使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主
Operator
Good day and welcome to The New York Times first quarter 2009 earnings conference call.
Today's call is being recorded.
A question and answer session will follow today's presentation.
(Operator Instructions) For opening remarks and introductions, I'd like to turn the call over to Ms.
Catherine Mathis.
Please go ahead, ma'am.
- SVP, Corporate Communications
Thank you and welcome to our first quarter earnings conference call.
We have several members of our senior management team here today to discuss our results with you, and they include Janet Robinson, our President and CEO, Jim Follo, our Senior Vice President and Chief Financial Officer, Scott Heekin-Canedy, President and General Manager of The New York Times, Martin Nisenholtz, Senior Vice President of Digital Operations.
All comparison on this conference call will be to the first quarter of 2009 to the first quarter of 2008 unless otherwise stated.
Our discussion will include forward-looking statements and our actual results may differ from those predicted.
Some of the factors that may cause them to differ are included in our 2008 10-K.
Our presentation will also include non-GAAP financial measures and we have provided reconciliations to the most comparable GAAP measures in our earnings press release which is available on our corporate Web site at www.nytco.com.
An archive on this call will be available on our Web site as will a transcript and a version that's downloadable to an MP3 player.
With that, I'd like to turn the call over to Janet Robinson.
- President, CEO
Thank you, Katherine, and good morning, everyone.
Like many companies across America in our industry, the challenges we face intensified in the first quarter.
The effect of the global economic downturn coupled with secular changes affecting newspapers resulted in significant declines in revenues, as advertisers pullback on print placement in all categories; national, retail, and especially classified.
Digital revenues also declined, although modestly, as a result of the weakening economy.
For the first quarter we reported an operating loss of $61.6 million compared with operating profit of $6.2 million in the first quarter of 2008.
Excluding depreciation, amortization, severance, and special items, our first quarter operating profit was $16.5 million compared with $77.7 million in the first quarter of last year.
For the first quarter, we reported a loss per share from continuing operations of $0.52 which included $0.07 for the loss on leases at City and Suburban, our New York area distribution business, that we closed in January and $0.11 in severance costs.
The New England Media Group which includes the Boston Globe, the Worcester Telegram & Gazette and their Web sites had significant losses in the quarter and I will share more about that in a moment.
Last year in the first quarter, we reported $0.00 cents per share which included $0.07 for the write-down of assets for a systems project, $0.04 per share for severance costs, and a favorable tax reserve adjustment of $0.03.
As many of you know, in 2008 we reduced our operating cost by nearly 5% or $136 million.
This quarter our operating cost decreased 9.5%.
Excluding depreciation, amortization and severance, operating costs declined 11.6%.
This year we plan to save more than $330 million in operating cost.
Jim will go into greater detail on this in his remarks.
Before going into our revenue discussion let me add that this quarter we took steps to significantly improve our financial flexibility so that we can continue to execute on our long-term strategy.
In January, we completed a private transaction for $250 million in senior unsecured notes and warrants.
In March, we closed on the sale leaseback of a portion of the space we own and occupy in our New York City headquarters.
The proceeds from these transactions were used to repay existing debt including amounts borrowed under a revolving credit facility that expires next month, and a portion of the notes due in November 2009 and in March 2010.
We have sufficient capacity under our revolving credit agreement to repay at maturity the $44.5 million in notes due at the end of this year.
After that, our next major debt maturity is more than two years away.
Nearly three quarters of our debt now matures in 2015 or later.
We also suspended our dividend in the quarter and are progressing on the sale of our 17.75% stake in New England Sports Ventures, whose holdings include the Boston Red Sox, Fenway Park, and approximately 80% of the New England Sports Network, our regional cable sports network.
We are pleased by the response we have seen from prospective buyers.
In short, we are making great strides in achieving our goals.
While the decline in advertising masks the success we are having in transforming our Company, we believe that the steps we have taken and are taking serve the interests of our employees, readers, advertisers, and shareholders over the long-term.
