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NY Times (NYT) Down in 3 Months: Is the Drop Momentary?

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In spite of The New York Times Company’s (NYT - Free Report) concerted efforts to lower its dependency on traditional advertising and focus on digitalization, shares of this news and information provider have tumbled roughly 12.7% compared with the industry’s decline of 12% in the past three months. Analysts pointed that fall in advertising revenue both in print and digital coupled with sluggish growth in paid digital subscriber base during the second quarter of 2018 impacted the stock’s performance.

However, industry experts believe that the company’s persistent endeavors to rapidly acclimatize to the changing face of the multiplatform media universe will definitely help the stock to regain its lost momentum.

Let’s Introspect

Needless to say, soft advertising revenue, primarily the print, remains one of the factors behind the stock’s dismal run. Total advertising revenue decreased 9.9% year over year during the second quarter of 2018. This follows a decline of 3.4% in the preceding quarter.

Management anticipates total advertising revenue to fall in the low-single digits in the third quarter. Meanwhile, print advertising revenue fell 11.5%, while digital advertising revenue slid 7.5% during the quarter under review.

Further, The New York Times Company added 109,000 paid digital subscribers during the second quarter, lower than 139,000 and 157,000 subscribers added during the first quarter of 2018 and the final quarter of 2017, respectively.



Catalysts

The New York Times Company has been contemplating new avenues of revenue generation in a bid to counter the dwindling print advertising revenues. The New York Times Company has been realigning cost structure and streamlining operations to increase efficiencies. The company is concentrating on online activities, as evident from its pay-and-read model. It had also launched The New York Times Crossword app for Android users, whereby subscribers have access to the daily puzzle and the daily Mini puzzles.

The company notified that the number of paid digital subscribers reached 2,892,000 at the end of the second quarter of 2018, rising 24% year over year. Subscription revenue grew 4.2% to $260.6 million primarily due to increase in the number of subscriptions to the digital-only products.

Revenue from digital-only subscriptions products surged 19.6% to $98.7 million. Management now projects total subscription revenue in the third quarter of 2018 to increase in the mid-single digits, while digital-only subscription revenue is likely to rise in the high-teens. The company expects digital advertising revenue to increase roughly 10% in the third quarter.

Wrapping Up

The New York Times 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 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 its T Brand Studio that helps in creating digital ad innovation and branded content. Further, it has launched digital subscriptions for NYT Cooking, its popular recipe site and app.

The New York Times Company is diversifying business, adding new revenue streams, strengthening balance sheet and restructuring portfolio. It had offloaded assets in order to re-focus on its core newspapers and pay more attention to online activities.

Other publishing companies such as New Media Investment Group Inc. , Gannett Co., Inc. (GCI - Free Report) and The McClatchy Company are also trying to adapt to different revenue generating ways.

The New York Times Company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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