The current economic scenario does not look promising for publishing companies, which are bearing the brunt of waning print advertising demand, and The New York Times Company ( NYT - Analyst Report ) is no exception. However, the company witnessed sturdy circulation growth during the six-month period ending Mar 31, 2013, riding on digital subscription initiatives.

According to the data released by Alliance for Audited Media ("AAM"), total average circulation, including print and digital, registered an increase of 18% to 1,865,318 for Monday to Friday publications and 16% to 2,322,429 for Sunday editions during the period.

Notably, digital circulation outpaced the print circulation. For weekdays, average digital circulation rose 41% to 1,097,467, whereas average print circulation dropped 6.2% to 731,395. Average digital circulation for Sunday surged 45% to 1,065,940, while average print circulation fell 0.9% to 1,254,506.

The data suggests that print circulation is continuing to lose its grip, whereas digital circulation is gaining traction, as more and more people are visiting the company’s website through smartphone and iPad applications. However, the only respite for print editions is the Sunday home delivery circulation, which witnessed a marginal increase of 0.5% to 1,023,956.

Aside from The New York Times, The Wall Street Journal -- the flagship newspaper of News Corporation ( NWSA - Analyst Report ) -- also experienced a rise in circulation and holds on to its leading position as per the data available from AAM. Circulation for daily newspapers rose 12.3% to 2,378,827. However, USA Today -- the iconic brand of Gannett Co., Inc. ( GCI - Analyst Report ) -- saw its circulation declining 7.9% to 1,674,306 and remained at the third position. The New York Times now occupies the second position. The Washington Post newspaper of The Washington Post Company ( WPO - Analyst Report ) witnessed a drop of 6.5% in circulation to 474,767.

Although The New York Times Company has a sturdy total circulation, its advertising volume continues to remain under pressure as advertisers are shying away from making any upfront commitments in an economy which is showing an uneven recovery. Total advertising revenue slid 11.2% to $191.2 million in the first quarter of 2013. Print advertising revenue declined 13.3% during the quarter.

The sluggish advertising compelled this Zacks Rank #4 (Sell) stock to post earnings of 4 cents a share that missed the Zacks Consensus Estimate by a penny and fell 20% from 5 cents delivered in the year-ago quarter.

The New York Times Company remains committed to streamlining its cost structure, strengthening its balance sheet, and rebalancing its portfolio. However, we remain apprehensive about the risks the company faces due to its high dependence on advertising revenue.

The company intends to transform itself and lessen its reliance on traditional advertising. In doing so, the company wishes to launch lower-priced as well as premium subscription based model to target different masses according to their appetite, and emphasize on online video production and brand extension.