We believe that when the economy turns around, which it will, we will be very well positioned to benefit from the cost restructuring.
Now let me provide you with more detail on the revenues.
Total revenues for the Company declined 18.6% with ad revenues down 27%, circulation revenues up 1%, and other revenues down 27.7%.
Excluding the C & S revenues, total revenues declined 17.4%.
Circulation revenues rose 2%, and other revenues were flat.
At the News Media Group, which includes The New York Times, New England and Regional Media Groups, ad revenues decreased 28.4% with national advertising down 21.9%, retail down 25%, and circulation down 45.1%.
Within the classified area, recruitment advertising fell 60.1%, real estate declined 44.9%, and automotive was down 42.2%.
At the Times Media Group, advertising revenues decreased 27.3% in the quarter.
The national print categories, where we saw the largest declines, were studio entertainment where the studios released fewer films than last year and provided limited support for new releases and a weak awards season.
International fashion, which saw lower spending from luxury advertisers due to the global economic crisis, and live entertainment where an unprecedented number of Broadway shows closed and fewer shows opened due to cautiousness in the current economic environment.
National print ad categories that performed well included corporate, which saw gains from energy-related companies and government trade groups and cosmetic manufacturers and stores lead by campaigns from Proctor & Gamble for some of its product lines.
Classified advertising decreased in all three major categories; real estate, recruitment, and automotive.
Retail advertising revenues were down lead by declines in home furnishing stores, fine arts, fashion, and jewelry advertising.
During this time when print ad dollars are decreasing, The Times is very focused on making sure that we are getting our fair share of the market.
For 2008, we had 53% of the national newspaper market compared with 28% for the Wall Street Journal and 19% for USA Today, excluding house ad spending.
At the New England Media Group, advertising revenues declined 31.6% in the quarter.
National ad revenues decreased as declines in media, studio entertainment, and live entertainment categories more than offset modest growth in bank and financial advertising.
Retail advertising revenues were lower lead by weakness in department store, furniture, home furnishings, clothing, and shoe store advertising.
Overall, classified advertising at the New England Media Group was soft in all three major areas; recruitment, real estate, and automotive.
Over the past several years, The Globe, which is the most significant part of the New England Media Group, has faced very difficult challenges, as secular changes, business consolidations, and exits from the market have resulted in significant revenue declines.
Globe Management is engaged in a wide ranging effort to restructure its cost base and in connection with that it is engaged in serious discussions with The Globe unions.
These negotiations are critical to putting The Globe on substantial, sustainable financial footing.
We are not going to comment publicly on the negotiations until they have been concluded.
At the same time, that we are working with the unions, The Globe is undertaking other substantial measures to increase revenues and lower costs, including the consolidation of its printing facilities.
At the Regional Media Group, advertising revenues decreased 29.3%, a little over half of the decline was due to less classified advertising.
Total circulation revenues were up 1% in the quarter, primarily because of higher prices at The Times, New England, and the Regional Media Groups.
Excluding C & S, circulation revenues increased 2%.
We continue to see that high quality journalism is valued by readers and advertisers and we have been able to raise our home delivery and newsstand prices.
Earlier this month, The Globe announced a price increase for newsstand copies.
At The New York Times, we have more than 830,000 subscribers who have been with us for two years or more, up from 650,000 in 2000.
A large portion of The Times core subscribers are already active users of the Web and are not leaving print in significant numbers.
Across the Company, circulation revenues made up 38% of our total revenues in the quarter, significantly higher than others in the industry and a sizeable and stable base of revenue.
As other newspapers cut back on international and national coverage or cease operation, we believe there will be opportunities for The Times to fill this void resulting in increased revenues from circulation, news services, and other products.
Yesterday, The New York Times was honored with five Pulitzer prizes.
This speaks to the extraordinary work done by our journalists across a broad range of areas including international coverage, photography, breaking news, cultural criticism, and investigative journalism.
