Murdoch’s Times Newspapers Ltd says it has made a profit for the first time in 13 years

While media reporters buy into the narrative that paywalls work really work, the numbers simply don’t add up with considering cost reductions

Yippie, The Times is profitable for the first time in 13 years. Times Newspapers Ltd, which owns The Times and The Sunday Times in the UK, said that its papers had posted an operating profit of £1.7 million for the financial year that ended on June 30.

Media observers took the news that paywalls work and that, by inference, advertising be damned.

Unfortunately, the narrative is faulty.

The Times’ statement was lacking an actual P&L, but it did provide a breakdown of its paid readership. Journalists, notoriously bad at math, failed to add up the numbers themselves.


As you can see, the two papers actually lost 2k in circulation, though its shift to digital is dramatic and likely to have resulted some cost reductions in print and distribution.

The paper also said that the share of revenue from readership was now at 51 percent, versus 44 percent from advertising. It did not say, though they inferred, that this was an increase from last year. If so, and if readership did not actually increase, than the only way this would be possible would be if The Times saw a continue decline in ad revenue.

“The figures confirm that the “paid-for” strategy, pursued by News UK, is working well and is helping to secure a sustainable future for the news, sport, analysis and comment of the papers,” the Times announcement claimed.

So, how did the papers go from the red to black?

First, Times Newspapers said that it is not discounting digital versus print. “This growth has been achieved whilst moving our premium digital members to price parity with our print membership,” the statement said. Readers, it appears, are willing to pay for digital at the same rates they did print – or, one might also say, print has previously been discounted to the point where digital subscription prices match print.

So, what is the secret sauce? Paywalls?

That is not what any of this says to me. Instead, it says that the advantages of digital, reduced print and distribution costs, can flow to the bottom line if a publication can shift its readership to digital while maintaining its overall circulation.

This seems to be the reason why Hearst Magazines forces readers to buy digital subscriptions even if they are print subscriber – they want that reader to migrate to digital, and don’t want to lose the revenue when they do so.

It also tells me that the hidden factor in the profit turnaround at Times Newspapers involves reduced costs. If digital readership is producing the same revenue as print, and the total readership did not go up, that means revenue did not go up (and with advertising being a lower percentage of total revenue, it means total revenue actually fell).

So, Times Newspapers Ltd achieved profitability primarily through swinging the axe. So be it. The combination of promoting digital readership, reduced costs, have led to a swing to profits. Promote the circulation director, and fire the ad director (after all, if readership did not fall dramatically, then the fall in share of revenue from advertising shows the ad teams are failing to sell the merits of the digital readership).

But don’t look for any word of that in the press release, it doesn’t sound as good as the claim paywalls work.

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