NYT bucks newspaper trend and reports higher ad revenue, as well as higher circulation dollars
Higher revenue encouraging, but overall costs grow as the NYT took on more costs as a result of its new strategic initiatives
The first quarter earnings report must have been very satisfying for new CEO Mark Thompson, as the company was able to report that not only did they increase circulation revenue, but ad revenue grew, as well.
“For the first time in several years, we saw quarterly growth in both print and digital advertising revenues, with total advertising revenues increasing by more than 3 percent year-over-year,” Thompson said. “We’re pleased with this result, which we believe demonstrates the progress we are making in both performance and innovation in advertising. Paid Posts, our native advertising initiative, launched very successfully during the quarter. However, we are certainly not claiming victory in advertising yet; we expect continued month-to-month volatility and recognize that we will face some significantly tougher year-on-year comparisons as the year goes on.”
Total revenue increased 2.6 percent in Q1, with print ad revenue up 3.7 percent, and digital revenue up 2.2 percent.
Costs rose, too, as the NYT brought on new people as part of their new initiatives. In fact, revenue growth did not match expense growth, and as a result operating profit fell 21.6 percent, and net income was almost halved to 1.743 million, down 51.2 percent from the prior year.
“Just after the quarter’s end we began the rollout of NYT Now and Times Premier, expanding the target market for our digital products and increasing our ability to monetize our unparalleled journalism and features across a more comprehensive spectrum of current and potential subscribers,” Thompson said in the earnings statement. “Our new mobile product, NYT Now, in particular is being embraced by the market. As we have said previously, we expect these products to take some time to ramp up, but we are pleased with the reception thus far and by the continued strength of our core digital subscription packages, which grew by 18% year-over-year in Q1.”
Update: traders got ahead of themselves this morning, driving up the value of the NYT’s stock in pre-opening bell trading when they saw that ad revenue increased – then back peddled when they saw the P&L and the forecast. The result: the stock opened unchanged.