O – The New York Times Co reported worse-than-expected results on Thursday as advertisers cut spending on both print and digital outlets, sending shares down 16 percent.
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Meanwhile, on a conference call with analysts about the results, Chairman Arthur Sulzberger Jr. said he supported Mark Thompson, the incoming president and chief executive, and addressed the scandal roiling Britain's BBC, where Thompson served in the top job until September.
The British Broadcasting Corp has been damaged by the accusations of sexual abuse of young girls and women by a former TV host, the late Jimmy Savile. The scandal also involves a BBC news program on Savile that was shelved.
Sulzberger said Thompson "provided a detailed account" of his involvement with the program and is starting as planned on Nov. 12.
"I am satisfied that played no role in the cancellation of that segment," Sulzberger said. "Our opinion ... remains that he abides by high ethical standards and is the ideal person to lead our company."
The New York Times public editor has questioned whether Thompson is fit to serve as CEO. He has not been implicated in the controversy.
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Earlier, the company reported that revenue was up almost 1 percent to $449 million. Still, the result missed the analysts' consensus estimate of $479.23 million, according to Thomson Reuters I/B/E/S.
Adjusting for severance costs and other special items, the company reported a quarterly loss of 1 cent per share, well below expectations of earnings of 8 cents per share.
The slight uptick in revenue was due to a 7.4 percent rise in circulation revenue helped by the company's digital subscription plans.
But as the company tries to rely more on circulation for its revenue, advertising sales are in a persistent slump.
"It wasn't a nice quarter on revenue," said Edward Atorino, an analyst with Benchmark Co. "The advertising numbers look terrible. I thought they might do a little better. They are caught up in the downslide like everybody else."
The stock dropped 16 percent to $8.93 in afternoon trade.
DIGITAL REVENUE DROPS
Print ad revenue, coming primarily from its namesake newspaper and the Boston Globe, dropped almost 11 percent from a year earlier - an even steeper decline than the previous quarter.
Digital ad revenue, which has been a bright spot for the company, fell 2.2 percent.
The company attributed the declines to the "challenging economic environment, ongoing secular trends and an increasingly complex and fragmented digital advertising marketplace."
Advertising revenue at The New York Times depends largely on national accounts from sectors like telecommunications and technology that use the newspaper to reach people across the United States.
"I think that really reflects that national newspaper revenue is much more exposed to secular pressures than the local retailer," said Leo Culp, an analyst with Citi.
The trend of declining national ad revenue was apparent at Gannett Co, the largest newspaper chain in the United States, and its national newspaper USA Today, a competitor to the Times.
While Gannett turned in better-than-expected results last week, national advertising, primarily through USA Today, was down almost 8 percent at its U.S. newspapers.
The clampdown by advertisers is expected at the New York Times into the next quarter - typically the strongest one for the newspaper industry as it's buoyed by holiday spending.
The company said it expects the same advertising trends in the fourth quarter as the third period.
Paid subscribers to the digital editions of The New York Times and sister paper International Herald Tribune increased 11 percent and totaled 566,000.
Once a sprawling media conglomerate, The New York Times has tightened its focus and shed assets. Over the past year, it sold a group of newspapers in the U.S. Southeast and in California, digital property About Group and stakes in sports ventures including the Boston Red Sox and Liverpool Soccer Club.
It is now down to a handful of newspapers, including its flagship, the Boston Globe, the Worcester Telegram & Gazette and the International Herald Tribune.