New York Times Rides Digital Subscriptions To Solid Q1
The New York Times Company (NYSE:NYT) announced solid fiscal first quarter results on May 3, as both its earnings per share and revenue came in ahead of expectations. NYT reported unprecedented growth in digital subscriptions, which helped the company stabilize its circulation revenues in the first quarter. The company’s total circulation revenues increased 11% year-over-year (y-o-y) in the quarter, with digital-only subscription revenue growing strongly at 40% y-o-y to $76 million. In addition, the company’s other revenues grew 21% y-o-y to $26 million largely due to affiliate referral revenue associated with the acquisition of Wirecutter and Sweethome (October 2016). However, headwinds in print advertising (-18%) resulted in a 7% y-o-y decline in the company’s overall advertising revenues in the quarter. Despite this continued pressure, the company’s overall revenues grew 5% y-o-y to $399 million, driven by very strong digital revenues.
On the expense side, the company’s operating costs increased 4% y-o-y in the quarter, due to higher marketing costs and costs from acquired companies, partially offset by lower print production and distribution costs. NYT’s adjusted operating profit increased 2% y-o-y to $53 million in the first quarter, driven by higher digital circulation revenues, partially offset by lower print advertising revenues and higher costs. The company also posted adjusted earnings of 11 cents, up 10% y-o-y compared to the same quarter last year.
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Overall Advertising Revenues Continue To Decline
NYT’s print advertising revenue decreased 18% y-o-y while digital advertising revenue grew 19% in the first quarter. The lower print advertising revenue was mainly due to declines in display advertising (-19%), primarily in the luxury goods, technology and telecommunications, financial and travel categories. However, the increase in the company’s digital advertising was driven by gains in smartphone branded content, marketing services and programmatic, partially offset by declines in the traditional digital display business.
Digital Subscriptions Boost Circulation Revenues
NYT’s digital-only subscriptions grew 62% y-o-y in the quarter, a net increase of 348,000 subscriptions compared to the end of the fourth quarter of 2016. The company reportedly added 308,000 net new digital subscriptions to its News product in the quarter. This increase in new subscribers in Q1 led to growth in NYT’s overall circulation revenues, which contribute more than half of the company’s total revenues. A print home-delivery price increase for The New York Times newspaper also helped in the growth of circulation revenues. However, the newspaper witnessed a reduction in the number of print copies sold during the quarter.
The surge in NYT’s subscriptions could be attributed to coverage of the political season, growth in untrustworthy news sources and the newspaper’s coverage of President Trump. Going forward, NYT expects continued year-over-year growth in the second quarter of 2017 as well, but at a slower rate than in the prior two quarters.
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