The New York Times Company (the "Company") was incorporated on August 26, 1896, under the laws of the State of New York. The Company is a diversified media company that currently includes newspapers, Internet businesses, television and radio stations, investments in paper mills and other investments. Financial information about our segments can be found in "Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations" and in Note 18 of the Notes to the Consolidated Financial Statements. The Company and its consolidated subsidiaries are referred to collectively in this Annual Report on Form 10-K as "we," "our" and "us."
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, and the Proxy Statement for our Annual Meeting of Stockholders are made available, free of charge, on our Web site http:/ /www.nytco.com , as soon as reasonably practicable after such reports have been filed with or furnished to the SEC.
In 2006, we classified our businesses based on our operating strategies into two segments, the News Media Group and About.com.
The News Media Group consists of the following:
– The New York Times Media Group, which includes The New York Times ("The Times"), NYTimes.com, the International Herald Tribune (the "IHT"), IHT.com, a newspaper distributor in the New York City metropolitan area, news, photo and graphics services, news and features syndication and our two New York City radio stations, WQXR-FM and WQEW-AM (expected to be sold in the first quarter of 2007);
– the New England Media Group, which includes The Boston Globe (the "Globe"), Boston.com, the Worcester Telegram & Gazette, in Worcester, Mass. (the "T&G"), and the T&G's Web site, Telegram.com; and
– the Regional Media Group, which includes 14 daily newspapers in Alabama, California, Florida, Louisiana, North Carolina and South Carolina and related print and digital businesses.
About.com, which we acquired on March 18, 2005, is one of the Web's most comprehensive consumer solutions sources, and provides users with information and advice on thousands of topics.
On January 3, 2007, we entered into an agreement to sell our Broadcast Media Group, consisting of nine network-affiliated television stations, their related Web sites and the digital operating center, to Oak Hill Capital Partners, for $575 million. The transaction is subject to regulatory approvals and is expected to close in the first half of 2007. The Broadcast Media Group previously represented a separate reportable segment of the Company. In accordance with Statement of Financial Accounting Standards ("FAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Broadcast Media Group's results of operations are presented as discontinued operations and certain assets and liabilities are classified as held for sale for all periods presented (see Note 5 of the Notes to the Consolidated Financial Statements). For purposes of comparability, certain prior year information has been reclassified to conform with the 2006 presentation.
Part I – THE NEW YORK TIMES COMPANY P.1
Additionally, we own equity interests in a Canadian newsprint company and a supercalendered paper manufacturing partnership in Maine; New England Sports Ventures, LLC ("NESV"), which owns the Boston Red Sox, Fenway Park and adjacent real estate, approximately 80% of New England Sports Network (the regional cable sports network that televises the Red Sox games) and 50% of Roush Fenway Racing, a leading NASCAR team; and Metro Boston LLC ("Metro Boston"), which publishes a free daily newspaper catering to young professionals and students in the Boston metropolitan area.
In October 2006, we sold our 50% ownership interest in Discovery Times Channel, a digital cable channel, for $100 million.
Revenue from individual customers and revenues, operating profit and identifiable assets of foreign operations are not significant.
Seasonal variations in advertising revenues cause our quarterly results to fluctuate. Second-quarter and fourth-quarter advertising volume is typically higher than first- and third-quarter volume because economic activity tends to be lower during the winter and summer.
NEWS MEDIA GROUP
The News Media Group segment consists of The New York Times Media Group, the New England Media Group and the Regional Media Group.
Advertising Revenue
The majority of the News Media Group's revenue is derived from advertising sold in its newspapers and other publications and on its Web sites, as discussed below. We divide such advertising into three basic categories: national, retail and classified. Advertising revenue also includes preprints, which are advertising supplements. Advertising revenue and print volume information for the News Media Group appears under "Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations."
