Date

Thu - 27.04.2017


The New York Times Company's third quarter earnings: ad revenue down, digital circulation up

The New York Times Company's third quarter earnings: ad revenue down, digital circulation up

The New York Times Company’s share price experienced its furthest one-day drop in three years today after the company released third quarter results that showed an 85 percent decline in net income on the period a year earlier.

While analysts had predicted an average third quarter profit of 8 cents a share, the company reported a loss from continuing operations (excluding severance and other costs) of 1 cent a share.

During the quarterly earnings call today, Twitter users noted under the $NYT symbol that the company’s share price had fallen by 11, 13, and then 17 percent. (The decline stood at 14.6 percent at time of publication. View current price here).

On the call, Chairman and Interim CEO Arthur Sulzberger Jr. listed video, mobile and international expansion among growth areas for the company, and spoke of its engagement with Facebook, Twitter, Pinterest and Google +, its new presence on Flipboard, and its experimental HTML 5 app for the iPad as crucial elements in its strategy.

“We are delighted to welcome Mark Thompson,” Sulzburger added, stating that the new CEO will assume his role on November 12, and expressing confidence that Thompson, the former head of the BBC, bore no responsibility in the Jimmy Savile sex scandal. He said that Thompson “possesses high ethical standards and is the ideal person to lead our company.”

After Sulzberger’s remarks, the call turned down a bleaker corridor as the company’s third quarter results were read out. Released several hours before the call began, these included an 8.9 percent overall decline in advertising revenue. Print ad revenue dropped 10.9 percent, and digital ad revenue by 2.2 percent.

Digital advertising revenues allegedly trended low in the quarter due to droopy business confidence, pressure on the national display advertising sector, and the falling price of online ad space due to a glut of available inventory. Denise Warren, the company’s Chief Advertising Officer, also said that “efficient buying methods such as programmatic buying” by Google and Yahoo were helping to drive ad rates downward. Digital ad revenue now makes up 24.4 percent of the company’s total revenue from advertising (up from 22.8 percent last year).

But the news was not all bad. The company’s total revenue dropped by only 0.6 percent in the third quarter thanks to a 7.4 percent rise in circulation revenue, propelled by an impressive 11 percent increase in digital subscriptions from the end of the second quarter.

The New York Times Media Group (encompassing The Times and the International Herald Tribune) now has 566,000 digital subscribers. Adding in the Boston Globe’s 26,000 subscribers, the company has reached 592,000 paying online readers. This more than compensated for a 7 percent decline in weekday print circulation and a 2 percent decline in Sunday print circulation (figures offered in answer to an investor question on the call).

In terms of sustaining this level of growth, management expressed optimism that it was possible. Warren outlined three areas of investment:

1. The journalism – the core of the business

2. New platforms – with a “New York Times everywhere” strategy they plan to make the product available to more people

3. Expanding the portfolio – including meeting “untapped demand” in areas such as corporate education, international expansion, and higher-end products and suites of products

“We are still in the very, very early innings of this initiative, and we believe there is a lot of opportunity to come,” she said of the company’s digital strategy. “You really have to peel back the onion in terms of what you’re offering.”

Source: The New York Times Company

Author

Emma Knight

Date

2012-10-25 17:54

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