NYT milestone

Advertising has always been the engine that pays for a newspaper's operating costs, but a funny thing is happening at the NYT: It's looking as if circulation revenue will pass ad revenue sometime this quarter. For the April-June period, ad revenues totaled $185 million and the circulation side generated $166 million. Three years ago, posts CJR's Ryan Chittam, it was $316 million from ads and $156 million from circulation.

What does this mean? It's a landmark event, one way or another. It either means the legacy press is going out of business (not unlikely!) or it points the way toward a new model. The New York Times in the second quarter pulled in from its 1.1 million daily print readers (averaging in Sunday) about $151 each in the second quarter--and I'm talking about straight out of the readers' pockets, not via advertiser subsidies. $151! That's $50 a month per reader. You think if the NYT went online-only and charged readers, let's say, one-third of that that most of them wouldn't pay?

Meantime, you have to wonder what's going on at the Register. In a Q&A with reporter Mary Ann Milbourne, publisher Terry Horne says things are looking up - in part because of better-than-expected real estate advertising. "It's because of foreclosures, short sales and other sales," he said. "Real estate people -- brokers and agents -- are making money and are advertising with the Register to make more money." Horne says other classified sectors are exceeding budget.

The Register was profitable in 2008 and is profitable in 2009. In this economic environment, the fact we'll have double-digit operating margins this year speaks to the strength of the Register's position and its link to the community. There is zero chance the Register will close its doors. Orange County will have a newspaper. Those people who say newspapers are dead are wrong. What's happening is newspapers are changing. Those that don't, will die.

Horne is even upbeat about the prospect of lenders taking over Freedom Communications, parent of the Register. The company must deal with a $700 million debt load.

It won't mean anything for the newspaper that people receive and read every day or that advertisers do business with. There will be less economic pressure on the parent company because the debt will be restructured to a much lower level. Everything the new owners will want to do will be about building value or restoring the value of the media business operations. There is no way that they are going to see deep reductions in costs as a way of doing that.

Timing of this Q&A is interesting. There have been a bunch of recent rumors about the Register talking to the LAT about some sort of expanded relationship in OC, but the higher-ups have pretty much dismissed them.