Below is a percentage breakdown of 2006 advertising revenue by division:
| Classified | |||||||||||||||||||||||||||||||||||||||
| National |
Retail and Preprint |
Help Wanted |
Real Estate |
Auto | Other |
Total Classified |
Other Advertising Revenue |
Total | |||||||||||||||||||||||||||||||
|
The New York Times Media Group |
64 | (1) | 14 | 5 | 10 | 3 | 2 | 20 | 2 | 100 | |||||||||||||||||||||||||||||
| New England Media Group | 26 | 31 | 11 | 13 | 9 | 5 | 38 | 5 | 100 | ||||||||||||||||||||||||||||||
| Regional Media Group | 3 | 48 | 13 | 15 | 10 | 5 | 43 | 6 | 100 | ||||||||||||||||||||||||||||||
| Total News Media Group | 45 | 24 | 8 | 12 | 5 | 3 | 28 | 3 | 100 | ||||||||||||||||||||||||||||||
(1) Includes all advertising revenue of the IHT.
The New York Times Media Group
The New York Times
The Times, a standard-size daily (Monday through Saturday) and Sunday newspaper, commenced publication in 1851.
Circulation
The Times is circulated in each of the 50 states, the District of Columbia and worldwide. Approximately 48% of the weekday (Monday through Friday) circulation is sold in the 31 counties that make up the greater New York City area, which includes New York City, Westchester, Long Island, and parts of upstate New York, Connecticut, New Jersey and Pennsylvania; 52% is sold elsewhere. On Sundays, approximately 44% of the circulation is sold in the greater New York City area and 56% elsewhere. According to reports filed with the Audit Bureau of Circulations ("ABC"), an independent agency that audits the circulation of most U.S. newspapers and magazines, for the six-month period ended September 30, 2006, The Times had the largest daily and Sunday circulation of all seven-day newspapers in the United States.
The Times's average net paid weekday and Sunday circulation for the years ended December 31, 2006, and December 25, 2005, are shown below:
| (Thousands of copies) | Weekday (Mon. - Fri.) | Sunday | |||||||||
| 2006 | 1,103.6 | 1,637.7 | |||||||||
| 2005 | 1,135.8 | 1,684.7 | |||||||||
| Change | (32.2 | ) | (47.0 | ) | |||||||
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The decreases in weekday and Sunday copies sold in 2006 compared with 2005 were due to declines in single copy sales.
Approximately 62% of the weekday and 69% of the Sunday circulation was sold through home delivery in 2006; the remainder was sold primarily on newsstands.
According to Nielsen//NetRatings, an Internet traffic measurement service, The Times reaches 17.3 million unduplicated readers in the United States every month via the weekday and Sunday newspaper, and NYTimes.com.
Advertising
According to data compiled by TNS Media Intelligence, an independent agency that measures advertising sales volume and estimates advertising revenue, The Times had a 49.6% market share in 2006 in advertising revenue among a national newspaper set that includes USA Today, The Wall Street Journal and The New York Times. Based on recent data provided by TNS Media Intelligence and The Times's internal analysis, The Times believes that it ranks first by a substantial margin in advertising revenue in the general weekday and Sunday newspaper field in the New York City metropolitan area.
Production and Distribution
The Times is printed at its production and distribution facilities in Edison, N.J., and College Point, N.Y., as well as under contract at 19 remote print sites across the United States and one in Toronto, Canada.
On July 18, 2006, we announced plans to consolidate our New York metro area printing into our newer facility in College Point, N.Y., and close our older Edison, N.J., facility. The plant consolidation is expected to be completed in the second quarter of 2008.
Our subsidiary, City & Suburban Delivery Systems, Inc. ("City & Suburban"), operates a wholesale newspaper distribution business that distributes The Times and other newspapers and periodicals in New York City, Long Island (N.Y.), New Jersey and the counties of Westchester (N.Y.) and Fairfield (Conn.). In other markets in the United States and Canada, The Times is delivered through various newspapers and third-party delivery agents.
NYTimes.com
The Times's Web site, NYTimes.com, reaches wide audiences across the New York metropolitan region, the nation and around the world. According to Nielsen//NetRatings, average monthly unique users in the United States visiting NYTimes.com reached 12.4 million in 2006 compared with 11.0 million in 2005. According to NYTimes.com internal metrics, in 2006, NYTimes.com had 14.8 million average monthly unique users worldwide.
