11: The final straw in a terrible year
Audiences up, advertising down
by Priyanka Sharma-Sindhar
Though print media gained in circulation and TV news sucked in more
viewers, a larger audience could not offset losses caused by the decrease
in advertising revenue.
The New York Times Co. illustrates this scenario rather well: though
its daily circulation went up by 3.8 percent over the six-month period
ending March 31, it still posted a lower profit last month than it did
at the same time last year.
The company, which also publishes the Boston Globe, came out with a
net quarterly income of $54.5 million in April, down 11 percent from
$61.3 million a year earlier.
Within this past year, the economic slowdown forced all media companies
to reduce advertising budgets - September 11 just exacerbated the
Though a weakened advertising climate did hurt profits, higher expenditures
also played a part in the balance sheets of several companies. With
so much news coming in from Afghanistan and elsewhere, media outlets
were forced to allocate large sums for travel budgets. For many reporters,
this meant validation of their journalistic values. But many media outlets
are not even owned by news organizations: General Electric owns NBC;
ABC is one of the jewels in the Disney crown. Until recently, the general
impression was that these companies cared more about keeping a healthy
bottom line and high stock prices than about delivering serious news
to their audiences. But news or not, these media outlets took a major
hit in fall as well - with the earnings results to prove it.
Viacom, owner of the CBS and MTV television networks (and the second
biggest media company in the country), reported a $1.1 billion first-quarter
loss in April 2002, much bigger than the $7.3 million a year earlier.
The company attributed this loss to the fall in value of its Blockbuster
video rental business as well as lower sales. The news drove the stock
down to $49.81. The stock's 52 week-high, almost a year ago, was
In the six months after September 11, the Walt Disney Co.'s revenue
dropped by 4 percent to $13 billion, with troubles at ABC and feeble
advertising income contributing to the decline. But the mighty Mouse
still managed to post a net income of $259 million, or 13 cents a share,
comparing favorably to a loss of $567 million, or 26 cents a share a
year earlier (the second quarter of 2001 had included restructuring
and impairment charges amounting to $1.0 billion). Shares rose 48 cents
to $25 after news of the results came out, though they were still lower
than the 52-week high of $34.80.
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