August 4, 2021

Digital-only subscription growth continued at The New York Times in the second quarter, the company reported Wednesday, but at a considerably slower rate than in recent years.

The site added 142,000 net subscribers compared to the first quarter of this year — 77,000 for its news report and the other 65,000 for its cooking, audio and games (formerly crosswords) sites. That’s less than a fourth of the quarterly number added during the peak of the Trump-bump years and the start of the COVID-19 pandemic a year ago.

CEO Meredith Kopit Levien said total subscriptions, including print, passed the 8 million mark in the first weeks of this quarter and are headed to 8.5 million by the end of 2021.

She commented that “news cycles will continue to have significant effects on our subscription growth.”

If the subscription news was lukewarm, financial results for the second quarter were hot. Both revenue and operating profit ($93 million) were up from a year ago and slightly ahead of the same period in 2019, before the steep ad recession last year brought on by COVID-19.

The New York Times’ subscription growth and its stock have been a bright spot in the troubled newspaper industry. Even so, shares had been trading down 17% so far this year as investors were cautious about the business fully bouncing back from 2020 reverses.

The market responded positively to the report. Shares were up 10% in midday trading — gaining back about half of the decline for the year.

Kopit Levien also said that prospects for the rest of the year and beyond are excellent. As she has said previously, the company estimates the potential market for subscriptions to English-language news is 100 million. An increasing share of the digital subscription growth is now coming from international locations, she said, where business serving the daily news habit is “up for grabs.”

In contrast to local and regional news companies, which have gone bankrupt or must pay interest and principal on heavy debt loads, The New York Times has roughly $1 billion of cash in hand. So it effectively has no interest expense and actually earns a little on its positive cash position.

That unusually strong balance sheet also allows the Times to invest in startups of related products. Its podcasts, particularly “The Daily” and “Serial,” are industry leaders. A more recent move into video is beginning to pay off. Kopit Levien said the company’s “Framing Britney Spears” documentary both drew a big audience here and abroad and prompted attention and legal action related to her conservatorship.

This fall, the Times is planning a paid subscription version of its free product recommendation and shopping site, Wirecutter.

One cloud in the sunny picture is that paid print plus digital subscriptions continue to decline — which are down 4.5% year-to-year for daily subscriptions and 1% for Sunday. That could impact revenue since expensive print subscriptions (well over $1,000 yearly for seven-day delivery) are effectively being replaced by cheaper digital ones.

So far as the Times continues its digital push, that hasn’t happened. With the volume of digital growth and price increases for both print and digital, audience revenues were up 15.7% year-to-year — reassuring to investors and analysts who watch that number.

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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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