The New York Times Company, with its huge digital subscription base and international reach, is quite different from most U.S. publishers. But its first quarter results turned out to be very similar.
The company posted a small loss of $13.5 million for the period. It showed strong growth in digital subscriptions and a number of digital advertising categories. But print advertising losses of roughly 9 percent compared to the same period a year ago led to an overall revenue decline of 1.2 percent.
CEO Mark Thompson spun the results in a conference call with analysts as successful execution of a digital transformation strategy. He said, in effect, that the company is making necessary digital investments, especially marketing subscriptions abroad, at the expense of a stronger showing on profitability.
Advertising chief Meredith Kopit Levien went a little further. “The big strategic question is, can you make up the losses in print?” she said. Her answer was yes because the Times has the scale for success in digital and because certain print categories — like luxury goods — “will remain strong for a very long time.”
The company expects second quarter results and revenue declines to be about the same with some pickup in the second half of the year.
The New York Times added 67,000 net subscribers in the period — its biggest growth in a single quarter since the fourth quarter of 2012.
Print circulation continues to decline, however — off 5.4 percent daily and 3.8 percent Sunday compared to the same period in 2015.
Mobile advertising grew 81 percent year to year and now comprises 22 percent of the company’s total digital advertising. Branded content revenues were up 100 percent and the company also expects growth in programmatic, video and virtual reality ads.
But Thompson conceded that traditional digital advertising was “soft” especially on the homepage as readership shifts to individual articles, many now on Facebook and other platforms. That still makes up about half the digital total.
The Times did record an operating profit of $51.5 million for the quarter, but severance costs and a loss from its investment in a paper mill that closed led to the net loss.
Thompson boasted of the strength of the Times’ crossword vertical, which now has 200,000 paid subscribers. The company will begin counting crosswords as part of of its total digital subscription base.
Except for mentioning being “tough-minded on costs,” Thompson provided no additional detail on the downsizing of the Times Paris operation or the coming cuts in the newsroom later this year, estimated by some sources to be between 100 to 200 of 1,300 positions.
The market seemed to be mildly disappointed in the results, with shares down 4.3 percent in early afternoon trading.
