May 3, 2018

Emboldened by the success of "The Daily" podcast, the New York Times is entering the television business. While there may be a little money to be made, the main idea is to promote the excellence of Times journalism and reach a new group of potential subscribers.

CEO Mark Thomson dropped the news into an otherwise finance-heavy conference call with analysts as the company reported solid results for the first quarter.

Executives were intrigued by a Showtime documentary, made in recent months and screened over the weekend, on how the paper and its digital sites covered the first year of the Trump administration. The Times cooperated in the venture but had no editorial or business involvement.

Next up will be what Thompson called "a feature film" based on the Times investigation of Harvey Weinstein, which shared the Pulitzer Prize for public service and sparked the #MeToo movement. In this case, the Times has a licensing agreement with several production companies and the result will be a how-I-got-the-story dramatization like the Academy Award Best Picture winner, "Spotlight."

More productions are in the works, Thompson said, with particulars to be announced later. He said that the company was willing to place the shows either on a cable network or with one of the streaming services.

Some details of the venture, as Bloomberg reported, were previewed in a presentation to advertisers Monday. At that meeting and in an earlier interview, Sam Dolnick, assistant managing editor, said that one likely show will be a television version of "The Daily," though possibly weekly rather than every day.

"The Daily" podcast, hosted by Michael Barbaro, launched just after Trump's inauguration and was a hit from the get go. The 20-minute show now has a daily listener base of more than 1 million.

Dolnick has said that other shows in the works include a podcast on "The Caliphate," documenting a reporter's coverage of Islamic extremism, and a Netflix version of the paper's medical column, "Diagnosis." Future projects, according to the Bloomberg report, could include adaptations of the weekly Sunday Styles section Modern Love feature, of Sam Sifton's cooking column, and of the "Overlooked" series on notable women through history who did not receive obituary coverage in the Times when they died.

As for the main part of the Times business, the company reported a gain in revenues and net profit of $21.9 million on revenues of $413.9 million, a margin of 5.3 percent.

As has been the case for several years now, the driver of the revenue improvement was new digital subscriptions. For the quarter, the company added 99,000 net paid digital-only subscribers for its main news product and 40,000 more for its crossword and cooking verticals.

Digital paid circulation now totals more than 2.7 million, with print subscriptions and single-copy sales adding roughly another 1 million.

Thompson said that he expects that robust audience revenue growth to continue through 2018 and beyond, with many opportunities in international markets. Also, there could be an eventual price increase (which the Times has chosen not to impose to date so as to keep the number of digital subscriptions growing).

Print circulation revenues are more problematic, with another significant decline in volume — 9.4 percent daily and 7.1 percent Sunday, compared to the same quarter in 2017 — nearly offset by price increases. And while the Times likes to highlight digital subscription growth, 63 percent of its audience revenue still comes from the much more expensive print edition.

Advertising was not a positive — neither digital nor print — though print revenue was off only 2 percent year-to-year. The company expects combined advertising revenues to be down "in the low teens" in the second quarter, but has prospects of strong growth in digital later in the year.

Thompson said that operating costs were up and will continue to be through the year.  A large part of that reflects more investment in news, he said, both its quantity and quality, because that is the biggest driver of subscription growth and retention.

The company is making a big investment in business coverage, management said, in hopes of capturing more corporate subscribers. And it has found that the addition of even a few opinion writers abroad helps sell international digital subscriptions.

Thompson told the analysts that Facebook's current problems with policing fake news "are  broadly a net positive" for the Times.  The company has announced it will be running less news in users' feeds but more of that will be vetted for quality and reliability.  The company gets some advertising revenue from putting content on Facebook and Google platforms, he said, but, as with the TV venture, the bigger goal is to expose more people to Times journalism.

New York Times Co. shares traded roughly even for the day.

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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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