UPDATE 3-NY Times profit falls, eyes Red Sox stake sale
* Q4 profit $0.26 vs $0.27 average analyst estimate
* Q4 revenue $772.1 mln beats average analyst estimate
* Hires Goldman Sachs to help sell Boston Red Sox stake
* Company will stop releasing monthly revenue results
* Shares rise 7.5 percent (Adds details on stopping revenue forecasts, pension changes)
By Robert MacMillan
NEW YORK, Jan 28 (Reuters) - The New York Times Co (NYT.N) reported a lower quarterly profit because of a decline in advertising revenue, and confirmed its desire to sell its stake in the Boston Red Sox baseball team.
The Times said ad sales will deteriorate further, and also revealed a $625 million shortfall in its pension obligations. But shares rose 7.5 percent on confirmation of the planned sale of the Red Sox stake and better-than-expected cost cutting.
"They did it both ways: higher-than-expected ad revenues and lower costs than estimated, and I guess the news that they're going to sell the Red Sox takes some pressure off concerns about their financial picture," said Benchmark Co analyst Ed Atorino.
Ad revenue has been falling at the Times and other U.S. papers as the financial crisis aggravates a more fundamental migration of readers and advertisers to the Internet.
Instead, Wall Street is watching for the Times to show how it can raise enough money to pay its debt and adapt its business to survive in the Internet age.
As of the end of the quarter, the Times had $57 million in cash and $1.1 billion in debt. It has a $400 million credit facility that expires in May.
Analysts estimate the Times's 17.75 percent interest in New England Sports Ventures, the Red Sox holding company, is worth about $200 million. It also is near a deal to sell its stake in its New York headquarters building for up to $225 million.
The newspaper publisher also is borrowing $250 million from Mexican telecommunications tycoon Carlos Slim.
The Times would use proceeds from these deals to pay down debt.
AD REVENUE DOWN
The Times' fourth-quarter net income fell 48 percent to $27.6 million, or 19 cents a share, compared with $53 million, or 37 cents a share, in the quarter a year earlier.
Excluding a writedown related to the International Herald Tribune, its European newspaper, the Times reported earnings of 26 cents a share. The average analyst estimate was 27 cents a share, according to Reuters Estimates.
Revenue fell 10.8 percent to $772.1 million, beating the average Wall Street forecast of $761.1 million.
The Times said it would stop releasing monthly revenue results as ad sales erode, something more newspaper publishers are doing as good news is in increasingly short supply.
In the fourth quarter, advertising revenue fell 17.6 percent. Ad revenue at the news media group -- which includes its namesake newspaper, The Boston Globe and other local papers throughout the United States -- fell 18.4 percent.
Online revenue, including About and its newspaper websites, fell 2.9 percent to $92.5 million.
The Times's operating costs fell 8.5 percent to $689.6 million. Newsprint expenses rose 11 percent, but the company also cut its consumption.
The publisher said that it likely will have to begin paying money in 2010 to fund its pension program. The company said significant equity market declines in 2008 have left it with an underfunded pension obligation of $625 million. It would owe the money over seven years.
Pension funding at many companies was at surplus levels before stock prices collapsed last year. Now, companies could face a combined pension deficit of $409 billion, along with higher pension expenses, according to a recent report from the Mercer consulting firm, a division of Marsh & McLennan Cos.
The Times is the first big U.S. newspaper to report its financial results this week. Others, including USA Today publisher Gannett Co Inc (GCI.N) and Media General Inc (MEG.N), likely will report ad revenue declines as well.
Shares rose 42 cents to $6.02 on the New York Stock Exchange. (Reporting by Robert MacMillan; Editing by Derek Caney)
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