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And it's a poor investment, too...

http://www.fool.com/News/mft/2006/mft06041324.htm

New York Times Unfit in Print

By Stephen D. Simpson, CFA (TMFWildWeasel)
April 13, 2006

Behold the value trap: a stock that seems cheap, if only a few supposedly easy changes are made here or there, and if things go just a little bit better. Sometimes things work out, but other times, investors find themselves sticking with a stock that goes nowhere before petering out or selling at a bargain-basement price.

I don't necessarily think that all newspapers are doomed, but I'm pretty sure that I don't want to buy the shares of New York Times (NYSE: NYT) and wait to find out.

Surprising few observers, this was a soft quarter for the newspaper company. Total revenue climbed a bit more than 3%, but it would have been up just 1% without the inclusion of About.com, which was purchased last year. Of that 1% or so of growth, the bulk was ad revenue growth (0.7%), with circulation revenue up 0.3%.

Unfortunately, expense growth showed a bit more muscle. Expenses were up 6% in total (up about 3% without About.com), with newsprint costs rising nearly 6% from last year. High newsprint costs continue to be a problem, and the company is responding the same as most other newspaper operators -- by cutting down usage when possible, including a new scheme to shrink the amount of space devoted to stock price quotes during the week.

If the New York Times can improve, I think it will do so through cost-containment on the newspaper side; better ad rates, if it's lucky; and growth from Internet activities like About.com. Even though About.com contributed only 2% of revenue this quarter, it chipped in more than 10% of operating profit -- a disparity that cannot be ignored.

I don't dislike this company/stock; I just don't see enough potential. As I said yesterday, stocks like Gannett (NYSE: GCI) and Journal Register (NYSE: JRC) are more appealing to me when I use lowball cash flow estimates across the sector. At least New York Times pays a decent dividend. That can give investors something to look forward to as they wait and hope for a revival in this decidedly unpopular sector.

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