Other revenues for the News Media Group decreased 27.7%, mainly as the result of the closure of C & S.
In the first quarter of last year, C & S had other revenues of approximately $17 million.
Excluding C & S, other revenues increased 1.1% at the News Media Group.
Before I conclude my remarks, I would like to spend a few minutes discussing our digital business including the chatter in the marketplace about online business models for newspapers.
In the quarter, digital ad revenues at the News Media Group declined 8% driven by classified advertising declines.
NYTimes.com display advertising posted good growth in the quarter and continued to exceed industry trends as measures by eMarketer.
At the About Group, total revenues decreased 4.7% to $26.8 million as lower levels of display advertising were partially offset by higher cost-per-click advertising.
In total, Internet businesses account for 12.8% of the Company's revenues in the first quarter versus 11.1% last year.
In addition, The Times Company had the 13th largest presence on the Web with 52.3 million unique visitors in the United States in March, 2009, according to Nielsen Online, up about 4% from 50.4 million unique visitors in March of 2008.
Also according to Nielsen Online, NYTimes.
com had 20.1 million unique visitors in March versus 18.9 million in March 2008, up about 7%, and was the number one newspaper Web site in the United States, a position it has long held.
One area that has received a great deal of attention recently both in the media and within The Times Company is how to develop alternative revenue streams for online content.
Twice, in the Times' history, we have experimented with charging users for online content.
The first was in 1996 when we charged international users to access NYTimes.com.
The second was in 2005 when we created Time Select.
Since then, we have continued to explore opportunities to charge for online journalism.
Recently we analyzed the business models of more than 30 different organizations to determine which are the most effective in generating digital revenues.
What we have learned is that the advertising model we have used at NYTimes.
com has generated more revenue than the vast majority of other organizations, including some that are much larger than our site.
That said, we want to determine if there are other opportunities for us to create additional online revenue streams.
Our goal is to add substantial new revenue from our users without materially affecting the growth of our industry leading, online display advertising business.
As the advertising marketplace, particularly in print, changes, we continue to explore payment models as well as other approaches to generate revenues from our online content.
Our position is the leading newspaper Web site and a top five news and information site is the result of a focus on quality and innovation.
You can be sure that we will continue both with regard to the product and the business model.
In closing, this is a very difficult period for our Company, our industry, and the economy.
At this time, and it is very early in the quarter, we believe the rate of decline in ad revenues in the second quarter will be similar to that of the first.
In time, however, we believe that the economy will grow and the advertising market will improve.
While we are looking forward to that day, we are not waiting for it.
We are moving aggressively to restructure our cost base in line with our current revenues and continue to develop innovative, new digital products that enhance our financial performance.
When advertising improves, we believe we will be well positioned to meet the needs of the market place and to benefit from our restructured cost base.
Now, let me turn the call over to Jim who will tell you more about our cost reduction initiatives and the steps we are taking to enhance our financial flexibility.
- SVP, CFO
Thank you, Janet.
We continue to tightly manage our expenses in the first quarter.
As Janet said, operating costs, excluding depreciation and amortization and severance, declined 11.6% as reductions occurred in nearly all major expense categories.
This reflects our cost savings initiatives including the closure of C & S.
With the economy as weak as it is, we are putting an even greater focus on lowering costs.
We plan to decrease our operating costs, excluding depreciation and amortization and severance by more than $330 million in 2009.
Some of the components of this amount have already been announced, such as the $112 million for C & S, $18 million as a result of the changes in our benefit plans, and about $9 million in the second half of the year with a consolidation of The Globe's two printing plants.
Severance costs were $0.11 per share in the quarter or $25 million compared to $0.04 per share or $11.2 million in the same quarter last year.
At the end of March, our headcount was down 15.5% from the prior year.
Depreciation and amortization decreased 12.3% to $36.8 million from $41.9 million in the first quarter of 2008, primarily because of lower accelerated depreciation.