NYTimes.com derives its revenue primarily from the sale of advertising. Advertising is sold to both national and local customers and includes online display advertising (banners, half-page units, rich media), classified advertising (help-wanted, real estate, automobiles) and contextual advertising (links supplied by Google). In 2005, The Times introduced TimesSelect, a product offering subscribers exclusive online access to columnists of The Times and the IHT and to The Times's extensive archives, previews of various sections, and tools for tracking and storing news and information. TimesSelect is priced annually at $49.95 or monthly at $7.95, but is available to home-delivery subscribers at no additional fee. TimesSelect currently has approximately 627,000 subscribers, with about 66% receiving TimesSelect as a benefit of their home-delivery subscriptions and about 34% receiving it from online-only subscriptions.
On August 28, 2006, we acquired Baseline StudioSystems ("Baseline"), a leading online database and research service for information on the film and television industries. Baseline is part of NYTimes.com.
International Herald Tribune
The IHT, a daily (Monday through Saturday) newspaper, commenced publishing in Paris in 1887, is printed at 34 sites throughout the world and is sold in more than 185 countries. The IHT's average circulation for the years ended December 31, 2006, and December 25, 2005, were 242,000 (estimated) and 242,184. These figures follow the guidance of Diffusion Controle, an agency based in Paris and a member of the International Federation of Audit Bureaux of Circulations that audits the circulation of most of France's newspapers and magazines. The final 2006 figure will not be available until April 2007. In 2006, 60% of the circulation was sold in Europe, the Middle East and Africa, 38% was sold in the Asia Pacific region and 2% was sold in the Americas.
Radio
Our two radio stations, WQXR-FM and WQEW-AM, serve the New York City metropolitan area. In addition, the recently launched New York Times Radio News, a new department of WQXR producing newscasts heard on the station, is working with NYTimes.com and The Times's News Services Division to expand the distribution of Times-branded news and information on a variety of audio
Part I – THE NEW YORK TIMES COMPANY P.3
platforms, through The Times's own resources and in collaboration with strategic partners.
WQXR, The Times's classical music station, receives revenues through advertising sales, often in conjunction with The Times's selling effort. WQEW receives revenues under a time brokerage agreement with Radio Disney New York, LLC (ABC, Inc.'s successor in interest), that provides substantially all of WQEW's programming. On January 25, 2007, Radio Disney New York, LLC entered into an agreement to acquire WQEW for $40 million. The sale is currently expected to close in the first quarter of 2007 and is subject to Federal Communications Commission ("FCC") approval.
The radio stations are operated under licenses from the FCC and are subject to FCC regulation. Radio license renewals are typically granted for terms of eight years. The license renewal applications for the radio stations were timely filed on January 31, 2006, four months before the scheduled expiration date of the licenses. The WQEW application was granted for an eight-year term expiring June 1, 2014. We anticipate that the WQXR application, which is currently pending, will be renewed for a term expiring June 1, 2014.
Other Businesses
The New York Times Media Group's other businesses include The New York Times Index, which produces and licenses The New York Times Index, a print publication, Digital Archive Distribution, which licenses electronic archive databases to resellers of that information in the business, professional and library markets, and The New York Times News Services Division. The New York Times News Services Division is made up of Syndication Sales, which transmits articles, graphics and photographs from The Times, the Globe and other publications to over 1,000 newspapers and magazines in the United States and in more than 80 countries worldwide, and markets other supplemental news services and feature material, graphics and photographs from The Times and other leading news sources to newspapers and magazines around the world; and Business Development, which comprises Photo Archives, Book Development, Rights & Permissions, licensing and a small publication unit.
New England Media Group
The Globe, Boston.com, the T&G, and Telegram.com constitute our New England Media Group. The Globe is a daily (Monday through Saturday) and Sunday newspaper, which commenced publication in 1872. The T&G is a daily (Monday through Saturday) newspaper, which began publishing in 1866. Its Sunday companion, the Sunday Telegram, began in 1884.
