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Failing Or Succeeding? Trump Renews Criticism On The New York Times

Dave Royse

The “failing New York Times” has been doing a fair amount of succeeding this year in a business sense.

And though New York Times Company (NYSE: NYT) stock dropped considerably last month after it reported lower profits, it has started to edge back up in September, as it continues to shift its focus toward growing its paid subscriber base.

Latest Criticism

President Donald Trump ramped up his criticism of the newspaper in recent days, joining others in criticizing The Times after it published an essay on an upcoming book on Supreme Court Justice Brett Kavanaugh that included a crucial omission that resulted in an embarrassing correction.

The newspaper acknowledged it failed to fully put in context new material from the book, overselling an allegation against Kavanaugh, leading Trump to renew his criticism of the paper, which he has often called “the failing New York Times.”
While the president’s latest assertion that the newspaper is a “journalistic disaster” may be subjective, his ongoing claim that the paper is “losing a lot of money,” is, at a minimum, misleading.

Stock Up Year-To-Date

New York Times stock trades around $29 per share, up about 32% year to date. So for long-term investors, anyway, the paper hasn’t been a money-losing proposition.

In other measurements of the business side of the "Old Grey Lady," the assessment depends on what you’re looking for – though profit slipped last quarter, revenue continues to grow.

The company said last month that second-quarter revenue grew more than 5% compared to the quarter a year earlier.

The paper is in the midst of a shift in its revenue model, seeking to insulate itself from industry-wide declines in advertising revenue to making money more from paying subscribers. And in that regard, it’s doing quite well.

The company said paid subscriptions reached an all-time high of 4.7 million digital and print subscriptions in the second quarter, with 3.8 million people paying for at least one New York Times online product. The trend line is sharp, as well, with the company having nearly doubled subscription adds year-over-year.

Growing subscriptions would seem to contradict, at least somewhat, Trump’s assertion on Twitter that the paper’s “reputation is ruined.”

When it released quarterly results in early August, New York Times CEO Mark Thompson said a dip in profits was because it is putting more money into adding subscribers.

Shooting For 10 Million Subscribers

"We’re making steady progress toward our goal of reaching 10 million total subscriptions by 2025,” Thompson said. “While profitability declined in the quarter, that is in large part a result of continued investment into growing our subscription business."

While the company’s stock is up substantially year to date, it hasn’t fully recovered from the huge drop it saw in early August after the quarterly report showed the decline in profits.

The stock lost around 20% of its value in the days after the print, but has risen slightly since then, getting back to where it was after a big early-year run-up that saw the stock go from about $22 in early January to just under $30 a month later.

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