Back to top

Image: Bigstock

Subscription Forms Key Pillar Supporting NY Times (NYT) Growth

Read MoreHide Full Article

The New York Times Company (NYT - Free Report) 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 and lower dependency on traditional advertising revenues and sturdy balance sheet positions it better to tide over the pandemic.

Notably, the company’s paid digital-only subscribers reached roughly 5,670,000 at the end of second-quarter 2020 — rising 669,000 sequentially and 1,890,000 year over year. Of the 669,000 total net additions, 493,000 came from the digital news product, while Cooking, Crossword and audio products accounted for the remaining.

At the end of the quarter, the company had 6,510,000 subscriptions across its print and digital products, and looks well poised to attain the target of 10 million subscriptions by 2025.

Subscription revenues improved 8.4% to $293.2 million primarily courtesy of increase in the number of subscriptions to the company’s digital-only products, which include news product, and Cooking, Crossword and audio products. