Unexpectedly Intriguing!
April 20, 2011
Escape from New York

The New York Times' newspaper business continued to decline in 2010, as the circulation of the United States' former newspaper of record further deteriorated beyond the grim milestone it passed in 2009.

According to documents filed with the U.S. Securities and Exchange Commission on 22 February 2011, the total circulation of the New York Times' Sunday edition dropped by 3.4% from 2009 to 2010 to 1,356,000, while the circulation of the New York Times' weekday edition plunged by 5.5% to 906,100. In 2009, the average total circulation of the weekday edition of the New York Times had dropped below the one million mark for the first time in decades.

Examining the circulation data the New York Times has published in its annual reports since 1993, we've discovered that the New York Times appears to be systematically abandoning its presence in the 31 counties in the New York City metropolitan area that make up its traditional home market in favor of expanding nationally and on the Internet.

The charts below show how the circulation for both the New York Times' Sunday and weekday editions has changed since last peaking in 1993, first within its New York City home market (left) and outside of its home market (right):

Estimated New York Times Circulation Within New York City Market, 1993-2010 Estimated New York Times Circulation Outside New York City Market, 1993-2010

The New York Times' strategy to expand nationally appears to have been initiated in 1997 or early 1998. By contrast, it appears that the decision to slowly wind down the newspaper's presence in the New York City market took place in 2001, as the newspaper's weekday circulation began a steady decline in the years following 2001 after holding level for four years in its home market. This outcome suggests a conscious decision on the part of the New York Times' management to either stop trying to sustain the newspaper's circulation levels in New York City or to systematically draw down its presence in its home market to devote its resources to other areas.

In either case, those resources appear to have been diverted to support the newspaper's national expansion, which accelerated in the years from 2001 to 2005. It appears however that the newspaper's national strategy then topped out in 2005, as its national circulation has fallen off since. The circulation of the newspapers' national weekday edition has continued to decline, but at a considerably less steep rate than its home market editions, while its Sunday edition circulation appears to have stabilized as of 2010.

The chart and table below presents the New York Times' weekday edition circulation data for the years since 1993, as taken or calculated from information provided by the newspaper's SEC filings:

New York Times Weekday Circulation, 1993-2010
New York Times Average Weekday Circulation, 1993 through 2009
Year Weekday Circulation (Mon-Fri) Weekday Percentage of Total Circulation in NYC Weekday Circulation Within NYC Market Weekday Circulation Outside NYC Market Percentage Decline of Total Weekday Circulation
1993 1,183,100 64 757,184 425,916 0.0
1994 1,148,800 64 735,232 413,568 -2.9
1995 1,124,300 62 697,066 427,234 -5.0
1996 1,111,800 62 689,316 422,484 -6.0
1997 1,090,900 62 676,358 414,542 -7.8
1998 1,088,100 61 663,741 424,359 -8.0
1999 1,109,700 60 665,820 443,880 -6.2
2000 1,122,400 59 662,216 460,184 -5.1
2001 1,143,700 58 663,346 480,354 -3.3
2002 1,131,400 55 622,270 509,130 -4.4
2003 1,132,000 53 599,960 532,040 -4.3
2004 1,124,700 50 562,350 562,350 -4.9
2005 1,135,800 49 556,542 579,258 -4.0
2006 1,103,600 48 529,728 573,872 -6.7
2007 1,066,600 47 501,302 565,298 -9.8
2008 1,033,800 46 475,548 558,252 -12.6
2009 959,200 44 422,048 537,152 -18.9
2010 906,100 43 389,623 516,477 -23.4

The chart and table below presents the New York Times' Sunday edition circulation data for the years since 1993, as taken or calculated from information provided by the newspaper's SEC filings:

New York Times Sunday Circulation, 1993-2010
New York Times Average Sunday Circulation, 1993 through 2010
Year Sunday Circulation Sunday Percentage of Total Circulation in NYC Sunday Circulation Within NYC Market Sunday Circulation Outside NYC Market Percentage Decline of Total Sunday Circulation
1993 1,783,900 63 1,123,857 660,043 0.0
1994 1,742,200 63 1,097,586 644,614 -2.3
1995 1,720,300 60 1,032,180 688,120 -3.6
1996 1,701,800 60 1,021,080 680,720 -4.6
1997 1,651,400 59 974,326 677,074 -7.4
1998 1,638,900 58 950,562 688,338 -8.1
1999 1,671,200 56 935,872 735,328 -6.3
2000 1,686,700 55 927,685 759,015 -5.4
2001 1,659,900 53 879,747 780,153 -7.0
2002 1,682,100 51 857,871 824,229 -5.7
2003 1,682,100 49 824,229 857,871 -5.7
2004 1,669,700 47 784,759 884,941 -6.4
2005 1,684,700 44 741,268 943,432 -5.6
2006 1,637,700 44 720,588 917,112 -8.2
2007 1,529,700 42 642,474 887,226 -14.2
2008 1,451,300 41 595,033 856,267 -18.6
2009 1,405,200 40 562,080 843,120 -21.2
2010 1,356,800 38 515,584 841,216 -23.9

Even with these circulation declines, the New York Times Company was able to post a net profit in 2010 of $107.7 million, even though the company's total revenue fell by 1.9%, from $2.44 billion in 2009 to $2.39 billion in 2010, as the company profited by reducing its costs and its payroll in both 2009 and 2010. At present, we would expect the erosion of the New York Times circulation to continue, given its management's new focus on promoting and generating revenue from its Internet operations.

We wonder at what circulation level will the New York Times' management dispense with the pretense of being a New York City newspaper.

Disclosure: Ironman does not hold any positions in the New York Times (NYSE: NYT).

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