August 3, 2022

Despite a relatively slow news cycle and a changing mix of products, The New York Times Co. reported Wednesday that it added a net of 180,000 digital-only subscribers in the second quarter.

Also, despite a softening economy and heavy expenses related to turning around its money-losing acquisition, The Athletic, the Times recorded respectable profitability – $62 million net on revenues of $556 million (an 11.2% margin) for the quarter.

For years, the Times financial reports have emphasized digital subscriber growth and broken the gains down between news and vertical products like games and cooking. That stopped with the current quarter. Asked directly in a conference call with analysts how much of the 180,000 gain was from news, CEO Meredith Kopit Levien would not say.

Instead she reiterated several times in the call that the current marketing emphasis is on an all-access subscription bundle that gives a reader access to news, games, cooking, The Athletic and the product recommendation site Wirecutter.

New bundle subscribers accounted for more than half of the growth in the period, she said. And with 10.5 million total subscriptions now, the company is continuing to target a goal of 15 million by the end of 2027.

She summed up the company’s current strategy as having “the essential news subscription for an addressable market of 135 million English speakers” in the U.S. and abroad, together with “more valuable content to more people in managing their daily lives.”

With its national/international reach and steady stream of acquisitions, the Times is quite different from the nation’s struggling regional newspaper sector. But I would expect some of the trends discussed to turn up in Gannett’s earnings report Thursday. The so-called “headwinds” are also  doubtless squeezing revenues in the large portion of the industry that is privately held and therefore does not disclose financial results.

Kopit Levien said that the uncertain economic climate caused some digital advertisers in categories like tech, streaming services and finance to pull back. (Typically, reduced newspaper ad spend precedes or comes early in a recession). She added that as the news cycle slowed in the quarter  some advertisers became less interested in having their messages adjacent to news content.

At the Times, two of its strong print advertising categories were bouncing back compared to the same period a year ago, offsetting a 2.4% year-to-year decline in digital advertising. (Regional papers are much less likely to have that kind of boost.)

The company expects the digital ad revenue decline to continue into the third quarter and worsen on a percentage basis.

Subscription revenue, now more than three times as much as advertising, was a bright spot in the Times financials – up 13.1% year-to-year, even though the number of print subscribers and the revenue they generate are down.

Costs were up 19.6% year-to-year as the company spent heavily on The Athletic and promoting its various subscription options. Kopit Levien also expects spending on newsroom expansion to continue to grow. She said that measures of profitability should be back on a more stable upward path by 2023.

The report was in line with what analysts had expected. New York Times Co. share price was not much affected, up 1% percent in noontime trading.

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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…
Rick Edmonds

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