The New York Times (NYT) saw a slight revenue decline in the first quarter from a year earlier, after adjusting for discontinued operations linked to the January 2012 sale of the Regional Media group.

While its operating profit fell, its net profit increased to $42 million from $5.2 million a year earlier, mainly due to gains from selling off its stake in the Fenway Group, and income generated through discontinued operations like the Regional Media group.

Going forward, we expect the company will continue to focus on online advertising and digital subscription products, growing revenue to compensate for declining print advertising sales. The NYT competes with giants like Facebook, Google (GOOG) and Yahoo (YHOO) in the online advertising space.

Digital drives growth

The NYT reported a total of 472,000 paid subscriptions to its digital packages and e-reader editions as of March. Its digital subscriber base averaged around 278,000 in 2011, and we expect it to surpass 500,000 in 2012.

Going forward, we expect the NYT to focus on refining its digital offerings, generating more revenue from digital subscriptions.

We also expect it to generate more revenue from digital advertising as it continues to attract more visitors and readers to its website. Attracting a large audience enables the company to monetize its digital content either via advertising or subscriptions.

Print advertising lags behind

On the other hand, the company's print advertising revenue has continued to see a decline. Despite maintaining its print ad market share, the company's revenue has taken a hit in the shrinking market for print advertising. Advertisers are diverting more of their ad spending to online media.

The NYT has started shedding some of its non-core print properties, like the Regional Media group, and is expected to increase its focus on online content while reducing its reliance on the print medium.

About.com saw yet another decline in overall revenue, due to a decline in traffic. We expect the About audience to continue to shrink in the coming years.

We are updating our $7.51 Trefis price estimate for The New York Times in light of its earnings.