NYT Earnings Review: Growth In Digital Subscriptions Offset By Declines In Print

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NYT: New York Times logo
NYT
New York Times

The New York Times Company (NYSE:NYT) announced its first quarter earnings on Tuesday, May 3rd, reporting a 1% year on year (y-o-y) decline in its revenues, and a net loss of $13.6 million. The loss in the bottom line was caused by the shutdown of a paper mill owned by Madison Paper Industries, in which NYT had 40% stake. Operating expenses remained largely flat due to the company’s focus on cutting superfluous costs.

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NYT recently laid out a plan to double its digital revenues by 2020. In line with this plan, the company made a structural shift in its income statement, reclassifying revenues from its Crossword product (earlier listed in “Others”) to “Circulation”.
As per our expectations, circulation revenues saw a slight improvement to $218 million in Q1, 2016. This rise was driven by a 14% y-o-y growth in NYT’s digital subscription revenues. However, print circulation revenues were down 1%, despite a rise in home delivery prices, due to a continued decline in print volumes.

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In the advertising segment, the company continued to experience headwinds in print (- 9% y-o-y) and digital (-1% y-o-y), resulting in a 7% decline in total advertising revenues. Digital ad revenues have been on a downtrend, due to a changing mix in advertising towards mobile (21% of total digital advertising revenues) and creative services, from the traditional web display advertising. However, the company remains confident that its strategy towards branded content (T-Brand Studio, NYT Virtual Reality App), video, and more seamlessly integrated ad formats, on both mobile and desktop, will help it achieve growth in the second half of 2016. Moreover, the acquisition of HelloSociety, a social influencer network, will add to NYT’s content creation and distribution capabilities, likely churning in positive returns.

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Following is the guidance provided by the company regarding Q2, 2016:

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Have more questions about NYT? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to the full Trefis analysis for New York Times.

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