How Is New York Times Likely To Grow In The Next Two Years?

New York Times‘ (NYSE: NYT) performance has been mostly above its guidance and market expectations so far this year, driven largely by the political climate in the U.S. NYT has witnessed significant digital growth in its readership since the 2016 election, which largely offset the secular declines in its print business. In the first half of fiscal 2018, the company saw weak advertising trends, with both print and digital advertising revenue declining 7% y-o-y. However, the company’s overall revenues grew 3% y-o-y to $828 million in this period, driven by more than 20% y-o-y growth in digital-only subscription revenues to $194 million. NYT reported unprecedented growth in digital-only subscribers, which grew by 23% y-o-y to 2.9 million. This increase in new subscribers led to growth in NYT’s overall subscription revenues, which contribute more than half of the company’s total revenues.

Accordingly, we expect NYT’s revenue to grow by nearly $130 million (3.7% CAGR) through fiscal 2019. To arrive at our fiscal 2019 net revenue estimates for NYT, we have broken down the primary revenue streams and projected them separately. We have also created an interactive dashboard analysis which provides a detailed analysis of how to arrive at this growth number. You can make changes to these variables to arrive at your own revenue estimates for the company. We have a $23 price estimate for New York Times, which is slightly below the current market price.

Digital Subscriptions Will Continue To Boost Subscription Revenues

NYT’s online subscriber base has grown from 800,000 in 2013 to 2.9 million now. Going forward, we expect NYT’s online subscriber base to be its biggest value driver, and forecast this growth to pick up in the coming years and reach 3.7 million by 2022. As of now, we forecast the company’s subscription revenue to grow by 15% y-o-y and reach $1.16 billion in 2018 and subsequently reach $1.20 billion in 2019. We also forecast advertising revenue to decline in double-digits to around $490 million in 2019, on the back of the continued decline in display (print) advertising and traditional website display advertising. Overall, we expect NYT to generate around $1.8 billion in revenues in 2019, and adjusted earnings of nearly $170 million.

Sluggish print subscription revenues continue to weigh on the company’s results – having declined modestly over the past three years, falling from $653 million in 2015 to $608 million in 2017. However, this rate of decline is more moderate than many competitors, showing that even in the face of secular headwinds, the Times is still able to retain a healthy number of print customers.

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