Newspapers' Online Arms Return Good Results

The online arms of traditional newspapers, including those of the New York Times, Knight Ridder, and Dow Jones, are returning positive results in the second quarter.

In results announced Tuesday, revenues at New York Time Digital (NYTD), the online arm of the New York Times Co. , were $21.6 million, a 22 percent rise compared to the same quarter a year ago. Operating profits at the unit also rose, more than doubling to $4.3 million. The company said the big increases were due to higher advertising demand.

In contrast, The New York Times Co. said ad sales were weak in the quarter due to the Iraq war.

NYTD, which runs both NYTimes.com and Boston.com, has returned operating profits for the past eight quarters. The unit has been a leader among the online arms of newspapers, which have been producing a string of impressive results in recent quarters.

At Knight Ridder , which publishes 31 newspapers, revenues from its online unit rose 36 percent in the quarter to $19.3 million. Knight Ridder Digital pulled in $3.4 million of operating income, a stark turnaround from the $2.6 million loss posted in the same period last year.

Likewise, Tribune Co., which owns the Chicago Tribune and Los Angeles Times, said its interactive revenues were up 15 percent. The company said growth came from both classifieds and national advertising.

Revenues for the Dow Jones electronic publishing group, which includes its online properties and newswires, rose about 2 percent to $80 million. Operating income was up 6 percent to $16.1 million. Paid subscribers to The Wall Street Journal Online rose 4 percent year over year to 671,000.

Local newspaper chains also continued to show growth. Davenport, Iowa-based Lee Enterprises, publisher of 38 local papers like the Lincoln Journal Star (Neb.), reported that online revenue through June was up nearly 35 percent to $5.8 million.

Other publicly traded newspaper companies, including The Washington Post Co., have yet to report. Gannett, publisher of USA Today does not break out results from Internet operations.

If the previous quarters are a guide, the positive results will continue. Last quarter, the Online Publishers Association (OPA) reported results of a survey of two dozen of its members showing 37.6 percent average growth in revenues. The OPA did not ask about profits.

“They’ve beefed up their infrastructures to take better advantage of the Internet,” said Dave Morgan, chief executive of Tacoda Systems, which sells user-targeting software to online publishers. “Their money is coming from traditional advertisers. And traditional advertisers won’t buy anonymous eyeballs.”

Top online publishers have rolled out targeting tools to help advertisers parse their audience. At NYTD, wide-angle targeting allows an advertiser to reach a specific group of users anywhere on the site. Likewise, The Wall Street Journal Online unveiled interest-based targeting in June. A growing number of news sites, including washingtonpost.com and LATimes.com, target ads based on demographic information gathered from madatory site registration.