October 29, 2015

As Gannett and New Media Investment Group saw financial results dragged down by deep print ad revenue declines in third quarter earnings reports today, the New York Times posted a small revenue gain of 0.7 percent.

The Times held print ad losses to 0.9 percent compared to the same quarter in 2014. Digital ad revenues were down 5 percent, but the company had gains in circulation revenue and from other activities including rental income, events and crossword puzzles.

All three companies, thanks to cost controls, were profitable for the period, though modestly so. Gannett recorded a 5.6 percent profit margin, the Times, 2.6 percent and New Media Investment, 2 percent.

The Times continues to post big gains in digital-only subscriptions with 51,000 net new subscribers for the quarter. It expects to add another 40 to 45,000 in the fourth quarter. Some of that growth is coming internationally, and executives said that they are just beginning to tap into those markets. As earlier announced, the Times now has more than a million digital subscribers.

The Times has an atypical ad mix and that worked to its benefit. Luxury and tech print advertising are both strong, CEO Mark Thompson said, and branded content, video ads and mobile ads are all growing.  Thompson said that he expects another boost as the company introduces virtual reality content in coming months with accompanying ad opportunities.

He said that he expected print advertising would weaken comparatively and digital resume its growth in the fourth quarter; and overall both revenues and profits should improve.

Print circulation was down 7.4 percent daily and 5 percent Sunday. But Thompson closed the call saying, “print will be with us, albeit a mature business, for many years to come.”

Gannett has not yet closed on its acquisition of the Journal Media Group. However, the results included revenue from 11 smaller papers, mainly in the Southwest, that it bought earlier in the year from Digital First Media. Even with that boost, total revenues were down 8.6 percent year to year.

Gannett has passed the 100 million mark in unique U.S. digital visitors. Despite gains in the quarter, CEO Bob Dickey said, the chain’s 92 papers have just over 100,000 digital-only subscribers. That is only a little more than the Times expects to add in the second half of 2015.

Both Dickey and Thompson were asked by analysts how their companies are responding to the surge in ad blockers. “We have a bright group of people working on this over the last few weeks,” Dickey said, “and we are beta testing some products.” But it is still early to say what Gannett’s response will be, he said.

Thompson, too, said the company is just beginning experiments to counter the potential ad losses from blocking. He said that the Times main emphasis will be on serving better ads to “engaged users,” and he was cool to an analyst’s suggestion of a pop-up telling visitors to disable their ad blockers in order to view content.

Unlike Gannett, New Media Investment provided a “same store” revenue comparison, factoring out the many papers it has acquired since the third quarter of last year. On that basis, total revenue was down 5.7 percent compared to the 2015 quarter and print advertising off 10.4 percent.

With the acquisitions, revenues were up 89.1 percent. And the company has just signed a deal to offer its digital marketing services products to the large Postmedia Network in Canada.

Market reaction to the reports was mixed. For the day, New York Times shares were up 1.5 percent, Gannett up 8.4 percent, and New Media Investment down 8.2 percent.

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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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