate of $0.46 per Media leadership in the first ENHANCING OUR STRONG productivity share. Excluding the effects of the decade of our new century has BRANDS gains of NEMG charge and the real estate required that we embrace a disci- The Company’s powerful and $120 million. This gains, our EPS were $1.33 for 2006 plined and expansive planning trusted print brands remain a work continues. compared with $1.28 for 2005. process, and we are doing exactly strategic cornerstone. Traditional As a result of the significant that with a five-part strategy: print newspaper audiences, on a decline in current and projected – Enhancing the positions of our daily basis, are still significantly 1. operating results and cash flows strong brands through the intro- larger than their Web counter- Consolidating our of the NEMG due to, among duction of innovative new parts, and print commands high printing plants other factors, advertiser consoli- products and services across levels of reader engagement. dation and increased competition media platforms; Consequently, we have pro- 2. with online media, the accounting – Aggressively pursuing leader- duced a range of exciting new Continuing our rules required the Company to ship positions in key content magazines, including: process engi- write down intangible assets of the verticals, both in print and online; – PLAY, The New York Times neering initiatives Group. Despite this charge, we – Building a vibrant long-term Sports Magazine; continue to view these properties innovation capability that helps – KEY, The Times’s new luxury 3. as important assets, and we us anticipate consumer prefer- real estate publication; and Reconfiguring remain acutely focused on ences and create ways of – Design New England, the our workforce improving their performance satisfying them; Globe’s magazine devoted to and value. – Increasing our operational effi- home and garden. 4. Our optimism is rooted in the ciency and reducing both fixed Other new product introductions Decreasing our fact that our Company is enhancing and variable costs; and include new zoned and special newsprint its competitive position by making – Continuing to rebalance our sections across the Company; new consumption more changes than at any time in portfolio of properties and to ad placements, including section its 156-year history. Over the past exercise financial discipline as fronts at nearly all of our newspa- year, we have introduced many we allocate capital for the bene- pers; and new weekly newspapers new products, re-engineered our fit of our shareholders. at our Regional Media Group. THE NEW YORK TIMES COMPANY P.1 Just as we have a leadership posi- recruitment company, to sell anticipate consumer preferences The New York tion in print so too do we online. help-wanted ads, both on its sites and devise ways of satisfying Times received The New York Times Company had and our newspaper Web sites. them. Its scope includes: three Pulitzer the ninth largest presence on the Two years ago, digital revenues – New products and platforms, Prizes in 2006: Web, with 44.2 million unique visi- made up just 4% of our Company’s including mobile and video; James Risen and tors in the United States alone in revenues. In 2006, over 8%, or $274 – New tools and services, such Eric Lichtblau December 2006. We expect this million, came from our digital oper- as analytics that can be used for national reporting audience to grow as we extend our ations, which include About.com, to better serve advertisers’ for their coverage of the U.S. digital offerings. We are aggres- NYTimes.com, Boston.com, iht.com increasing preference to target government’s sively developing new online and the sites associated with our specific audiences; and secret eavesdrop- products and building out our regional newspapers. For 2006, – Strategic partnerships and ping program. online verticals. Our approach is to online advertising revenues grew investments. Joseph Kahn and attract more users, deepen their 41%. In 2007, we expect our total Our R&D group, in its first full Jim Yardley for inter- engagement through relevant con- digital revenues to grow 30% to year of operation, worked closely national reporting for their examination of tent and increasingly monetize the approximately $350 million mainly with our business groups to create China’s legal system. traffic from those users: because of organic growth. new mobile products at many of – We redesigned NYTimes.com, our properties and to launch Nicholas Kristof for commentary bring- the No.1 newspaper Web site. We DEVELOPING OUR CONTENT the local search product at ing the genocide in streamlined navigation, added VERTICALS Boston.com. It was instrumental Darfur to the more video and introduced new Our second strategic focus is the in the launch of the Times Reader, world’s attention. features such as “Most Blogged,” aggressive development of key a new product that takes advan- In addition, Times “Most Searched” and My Times, content verticals: tage of Microsoft’s Vista operating journalist Lydia which enables users to capture – We expanded our real estate ver- system to combine the format of Polgreen won a their favorite feeds from around tical with the introduction of the newspaper with the function- George Polk Award for her coverage the Web in one place. “Home Finance Center” and ality of the Web. of Darfur. – We acquired Baseline “Great Homes” on NYTimes.com StudioSystems, the primary and the debut of KEY Magazine. IMPROVING OPERATIONAL business-to-business supplier – On NYTimes.com’s entertain- EFFICIENCY & REDUCING COSTS of proprietary entertainment ment vertical we launched Our fourth strategic focus is information to the film and tele- Carpetbagger, one of our first operational efficiency and cost vision industries. It also has a blogs with complementary video. reductions. We are continuing to growing syndication/licensing – We continued to build About.com make significant progress in business that provides non- with the acquisition of Calorie- reducing costs: over the past two professional entertainment Count.com, a site that offers years, we have lowered costs and information to leading con- weight loss tools and nutritional realized productivity gains of sumer-oriented Web sites. information. About.com has approximately $120 million. Baseline is expected to provide consistently been the third We have been working to reduce NYTimes.com’s popular enter- largest commercial health chan- our fixed cost base across the tainment vertical with enhanced nel and the third largest food Company, and have announced Boston.com Mobile content offerings and improved channel on the Web. plans to close our Edison, N.J., print- advertising opportunities. Operational integration is a critical ing plant and consolidate printing INTERNET – Boston.com launched a local ingredient in our efforts to intro- of The Times’s metro edition into REVENUES search product, which includes duce new products, to develop our our newer College Point, N.Y., (% of total revenues) content that is focused on areas key verticals and to generate facility.