Newsprint expense increased 0.9% with a 25.2% increase in prices, nearly offset by a 24.3% decline in consumption.
Newsprint transactions peaked last November and have been trending down.
Forecasters believe that prices will continue to decrease as the decline in newsprint demand continues.
In 2008, we reduced the size of the printed page of six of our regional newspapers which will benefit us this year and at the end of March, we decreased the size of the printed pages of some copies of the national edition of The Times which will result additional newsprint savings.
Last month, we completed a sale-leaseback for $225 million for part of the space we own and occupy in our New York City headquarters.
This is essentially a financing transaction.
The rental payments will total approximately $25 million for the first year and will escalate through the term of the lease.
The lease term is 15 years and there is an option for us to repurchase our portion of the building for $250 million during the tenth year of the lease.
The sale proceeds will be recorded as a financing liability and the rental payments associated with the sale-leaseback will be treated as interest expense for tax and accounting purposes.
In addition, the difference between the purchase option price of $250 million and the sale proceeds of $225 million as well as the transaction costs will be amortized over a 10 year period as an increase to the financing liability through interest expense.
Interest costs increased in the quarter from $11.7 million to $18.1 million as a result of higher rates on our debt.
At the end of the quarter, our debt totaled $1.3 billion.
This includes the financing liability related to the sale-leaseback transaction that closed in early March.
The proceeds from this transaction were held in an escrow account at quarter- end and subsequently used along with borrowings under our revolving credit facility to redeem $250 million of notes due in March 2010.
After the redemption of the notes, our total debt was approximately $1 billion.
We remain in compliance with the minimum shareholders equity covenant and our revolving credit agreements and have a significant cushion over the maximum required.
Quarterly interest expense for the remainder of the year is expected to be higher than it was in the first quarter because of the sale-leaseback occurred at the end of March.
For the year, the Company expects interest expense to be approximately $90 million.
In the first quarter, we also repurchased $55 million of notes due in November, 2009.
We have sufficient capacity under our revolving credit agreements to repay the balance of these notes at maturity.
We had an income tax benefit of $1.1 million in the quarter.
The tax provision was unfavorably affected by significant losses at the New England Media Group which only a minimum state tax benefit is recognized due to our recent Massachusetts law change and various non-deductible losses.
These items were partially offset by a $12 million adjustment to reduce the Company's reserve for uncertain tax positions.
We have taken decisive steps to reduce capital spending and improve our flexibility.
This year, we expect our capital expenditures will decrease from the 2008 level of approximately $127 million to approximately $80 million.
As Janet said, in February, our board of directors suspended our quarterly dividend which is a difficult, but necessary, decision that we believe provides us with greater financial flexibility in these uncertain economic times.
With regard to our pensions, at year-end, the unfunded obligation for our qualified pension plans was approximately $535 million, as measured in accordance with ERISA.
As we have said, we have carryover credits requiring us to offset required contributions to our plan in 2009.
Recent guidance from the IRS regarding funding calculations will provide additional flexibility on the timing of cash contributions.
We believe, based upon this guidance, that we will be able to offset a significant portion, if not all, of the 2010 required contribution with additional carryover credits.
We may still make, elect to make, contributions to the plans in 2010 based upon market and other factors, but have no plans to do so in 2009.
We do expect to make contributions to a joint trusted pension for Guild employees of The Times in 2009.
As always, we continue to evaluate our assets to determine if they remain a strategic fit and, given the outlook for our business and the financial performance, makes sense to continue to be part of the Company.
At the end of March, we sold the Times Daily, our newspaper in Florence, Alabama, to a strategic buyer in an adjacent market.
As Janet mentioned, we are pleased by the interest we have seen in our interest in the New England Sports Ventures.
With the moves we have made to refinance and pay down debt, and the proposed asset sale, we have the financial strength to manage through this challenging time.
