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From Macro to Micro: The New York Times

Yesterday we took the long view on Internet advertising; today's let's zoom in on one company: The New York Times. The way trend lines are crossing in the media business from print to online these days are illustrated by just one month's figures for this one publishing company.

July 2008:

Total company revenues decreased 10.1 percent compared with July last year; overall advertising revenue decreased 16.2 percent and circulation revenue decreased slightly at 0.5 percent.

The Times breaks its operations into groups -- the "New York Group" saw a 15.3 percent drop in advertising revenue; the "New England Group" a 24.5 percent drop; the "Regional Group" -18.1 percent.

Down. Down. Down, all at unsustainable levels.

However, next look at the Internet advertising picture. The "About Group," which mainly consists of the acquisition About.com, rose 14.6 percent. What the Times calls its "Internet Businesses" grew their advertising revenue by 5.5 percent in July.

At this point, online businesses account for one-eighth of the Times' overall revenues, up from less than one-ninth a year ago. The company's online audience grew 38 percent over the past year to reach 50.2 million visits in July.

Clearly, there is plenty of upside for this media company, but it is located squarely in its online activities. Anytime 7/8ths of your company's operating revenues are falling by more than 16 percent and the other eighth is generating positive growth of from 5.5 to 14.6 percent, deciding where to place your next investment dollar is not exactly rocket science.

Which is exactly what dissident shareholders have been trying to tell the Times' management for the past year. It's all in the numbers...