The New York Times Co. reports stable revenue, but income crashes due to investments
Advertising falls 4.1 percent in Q2, but is almost made up for by circulation, digital and other revenue streams
The New York Times Co. today reported its second quarter earnings, reporting that revenue fell only 0.6 percent in the quarter, but that net income fell 55.0 percent due to investments the company are making as it tries to find a winning formula.
Operating profit came in at $16.5 million, compared to $46.2 million in the same quarter of 2013.
“We saw continued growth in digital advertising and circulation revenues during the quarter,” said Mark Thompson, president and chief executive officer, “but know that we still have more work to do to transform our business and deliver long-term sustainable revenue growth for the Company.”
Circulation revenue remains a bright spot, growing 1.4 percent in the quarter – though its growth rate appears to be slowing. Advertising, meanwhile, fell 4.1 percent. The NYT’s “other” category almost made up the difference, growing 7.7 percent. “Other” is made up of news services/syndication, digital archives, rental income and conferences/events.
“We grew our digital subscriber total by 32,000 in the quarter, 39 percent more additions than in the same quarter of 2013, with our newly released products – including NYT Now, NYT Opinion and Times Premier – contributing the majority of that total,” Thompson said. “We’re encouraged by the reaction of users to the products, especially the high consumer satisfaction levels we’re seeing with the NYT Now app. But, while we expected the portfolio to take time to build, we want to accelerate the rate of growth in subscription sales, so over the coming months, we will refine some of the offers and the way we market the portfolio to accomplish this.”
“We also know that long-term digital revenue growth depends on the reach and depth of engagement of our digital audience. This was one of the key recommendations of our recently completed Innovation Report on the future of Times journalism. We plan to implement the recommendations of the report across the Company and believe that we can significantly grow our digital audience, which in turn will contribute to improved digital subscription and advertising monetization.”
In short, the NYT is doubling down on its paid content strategy, which inevitably will lead to continued ad losses. That won’t last forever, however. (After zero there is no place else to go.)
Meanwhile, as the paid content advocates continue to push hard on reader revenue, the Times and other media outlets may discover that there are only so many services a consumer can subscribe to. Will it be the NYT, Next Issue, their cable service, or Beats Music? Do publishers really want to fight this war?