And with that, we would be happy to open it up for questions.
Operator
(Operator Instructions).
We'll take our first question from Edward Atorino with Benchmark.
- Analyst
I'm never first.
Turn me off!
Jim, on the staff reduction, the base, then, would be last year's cost and expenses excluding depreciation and excluding charges?
- SVP, CFO
I'm sorry, Ed, I didn't follow that question.
- Analyst
The cost base from which the 330 is coming down is last year's costs excluding depreciation and staff reductions?
- SVP, CFO
And severance cost, that is correct.
- Analyst
Which were roughly $2.7 billion, I guess, something like that?
- SVP, CFO
I don't have that.
- Analyst
Okay, I just want to get that base.
- SVP, CFO
That is the calculation.
- Analyst
And I guess I have to ask the question everybody else is going to ask.
Do you see any light at the end of the tunnel or sounds like second quarter is not going to be all that great.
Any inquiries about beyond the next couple months?
- President, CEO
I think, Ed, this is Janet.
I think that what I said in the quote that it's trending similar to what we're seeing in the first quarter is really what we're seeing right now.
We do hear, of course, from advertisers that they are saving their marketing spend during this first quarter and second quarter.
And traditionally, of course, particularly in the newspaper industry, third and fourth are stronger quarters for ad spending.
That has been the case certainly in years past.
But this economic climate certainly doesn't dictate any prediction by any stretch.
But I think that there is a saving of dollars in the first half of this year that hopefully we will see loosen up as the year goes on.
- Analyst
Circulation revenues were up.
How about volume for the three groups; Times, Globe, and regionals?
- President, CEO
No.
The volume was down as well.
One thing we do see in the second half of the year, though, and even in the second quarter, due to the strong efforts and regard to cost reduction as outlined by not only the 330 that we just noted, but certainly things that we have done in past years that we're reaping the benefits of.
We do expect to see in the remaining quarters of the year an improvement in our operating profit.
I think this is really the benefit of what we've done in regard to being extremely proactive in regard to what we've done on the cost side which includes plant consolidations and staff reductions and a whole host of elements.
We believe that this operating profit will be better in the quarters going forward excluding depreciation, amortization, severance, and special items.
Operator
Thank you.
We'll take our next question from John Janedis with Wachovia.
- Analyst
Hi, good morning, thank you.
Janet?
I'm not sure what you can tell us, but can you talk more about the expense opportunities in Boston?
It looks like ad revenues for the market in 1Q are about half of 2005's level.
And I'm just wondering based on how you think about the future of that market, what's the right level of expenses and how much flexibility do you have given the composition of that workforce?
Thanks.
- President, CEO
Well, as you know, we are working right now very closely with our unions.
So we're in a situation where we're not going to comment to any great degree in regard to those negotiations and what we are looking for.
I will say that there has been a very proactive effort on the part of The Globe management to bring down costs in recent years and that has included everything from staff reduction to plant consolidation to circulation profitability moves.
And there are certainly things before them that they have already announced in regard to circulation increases in that market.
They took one in September last year and they've recently announced they are taking another one as of May 4 in regard to single copy.
So I think until we finish with our discussions with the unions, it's going to be very difficult for me to be precise in regard to what the cost base really will be.
I will say that we are being extremely proactive in regard to lowering the cost base of the New England Group.
- Analyst
And maybe as a follow-up to Ed, when you look at Q2 relative to 1Q, is there much variability on specific properties or regions or even categories from 1Q to 2Q?
- President and General Manager of The New York Times
John, this is Scott.
Not a whole lot of variability.
The whole first half seems to be characterized by the deep economic uncertainty that's touching just about every segment of the economy.
And as Janet has already mentioned, we're hearing a similar expectation, or maybe hope, that some of the macro steps that are being taken to address the economy will start to lead to some moderation in the second half.
And there's a general theme among advertisers that they're prepared to open up their wallets and spend in the second half.
- President, CEO
I think that's also true somewhat in New England, particularly in the retail side and a little bit in regard to the same story that we're hearing in regard to the regionals, but as you know, those two newspapers have been much more classified-dependent than The Times.
- Analyst
And as a quick follow-up, on the movie studio side, they're obviously putting out fewer movies this year, a fair amount of sequels.
Is the category still your largest or among the largest and what's the outlook there?
- President and General Manager of The New York Times
It continues to be the largest category for The Times.
And the performance has, through the first hal,f is likely to carry-on through the full-year.
We don't see a change in the fundamentals of the studio advertising this year.
There are other categories, studios have performed better than our overall revenue base.
There are other categories that have been performing quite a bit better as well, those include financial services, which is up against incredibly strong comps for Q1 from last year.
Corporate is quite strong.
Telecom and tech are both showing some relative better performance compared to the whole department stores and mass market as well.
- Analyst
And, Jim, I'm sorry, one last question.
But a few quarters ago, I think you put out a number of total savings of 230 across the Company.
I think 100 in 2008 and then 130 in 2009.
Does today's number get us to 430 in total?
- SVP, CFO
Well, just to clarify, the 230 we gave out in mid to late 2007 was 130 million in 2008 and 100 million in 2009 and we had said that was excluding one-time charges severance inflation.
We've taken the inflation formula out of it.
We far exceeded the 130.
I don't have the exact number, but we certainly exceeded the 130 by a pretty wide margin in 2008 and what was leftover in 2009 is 100.
And this number is 330 relative to that 100 and we've taken the inflation qualifier out of that, so it's quite much larger than that.
Thanks so much.
Operator
We'll take our next question from Craig Huber with Barclays.
- Analyst
Yes, good morning.
A few questions.
The same question Ed had, please.
What was your daily and Sunday percent change for circulation volume at the flagship paper and also The Boston Globe in the first quarter, please?
- President, CEO
We're releasing [fast backs] in regard to ABC numbers on Monday, April 27th.
- Analyst
Okay, so you can't preview it here then?
- President, CEO
No.
- Analyst
Okay.
This $12 million gain that we briefly talked about that's also in the income tax part of your press release here it adds about $0.08 to $0.09 to your earnings, it wasn't mentioned in the first page or two like the exact same tax gain was that helped by $0.03 a year ago.
Is that to say that then, just to be totally clear here, that the underlying number excluding the lease write-off basically, the severance and the $12 million tax benefit, the true number was $0.42 to $0.43 loss in the quarter?
- SVP, CFO
The $12 million you're referring to as a discreet item in the quarter.
That's a - - under the relatively new tax rules on a quarterly basis evaluate your tax contingency line and there was an adjustment in the quarter of $12 million.
So that is correct.
Okay, so we should treat it then, you're suggesting, like what happened a year ago?
We certainly wouldn't treat it as a recurring item, if that's what you're asking.
- Analyst
But there's $.03 a year, okay.
And then also, investors are asking me, what is your estimate of how much your cash severance cost could be for this year?
I know you say it would be lower for the rest of the quarters for the first quarter.
But what do you anticipate here in the spend of cash severance for the total year?
Thanks.
- SVP, CFO
Well, look, Craig.
As you know, we adjust our spending as we go and we make regular changes to our plans as we need to.
I mean, I think the buyouts we have in the first quarter of 25 million we do think is substantially higher than anything we have forecasted for the rest of the year.
But to be precise on that number is very difficult.
I will say this though, we feel highly confident that we don't come anywhere close to approaching what we did last year.
Last year our severance number was somewhere in the $80 million range.
And we don't see a number coming in anywhere close to that.
And I do think, I believe right now, a good part of our severance is behind us.
We've had the C & S closure contributed that and that was a one-time event.
And there's a number of things happening in Boston which we don't see at the same level compared to current for the rest of the year.
But it is a hard number to be very precise on.
