The New York Times reports Q2 loss, print ad revenue falls 14%
Total revenue declines, even digital ad revenue fell almost 7%, though the newspaper company was able to report that it now has around 1.4M digital subscribers
Today both Alphabet (Google) and Amazon are scheduled to report earnings after the bell. So far, the earnings season has brought good news for the new media and tech companies, and bad news for traditional media firms. It’s still earning, with plenty more publishing companies still to report. But so far, things look bleak for traditional publishing companies.
This morning, before the bell, The New York Times Co. reporting its second quarter earnings (you can find the earnings announcement for New Media Investment Group in the News section at the top of the home page).
The New York Times said that total revenue fell 2.7 percent, with advertising fall precipitously, down 11.7 percent. This resulted in the newspaper publisher reporting a net loss on the quarter of $492K versus a profit of $16.2 million in the same quarter last year.
The news was certainly not good, though the NYT’s chief executive gave a rosier forecast for Q3.
“Advertising was tougher in the quarter, particularly on the print side. In digital, we saw very strong growth in mobile, video and virtual reality, branded content and programmatic advertising. These were not enough to offset declines in traditional web display in Q2, which led to an overall decline in digital advertising,” said Mark Thompson, president and chief executive officer, The New York Times Company. “However, we expect that situation to improve in the second half of the year; in fact, we are already seeing a marked turnaround in July. We expect to deliver strong revenue growth from both digital advertising and our digital consumer business in Q3.”
The newspaper company is committed to its paid subscriber strategy, so it was good that the media company was able to report a 3 percent gain in circulation revenue. But the company continues to have to cut costs in order to avoid reporting even larger losses. The NYTCo. did manage to report a 2.4 percent decline in costs associated with sales, editorial and administration, but production costs were flat.
Things shouldn’t have come to this. Production costs should have been plummeting due to the transition to digital editions. But that transition ended a couple of years ago, when both publishers and Apple, gave up on the platform. Only a handful of companies, such as Montreal’s La Presse, have made the leap to digital-only (they maintain their weekend print edition, but are digital-only on weekdays).
The NYT added 51,000 digital-only subscriptions in the quarter, plus another 6,000 crossword subscriptions. Digital-only subscriptions now have reached close to 1.4 million (200K of which is for the crosswords).
Advertising remains the driver of the bad news: print advertising revenue decreased 14.1 percent while digital advertising revenue decreased 6.8 percent.
That last number is almost impossible to fathom, the NYT is seeing its digital ad revenue fall at a pace that other newspaper companies are seeing their print ad revenue decline. Guess there really are consequences to deemphasizing advertising.
Going forward the company expects some of these ad losses to moderate a tad in Q3, but costs may go up a bit due to severance, as the NYT continues to make staff reductions.
Honestly, I’m not seeing it. The NYT is the poster child for the paid content strategy and it has bet the farm that it knows what it is doing. Mark Thompson did not come from the business side of the newspaper industry, nor that of the digital ad business. It is showing up in the financials.