Circulation
The Globe is distributed throughout New England, although its circulation is concentrated in the Boston metropolitan area. According to ABC, for the six-month period ended September 30, 2006, the Globe ranked first in New England for both daily and Sunday circulation volume.
The Globe's average net paid weekday and Sunday circulation for the years ended December 31, 2006, and December 25, 2005, are shown below:
| (Thousands of copies) | Weekday (Mon. - Fri.) | Sunday | |||||||||
| 2006 | 389.2 | 588.2 | |||||||||
| 2005 | 413.3 | 646.4 | |||||||||
| Change | (24.1 | ) | (58.2 | ) | |||||||
The decreases in weekday and Sunday copies sold in 2006 compared with 2005 were due in part to a directed effort to reduce the Globe's other paid circulation (primarily third-party bulk sponsored copies but also hotel copies), as well as continuing adverse effects of telemarketing legislation.
Approximately 76% of the Globe's weekday circulation and 71% of its Sunday circulation was sold through home delivery in 2006; the remainder was sold primarily on newsstands.
According to a 2005/2006 Gallup Poll, in the United States, the Globe reaches 3.3 million unduplicated readers every month via the weekday and Sunday newspaper, and Boston.com.
The T&G, the Sunday Telegram and several Company-owned non-daily newspapers – some published under the name of Coulter Press – circulate throughout Worcester County and northeastern Connecticut. The T&G's average net paid weekday and Sunday circulation, for the years ended December 31, 2006, and December 25, 2005, are shown below:
| (Thousands of copies) | Weekday (Mon. - Fri.) | Sunday | |||||||||
| 2006 | 91.3 | 105.6 | |||||||||
| 2005 | 99.2 | 115.1 | |||||||||
Advertising
Based on information supplied by major daily newspapers published in New England and assembled by the New England Newspaper Association, Inc. for the year ended December 31, 2006, the Globe ranked first
P. 4 2006 ANNUAL REPORT – Part I
and the T&G ranked sixth in advertising inches among all daily newspapers in New England.
Production and Distribution
All editions of the Globe are printed and prepared for delivery at its main Boston plant or its Billerica, Mass. satellite plant. Virtually all of the Globe's home-delivered circulation was delivered in 2006 by a third-party service provider.
Boston.com
The Globe's Web site, Boston.com, reaches wide audiences in the New England region, the nation and around the world. In the United States, according to Nielsen//NetRatings, average unique users visiting Boston.com reached 4.0 million per month in 2006 compared with 3.5 million per month in 2005.
Boston.com primarily derives its revenue from the sale of advertising. Advertising is sold to both national and local customers and includes Web site display advertising, classified advertising and contextual advertising.
Regional Media Group
The Regional Media Group includes 14 daily newspapers, of which 12 publish on Sunday, one paid weekly newspaper, related print and digital businesses, free weekly newspapers, and the North Bay Business Journal, a weekly publication targeting business leaders in California's Sonoma, Napa and Marin counties.
The average weekday and Sunday circulation for the year ended December 31, 2006, for each of the daily newspapers are shown below:
| Circulation | Circulation | ||||||||||||||||||||||
| Daily Newspapers | Daily | Sunday | Daily Newspapers | Daily | Sunday | ||||||||||||||||||
| The Gadsden Times (Ala.) | 20,700 | 21,600 | The Ledger (Lakeland, Fla.) | 69,800 | 85,200 | ||||||||||||||||||
| The Tuscaloosa News (Ala.) | 33,600 | 35,100 | The Courier (Houma, La.) | 18,600 | 20,000 | ||||||||||||||||||
| TimesDaily (Florence, Ala.) | 29,900 | 31,800 | Daily Comet (Thibodaux, La.) | 10,700 | N/A | ||||||||||||||||||
| The Press Democrat (Santa Rosa, Calif.) | 83,600 | 84,300 | The Dispatch (Lexington, N.C.) | 11,000 | N/A | ||||||||||||||||||
| Sarasota Herald-Tribune (Fla.) | 108,000 |
| | | | | ||||||||||||||||||