- Analyst
And then also if I could are your equity investments.
Given the Abitibi Bowater recent bankruptcy here, what does that mean for your 49% stake in the JV you have with them and the Canadian newsprint company?
- SVP, CFO
The bankruptcy was Abitibi Bowater This is a joint venture at which they are partners in which is unaffected by that bankruptcy.
So there was no change at all.
We don't see any impact from that at all.
- Analyst
Okay, very good.
Thank you.
Operator
And Alexia Quadrani with JP Morgan has our next question.
- Analyst
Hi, thank you.
Just a quick follow-up on your comments on Boston earlier.
Do you think you can get back to profitability at The Globe which is the other savings initiative that you're doing or do you have - - really assuming some concessions from the unions there?
- President, CEO
As I said earlier, we are not really in comment-mode primarily because of our negotiations that are ongoing with the unions.
As I will - - as I did say, and I will say again, The Globe management has been very proactive for a number of years in regard to cost reductions.
They are being very proactive in regard to rate increases, particularly in regard to circulation.
They've moved in regard to the consolidation of printing facilities there.
They are working very hard in regard to circulation profitability in regard to the zones that they distribute the paper.
All of those moves are going to help The Globe move to a stronger financial position.
And our discussions that are ongoing with our unions, hopefully will help in that regard as well.
- Analyst
And we've seen some other companies talk about closures of certain properties where they've just become so unprofitable or they feel they can't get significant improvement even when stability returns.
Do you constantly look through your portfolio and see if that's an option for you?
- President, CEO
We have always said that we don't comment on acquisitions and divestitures and we don't comment on business closures as well.
We are constantly evaluating what our portfolio contains and certainly the financial performance of all of those - - all of the units within our portfolio.
- Analyst
And then just lastly, I think Jim, you talked about paper pricing obviously coming down.
Could you give us a sense about how much you're budgeting for paper pricing in the second half?
- SVP, CFO
Well, I can say that in the first quarter, price had a negative impact on our business somewhere in the $11 to $12 million range.
We actually see for the full-year - - we see the impact of prices stay somewhat neutral for the full-year.
So you need to get to the back half of the year before you start seeing positives to offset this negative $12 million.
So, that's the way we think about it for the full-year.
So certainly, back half benefit, first half will not be.
- Analyst
Thank you.
Operator
Edward Atorino with Benchmark has a follow-up question.
- Analyst
Actually, Craig answered it, thanks.
I mean asked it.
Operator
And Chad Huber with Barclays has another question.
- Analyst
Yes, this is Craig Huber again.
Just on your bank line.
It's my understanding that this traunch of $400 million that's coming due May of this year is the same bank group that is your $400 million credit line that comes due June 2011.
Given my understanding is you were not able to renew the May 2009 credit agreement.
How confident are you when we get out to June 2011 that you can actually redo that bank line in somewhat favorable terms from your vantage point?
- SVP, CFO
Well, let me just address it.
The issue of the $400 million that expires.
That expired unused and unneeded.
We never had an intention on renewing that.
And I don't think it's a fair categorization to say the bank wasn't interested.
We had discussions with banks, the bank group and many others.
We just went in a direction we thought was best for the business at that time.
But as you look forward, as of March I think we had about $220 million under the line.
Where we find ourselves from a debt structure perspective is we're largely - - we have largely unsecured debt.
We expect to be generating cash from our business.
We are executing on certain asset sales which you talked about.
So I think as you look, we're still more than two years away from what's $220 million.
We have really substantial, if needed, security.
So I don't, as I sit here today, anticipate that that issue, whatever it may be, I mean it could be nothing.
We could have no borrowings under that.
It's just a little speculative now to be saying what the intentions are, what the credit markets are.
But we just don't see that two and a half years out as something that really hangs over our head in a way we think is hard to deal with.
- Analyst
Okay, thank you.
Operator
Barry Lucas with Gabelli & Company has our next question.
