February 4, 2016

Digital up, print down was nearly a refrain as The New York Times reported fourth quarter and full year financial results today.

For instance digital-only subscriptions grew 53,000 year-to-year, roughly 5 percent, in the quarter. However print circulation was down 6.9 percent daily and 4.4 percent Sunday. CEO Mark Thompson said that he expects to add another 50,000 digital subs in the current quarter and grow the base to 1,250,000 by the end of the year.

With home delivery price increases partly offsetting that loss in print volume, circulation revenues were up 1.3 percent for the quarter and 1 percent for the year.

Similarly print advertising revenues were down 7 percent for the quarter, but an 11 percent increase in digital advertising kept the overall loss to about 1 percent. Thompson told analysts in a conference call that he was particularly encouraged by strong gains in mobile (74 percent compared to the 2014 quarter). Mobile now accounts for 22 percent of digital ad revenue, he said, and the company has been successful in devising new story formats and ad modules that work especially well on smartphones.

The company recorded a profit of $51.7 million for the quarter on revenues of $444.6 million, a margin of 11.4 percent. That was a robust increase of 48 percent compared to the 2014 quarter but was driven by cost reductions that are not expected to continue into 2016.

The New York Times also announced a comprehensive review of its newsroom strategy in light of falling circulation and the ongoing transformation to digital. That review is expected to examine The New York Times’ system of desks and its slower-growing enterprises.

Thompson told the analysts that the Times is making necessary investments in digital transformation “but remains a very profitable company unlike some of our peers.” That could be read as a dig at The Guardian, which recently reported operating at a $80 million loss in 2015, or The Washington Post, which no longer reports financial results as a private company owned by Amazon billionaire Jeff Bezos.

Conceding that the fourth quarter growth was affected by timing, Thompson also told the analysts that the Times is poised for steady revenue and profit growth by 2017. That would mean digital revenues would grow from mitigating print losses to actually exceeding them.

There were several mentions in the call of the two-year-old T Brand Studio, which produces sponsored content. It has become, Thompson said, “a meaningful part of the business.”

The Times is the first of the public newspaper companies to report quarterly and year-end results. But its huge paid digital subscription base, international reach and high-priced advertising make it not necessarily a bellwether for reports that will follow.

The results were somewhat better than Wall Street’s advance estimates, and Times shares were trading up 2.1 percent early afternoon.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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