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Subscription Revenues a Key Factor for NY Times (NYT) Growth

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·4 min read
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The New York Times Company NYT has been constantly making efforts to rapidly acclimatize to the changing face of the multiplatform media universe. This New York-based company has been keeping pace with the changing times by utilizing technological advancements to reach their target audience more effectively. Notably, the company’s business model with greater emphasis on subscription revenues bodes well. However, declining print readership and advertising revenues still remain areas of concern.

Subscription Revenues a Key Pillar

The New York Times Company’s digital-only subscribers reached roughly 6,690,000 at the end of the fourth quarter of 2020 — rising 627,000 sequentially and 2,295,000 year over year. Of the 627,000 total net additions, 425,000 came from the digital news product, while remaining 202,000 came from Cooking, Games and audio products.

At the end of the quarter, the company had 7,523,000 subscriptions across its print and digital products.

Subscription revenues improved 14.7% to $315.8 million primarily due to increase in the number of subscriptions to the company’s digital-only products, which include news product, and Cooking, Games (previously Crossword) and audio products. Revenues from digital-only products jumped 36.8% to $167 million. Management had earlier guided about 15% increase in total subscription revenues and a surge of approximately 35-40% in digital-only subscription revenues for the first quarter of 2021.

In fourth-quarter earnings release, Meredith Kopit Levien, president and CEO said, “In 2020, we reached two key milestones, both of which we expect to be enduring: digital revenue overtook print for the first time, and digital subscription revenue, long our fastest growing revenue stream, is also now our largest.”

Near-Term Concerns

Advertising remains a significant source of revenues for The New York Times Company. Total advertising revenues declined 18.7% during the fourth quarter of 2020, while print advertising revenues plunged 37.9%. Management had cautioned about sharp fall in advertising revenues in the first quarter of 2021. The company had forecast high-teens decline in total advertising revenues for the first quarter.

Bottom Line

The New York Times Company has been diversifying business, adding new revenue streams, realigning cost structure and streamlining operations to increase efficiencies. The company is not only gearing up to become an optimum destination for news and information but is also focusing on lifestyle products and services. Management had projected low to mid-single digit increase in digital advertising revenues for the first quarter of 2021.

We note that shares of this Zacks Rank #3 (Hold) company have appreciated 5.8% in the past six months compared with the industry’s rally of 8.3%.

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Fox Corporation FOXA has a trailing four-quarter earnings surprise of 80.5%, on average. Currently, the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nexstar Media Group NXST, which flaunts a Zacks Rank #1, has a long-term earnings growth rate of 10%.

The E.W. Scripps Company SSP reported a positive earnings surprise of 184.8% in the last reported quarter. The stock carries a Zacks Rank #2 (Buy).

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