- Analyst
Thank you and good morning.
Just a quick one.
You back out the lease lost at C & S and the News Media Group at $16.4 million.
What was the operating loss?
So when 1Q of 2010, what will the variance be?
- SVP, CFO
I'm sorry, you asked about 2010?
- Analyst
Well no just trying to get a handle on the operating loss in 1Q 2009 for C & S was.
- SVP, CFO
For C & S?
- Analyst
Yes.
- SVP, CFO
I mean, we've said about $30 million in approved operating results.
So about $80 million per year in revenues.
And that's pretty equal over the quarter.
So we're going to lose about $20 million a quarter in revenues and we're going to benefit by about $30 million in operating.
And that's pretty straight-lined over the entire year.
- Analyst
Great.
Thanks, Jim.
Operator
Scott Davis with JP Morgan has our next question.
- Analyst
Hi, good morning.
So About.com, I guess, is somewhat small in the grand scheme of things, but I was looking for a little color on it.
When you said the second quarter felt like it was trending similar to the first quarter, was that for newspapers or for About.com.
And then second, when you mentioned higher cost-per-click advertising, I was wondering if somebody could give a little color on that.
Is it better click-through rates because of more relevant ads?
Is it pricing?
Just a little color, please.
- SVP of Digital Operations
Sure.
Taking the CPC question first.
It's basically - - first of all the gains are fairly modest, but it's basically that the pricing levels in the options seem to be holding up and that volume has increased just a little bit.
So we feel that the numbers are on trend to perform roughly as they have.
With respect to the second quarter, I think the characterization that Janet provided applies to About, as well.
We have seen relatively anemic display advertising at About.
And that, by the way, started fairly early in 2008.
About was a bit of a canary in the coal mine with respect to Internet display advertising.
It started to show trends that other Web sites began to show toward the fourth quarter.
The good news is that NYTimes.
com has not been subject to those trends.
And that's something that I think Janet pointed out as well in her introduction.
But CPC is obviously an accountable form of advertising.
It's a form of advertising that should remain reasonably good in a recession.
- Analyst
Thank you, Martin.
Operator
Edward Atorino with Benchmark has our next question.
- Analyst
Janet, a big picture question.
As you or your advertising people talk to advertisers, do you get the sense that they are learning to live with less.
Do you know what I mean?
And in a recovery, might we see a muted recovery, at least early on, as advertisers get courageous with cash?
- President, CEO
I think that they are learning certainly in the first half to live with less because they are either forced to or their saving dollars for the second half of the year, particularly in regard to some of the categories that spend more heavily in the third and the fourth quarter.
I think that there is so much fragmentation that's going on in the advertising markets, I think that their spend will reflect that in regard to what works best for them.
And we have to be there to offer them alternatives in regard to where they spend their dollars.
This isn't just a print Company anymore, as you well know, Ed.
This is definitely much more diversified in regard to our advertising offerings and we intend on being there for them.
But I think advertisers, as the economy improves, will understand that they have a strong need to advertise.
The ones that are more successful, I believe, are going to spend more during a down time primarily to gain more share and benefit from that.
And I think that that would bode well for a stronger third and fourth quarter and, certainly, what we may see going into 2010.
But I think that the economic conditions and the unpredictability of what we are dealing with is very difficult for anyone to predict what an advertiser is going to do right now.
But we do see signs and we hear comments from advertisers that lead us to believe that they are saving dollars in the first half to do possibly more in the second half if indeed they are able to.
But they will be utilizing a variety of streams and advertising options in doing so.
- Analyst
Thank you very much.
Appreciate that.
Operator
There are no further questions at this time.
Ms.
Mathis, I'd like to turn the conference back over to you for any additional or closing remarks.
- SVP, Corporate Communications
Thank you all for joining us today.
And if there are any other questions, please give me a call.
Operator
Thank you for joining The New York Times conference call.
That does conclude our presentation.
Have a nice day.