NY Times Banks on Strategic Plans, Ad Revenue a Concern
The U.S. newspaper publishing industry has long been grappling with sinking advertising revenues. The downturn in the newspaper publishing industry witnessed over the last few years was aggravated as print readership declined, with more readers opting for online news, thereby making the print-advertising model increasingly irrelevant.
Advertising remains a significant source of revenue for The New York Times Company NYT, which in turn is dependent upon the health of the economy. We observed that the company has been struggling with dwindling advertising revenue for quite some time now. Total advertising revenue dropped 9.7% during the fourth quarter of 2016. Print advertising revenue fell 20.4% in the fourth quarter, following a decline of 18.5% in the preceding quarter.
Adapting to Changing Media Landscape
Consequently, The New York Times Company has been contemplating on new avenues of revenue generation. The company is adapting to the changing face of the multiplatform media universe, and has already included mobile and reader application products in portfolio. Other publishing companies such as New Media Investment Group Inc. NEWM, Gannett Co., Inc. GCI and The McClatchy Company MNI are also trying to adapt to different revenue generating ways.
The New York Times Company is concentrating on online activities, as evident from its pay-and-read model. Its pricing system for NYTimes.com was launched on Mar 28, 2011. The company notified that the number of paid digital subscribers reached 1,853,000 at the end of the fourth quarter – rising 296,000 sequentially (276,000 came from the digital news products and 20,000 from the Crossword product) and 45.9% year over year.
The company is not only gearing up to become an optimum destination for news and information but is also now focusing on service journalism, with verticals like Cooking, Watching and Well. In this regard, it recently acquired The Wirecutter and its sister site, The Sweethome that recommends people about technology gear, home products and other consumer services. The company also acquired a digital marketing agency and portfolio company, HelloSociety, from Science Inc., which complements the company’s T Brand Studio that helps in creating digital ad innovation and branded content.
The company’s initiatives remain well on track but soft adverting revenue forecast for the first quarter of 2017 raises concern among investors. Management expects total advertising revenue in the first quarter to decline in the high-single digits.
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New York Times Company (The) (NYT): Free Stock Analysis Report
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