Digital Advertising And Subscription Growth Could Boost New York Times’ Revenue By $100 Million

October 21st, 2019 by Trefis Team
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New York Times

New York Times Company (NYSE: NYT) saw its revenue base expand by $193 million over the last two years, with revenue rising from $1.56 billion in 2016 to $1.75 billion in 2018. Trefis estimates that NYT could add another $100 million to its existing revenue base, which could take total revenues to $1.85 billion by 2020, led by a surge in digital subscriptions and online advertising.

You can view the Trefis interactive dashboard – New York Times Revenue: How Does NYT Make Money? – to better understand the company’s business and its segment-wise revenue performance. In addition, here is more Trefis Media data.

NYT’s Business

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What Does NYT Offer?

NYT is a large media company operating under 3 primary segments:

  • Subscription:  Consists of revenues from subscriptions to the print and digital products (which include news products, as well as Crossword and Cooking products) and single-copy sales of the print newspaper.
  • Advertising: Includes sale of advertising products and services on print and digital platform.
  • Others: Includes revenues from licensing, affiliate referrals, building rental revenue, commercial printing, NYT Live (live events business), and retail commerce.

What Are The Alternatives?

  • The print newspaper competes for subscriptions and advertising primarily with national newspapers such as The Wall Street Journal and The Washington Post; newspapers of general circulation and other daily and weekly newspapers, and television stations and networks.
  • The news and other digital products most directly compete with The Washington Post, The Wall Street Journal, CNN, Vox, Vice, Buzzfeed, NBC News, NPR, Fox News, Yahoo! News, and HuffPost. It also competes for audience and advertising with Facebook Newsfeed, Apple News, and Google News.

Subscription Revenue

  • Subscription revenue has increased by $162 million from 2016 to 2018 due to double-digit growth in the number of subscriptions to the company’s digital-only products.
  • We expect segment revenue to continue its increasing trend in the near term, driven by continued growth in digital subscriptions, and news product and other subscriptions.

Advertising Revenue

  • Advertising revenue decreased in 2017 led by a 13.9% decline in print advertising, partially offset by 14.2% increase in digital advertising. However, with print advertising making up 57% of segment revenue, with the other 43% contributed by digital, segment revenue saw a decline during the year.
  • Advertising revenue remained flat in 2018.
  • We expect the segment revenue to remain under pressure in the next two years, driven by a decrease in print advertising due to decline in display advertising, primarily in the luxury and entertainment categories, partially offset by an increase in digital advertising due to an increase in revenue from both direct-sold advertising and creative services.

Other Revenue

  • Other revenues have seen a healthy growth in recent years, with revenue rising by $53 million in the last two years.
  • This trend is expected to continue in the near term, driven by growth in the commercial printing operations, affiliate referral revenue associated with the product review and recommendation website, Wirecutter, and revenue from the rental of five and a half additional floors in New York headquarters building.

Total Revenue

  • For the full year, the company’s revenue is expected to continue its rising trend, with total revenue expected to increase by 4.1% to $1.8 billion in 2019 and further by 1.6% to $1.9 billion in 2020, marking a cumulative increase of over $100 million between 2018 and 2020.
  • Higher revenue is expected to be driven by higher subscription for the company’s digital products, increased commercial printing and rental revenue, partially offset by lower print advertising revenues.

As per New York Times Valuation by Trefis, we have a price estimate of $33 per share for NYT’s stock.

 

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