New York Times (NYSE:NYT) looks on track to achieve around 500,000 digital subscriptions for 2011, which stood at around 324,000 by Q3 2011.  However, the company’s foray into increasing digital content will be anything but easy in 2012. For starters, Facebook is expected to intensify its display advertising as its IPO draws close.
Steep Decline in Print Advertising to Continue
Overall advertising revenues for NYT have declined by almost 6% in the Jan-Sep 2011 period over prior year’s. This was largely attributable to steep declines in print advertising revenues, which dropped by over 10% in Q3 2011. Consequently, the company is expected to increasingly reduce its reliance on physical circulation of newspapers in 2012. This shift seems to have already started, as NYT announced its decision to sell its regional newspapers division to Halifax Media Holdings.  However, the impact of the sale on its Q4 results should be negligible, and we expect NYT’s quarterly results to reflect similar trends as in Q3 2011, with modest gains in digital subscription and advertising divisions.
We currently have a price estimate of $7.50 for NYT’s stock, which is roughly 7% below the current market price.Notes: