2009 Annual Report TO OUR In 2009 we reported operating profit of $74 million com- SHAREHOLDERs pared with an operating loss of $41 million in 2008. Operat- ing profit, excluding depreciation, amortization, severance 2010 is here, and The New York Times Company is and special items, was $320 million in 2009 compared with continuing to make the transition from an enterprise $382 million in 2008, as we dealt with the economic reces- that operated primarily in print to one that is increas- sion and the very difficult advertising environment.* ingly digital and multiplatform in delivery and global in reach. The New York Times, New England and Regional Repositioning for Growth Media Groups and the About Group all made significant Our 2009 results reflect the positive impact of the aggressive contributions to this long-term effort to achieve genuine actions we have taken to reposition our businesses for the transformation and improve our performance. This process evolving media landscape. These actions included: has required rethinking, reinventing, risk-taking, sacrifice, n Securing strong performance on costs, focusing relentlessly creativity and hard decisions. While it is never easy for an on increasing productivity and efficiency as we restructured organization to redefine itself, it is much more difficult to our cost base; achieve this goal in the midst of such unusual and stark n Diversifying our revenue streams, including increasing economic circumstances. revenues from our digital sources, introducing an array of new products and innovations, and extending our reach to In 2009 we contended with an unsettled national economy new audiences; that disrupted virtually every sector, adversely affecting n Leveraging our brand strength to grow profitable circula- consumer demand and severely limiting future visibility. tion revenue, where we believe — and have been proven Yet we kept faith in our journalistic mission, fought aggres- right — that continued strong demand for our high-quality sively for every dollar, invested in new products and tech- news and information is a testament to the value they nology, improved our financial flexibility, streamlined costs, provide; and and won numerous awards in journalism, technology and n Managing and rebalancing our asset portfolio to strengthen diversity. We will need to build upon these accomplishments our core operations and enhance our digital presence. in the months ahead as the environment we operate in continues to evolve. These are important initiatives that have yielded positive results. A recent example of our repositioning effort was We express gratitude to our colleagues across the world our announcement that we will be implementing a paid for all they achieved in a most challenging year. It was model for NYTimes.com at the beginning of 2011. We chose with great sadness that we parted ways with many valued a metered approach that will offer users free access to a colleagues and friends in 2009; their contributions will set number of articles per month and then begin charging not soon be forgotten. Future generations will look back users once they exceed that number. Fundamentally, we are at 2009 with deep respect for what courageous and taking this important step to support The New York Times’s innovative Times Company men and women were able esteemed journalism. to accomplish. Differentiation 2009 Results As we enter this new era, we have repeatedly differentiated To begin, we will review The New York Times Company’s The New York Times Company and its branded offerings 2009 results. Rooted in innovation, strategic discipline from its competition in many important ways, including: and long-term thinking, we have implemented a series of n Award-winning journalism covering the global news cycle journalistic, financial and operational actions that position us around the clock. for future growth while also benefiting us in the near-term. n Trusted brands and demographically desirable, highly loyal audiences greatly prized by advertisers. Total revenues in 2009 were $2.4 billion, a decrease of n A comprehensive, multiplatform strategy that effectively 17% from $2.9 billion in 2008. In the face of the widespread reaches our audiences through print, online, mobile, social advertising downturn, our revenues from advertising, media platforms and reader application products. our primary revenue source, fell 25%. This was offset in n A large national advertising presence, with The New York part by a 3% increase in circulation revenues, which are Times far less dependent on classified and retail advertis- derived from home-delivery and newsstand sales. ing than other daily papers; The Boston Globe also has a higher percentage of national advertising than the indus- We continued our strong expense discipline last year, build- try average. ing on our multiyear progress to restructure our cost base, n Solid NYTimes.com performance in premium display as evidenced in the 17% decline in operating costs in 2009. advertising that enables it to compete more effectively *A reconciliation of operating profit before depreciation, amortization, severance and special items to operating profit under accounting principles generally accepted in the United States is included in our fourth-quarter and full-year 2009 earnings release, available at www.nytco.com. 2009 ANNUAL REPORT on the Web while having less exposure to the challenged people now read our content in more places than at any online classified categories. other point in Times history. n Smart cost reductions that preserve our journalism. n The search advertising market expertise of About.com, Our digital experience has proven that product and which provides a substantial competitive advantage organizational innovation can yield sizable advertising across the Company’s digital offerings. results. We have used our new ad units and formats, our integrated print and online sales structure, our optimized sales Award-Winning Journalism channels strategy, and our enhanced selling and management The core strength of our brands is grounded in the quality tools to better serve the ever-changing needs of our of our reporting and content. Throughout the Company, our customers. This has enabled The Times to be the market newspapers and Web sites continued to provide our readers leader for national print newspapers, to compete aggressively with award-winning journalism. Specifically, The Times won for online market share and to develop a reputation for five Pulitzer Prizes in 2009 in the categories of breaking news, innovative thinking. investigative reporting, international reporting, art criticism and feature photography. In total, revenues from the Company’s Internet businesses accounted for 14% of revenues in 2009 versus 12% in 2008. Circulation Revenue Growth As we continue our transition from a company that operated Our respected brands have garnered continued growth in primarily in print to one that is increasingly digital in focus print circulation revenues, which rose 3% in 2009 — mainly and multiplatform in delivery, online revenues are becoming because of higher subscription and newsstand prices a more important part of our mix. at The Times and the Globe — despite lower circulation volume. Over the past few years, our newspapers have been Enhancing Our Business Model focusing on a strategy of reducing less profitable circulation As we mentioned earlier, our new metered model, and raising circulation prices. which will provide an additional online revenue stream, will be an important part of our future. The metered The positive revenue results from these price increases approach has a number of virtues: Its flexibility allows confirm that our journalism is highly valued by our readers. us to keep a proper ratio between free content and paid This speaks to our continuing effort to build and enhance the content, preserve our successful advertising business and quality circulation that is so coveted by our advertisers. remain a vibrant part of the search-driven Web. These are all essential from a financial perspective. And this is a very loyal audience. The reader retention rates for The Times and the Globe are enviable: For subscribers of We recognize that our success will be judged by how well two years or more, the rate is roughly 90% for both papers. we execute this effort, and that is why we are waiting until In fact, The Times has more than 820,000 readers who have been 2011. We are determined to make subscribing as smooth subscribing to the print edition for two years or more, up as possible, and we are working toward integrating our from 650,000 in 2000. customer management systems so we can ensure a friction- less user interface for home-delivery subscribers, who will Extending Our Reach continue to enjoy free access. It will take some time to build, As newspapers in major metro areas face increasingly difficult test and deploy the best systems, and it will take time to get environments and cut deeply into their editorial resources, this right. But we will. The Times has expanded its marketing efforts in many of these places. We have also added local content to The Times’s Moving with appropriate care will also allow us to fully coverage — in both print and online — on Fridays and exploit a future that is right at our doorstep. As we look Sundays in the San Francisco and Chicago areas. These new ahead, we see a broad range of new devices coming to pages, as well as new city blogs, complement the national market that will provide mobility, connectivity and rich and global coverage that has made The Times a popular news media experiences, and our pricing plans and policies must provider. Our intent is to roll out our expanded reports in reflect this vision. several other key markets across the country by collaborating with local journalists and news organizations. Advertising Innovation As with print, we are focused on digital ad product Multiplatform Strategy innovation to maintain our position as a leading site for Extending our reach is an integral component of our premium branding on the Web.