April 30, 2015

nytimesAn 11 percent decline in print advertising and a pension settlement caused the New York Times Co. to operate at a $14.3 million loss in the first quarter, the company reported today.

But the company pitched the period as “a solid start” to the year in light of strong results in both digital subscriptions and digital advertising.  The company added 47,000 more paid digital subscriptions bringing its total to 957,000.  That is the biggest quarterly increase in two years, and executives said they expect to add another 30,000 in the second quarter.

The bigger subscriber base translates to a digital circulation revenue increase of 14.4 percent compared to the same period in 2014.  Digital advertising grew 10.7 percent year to year and now accounts for 28 percent of all company advertising.

CEO Mark Thompson said the growth surge in digital subs comes in part from stronger retention efforts.  Without giving a specific number, he told analysts in a conference call that digital subscribers are now renewing at a higher rate than their print counterparts — who have been hit with a number of price increases including one in January.

Advertising chief Meredith Kopit Levien, whose job has recently been expanded to heading marketing as well, cited five factors in the digital ad growth:

  1. Success with “Paid Posts” (also known as native advertising).  She described the two-year-old initiative as “just getting started” and said it can be expanded into international markets.
  2. Mobile/smart phone ad revenue is increasing too with a bigger audience and improvements in the design and positioning of ad placements on smaller screens.
  3. In programmatic advertising (that is placed electronically often through real-time bidding), the Times Co. is developing “preferred and private” deals at higher rates.
  4. Video, though “still small for us” is “growing nicely.”
  5. The sales staff has become more digitally oriented and that has resulted in better sales execution. 
  6. As for the print ad declines, Thompson said comparisons were against the same period in 2014 when the Super Bowl was played in New Jersey and the Oscar competition was intense.  Still the company expects blended print and digital ad revenues to be down again “in the mid-single digits” in the second quarter.

    Even so, Thompson said, “we do significantly better in national advertising than competitor companies.” And because the Times only gets 3 percent of its print ad revenue from pre-printed inserts, it has less exposure as some retailers shift money out of those budgets to various digital approaches.

    The company was able to reduce operating costs 4.2 percent year-to-year and expects similar improvements through the rest of 2015.

    Investors seemed to respond positively to the results with New York Times Co. shares trading up nearly 5 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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