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Investment Overview for New York Times (NYSE:NYT)
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Below are key drivers of NYT's value that present opportunities for upside or downside to the current Trefis price estimate for NYT:
NYTimes Online Ads
- Number of NYT Online Subscribers: NYT announced the launch of the digital subscription service in March 2011, in which it charges “heavy users” for its high quality content. We estimate an average of 668,000 subscribers to this service for the year 2012. We also believe that this number will continue to increase till the end of our forecast period to around 1.4 million. In the scenario in which this service exceeds our expectations, and the number of paid subscribers increases to around 2 million by the end of Trefis forecast period, there could be an upside of 10% to ${trefisprice}. However, if this service fails to gain traction and the number of subscribers reaches only about 800,000 by the end of Trefis forecast period, there could be a downside of 10% to ${trefisprice}.
- Page views per unique NYTimes.com visitor: Page Views per Unique NYTimes.com Visitor have declined in 2011 due to the introduction of Paywall digital subscription service, as this service restriction will certainly limit the user activity. In the scenario in which this service does not bring about much decline to the user activity, and page view per visitor increases to around 20 per month throughout the Trefis forecast period, there could be an upside of 10% to ${trefisprice}. However, if the user activity declines more than our expectations for the page views per unique user to decline to around 5 per month by the end of Trefis forecast period, there could be a downside of about 10% to ${trefisprice}
For additional details, select a driver above or select a division from the interactive Trefis split for NYT at the top of the page.
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The New York Times Co. (NYT) is a media company primarily in the newspaper business. It owns the New York Times, International Herald Tribune, Boston Globe, and the Telegram & Gazette. The company makes money through advertising in its print newspapers, online advertising and newspaper circulation fees. In 2011, the company also launched a paid subscription service for NYTimes.com, which adds an additional revenue stream of digital circulation.
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US Newspaper Advertising Spending
The total advertising spend on print advertisements in newspapers stood at around $20.7 billion in 2011, which includes both national ads as well as retails and classifieds. Although this is a steep decline from the +$40 billion market size in 2007, print advertising still contributes a sizeable proportion of NYT's revenues. However, with online advertising increasingly expected to rise in future, there is a lot of pressure on media houses like The New York Times to diversify their content offerings to online media as well.
News Media Group National Print Ad Market Share
The overall national print ad market share of all newspapers under the News Media Group rose from 10.3% to 12.4% from 2007 to 2012. While the relevance of print advertising is on a continuous decline, The New York Times carries with it a significant brand value which represents high quality of journalism and analysis. This would play a key role in increasing the company's market share in an otherwise declining national print ad market in future.
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Digital content increasingly gaining relevance
Online media provides more abundantly available information, that too at a faster rate and cheaper prices when compared to print media. This has effectively rendered print newsapers obsolete, and as online reading is made further easy by tablets/smartphones, both physical circulation and print advertising within newspapers would see a decline going forward.
NYT moving towards paid digital service
NYT unveiled its digital subscription service designed to charge a fee to “heavy users” of its online platform. Under this payment structure, all users will be able to access 10 articles per month for free, and can also access NYT’s articles through search engines. Subscribers to NYT’s print version will also have full access to NYT online. This digital subscription, or "paywall", is intended to provide an easy transition of NYT's print newspaper readers to its online version, especially as circulation numbers continue to decline for newspapers worldwide.
Social and mobile to drive future growth
Social networking leaders Facebook have initiated a unique concept of "frictionless sharing" through their Open Graph tools, which enables publishers to instantly get their articles/content shared across a user's network of friends. Various media companies like Yahoo! and Washington Post have adopted the Open Graph to increase user engagement, and we expect more websites to join the bandwagon if they are to increase both web traffic and user engagement. Additionally, the growing penetration and bandwidth capabilities of smartphones and tablets would play a major role in increasing traffic and viewership for media companies, with NYT already releasing tablet-specific apps like "The Collection" to achieve this.
Trefis Forecast Rationale for Page Views per Unique NYTimes.com Visitor
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${forecast} represents the average number of pages a unique visitor to the nytimes.com or to the IHT.com website views in a day.
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Monthly page views per user stood at around 30 in 2007 by our estimates. This number has fallen to roughly 13 by 2012. There are 2 reasons for this decline. Firstly, online users have increasingly found more sources of information on the web with time. Additionally, NYTimes.com's paid digital subscriptions launched in 2011 has put additional pressure on maintaining page views per user, as various online sources provide the same information for free.
We expect ${forecast} to show a slight increase going forward.
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Trefis considered the following factors for its forecast:
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- NYT May Go More Social
- Following in the footsteps of other publishers like The Washington Post, NYT can also be expected to integrate heavily with social networks like Facebook in future. This could provide an upside to page views per user as articles/blogs are shared extensively on the social network.
- NYT Expanding its Mobile Distribution Platforms
- NYT has already launched some tablet-specific apps which aim to leverage its large content pool and present users with a simple-yet-engaging reading experience. One such example is the "Collection" app which focuses on fashion-related articles, launched in 2011.
- As the company continues to push for smartphone/tablet based apps, it could see an upside to user engagement.
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- Digital subscription service will discourage user activity
- The company plans to make the access of the NYTimes site the paid access for "heavy users". The service will allow access of only 10 articles per user per month for free. This restriction will certainly limit the user activity, which means the ${forecast} will come down.
- However, the site will still be available for access from search engines, which means the ${forecast} will not decline drastically.
Back to Company OverviewHow Does Trefis Modelling Work?
How do we get the historical numbers for this chart?
Trefis has a team of in-house Analysts who gather historical data from company filings and other verifiable sources. When historicals are available, we explain how we got them at the bottom of the Trefis analysis section below.
Who came up with the Trefis forecast for future years?
The Trefis team of in-house Analysts considers a variety of factors when projecting any forecast. The rationale for our projections is explained in the Trefis analysis section below.
How does my dragging the trendline on the chart impact the stock price?
- We use forecasts for business drivers to calculate forecasted Revenues and Profits for each division of the company.
- We then use forecasted Profits in a Discounted Cash Flow (DCF) model to obtain the Price Estimate for the company.
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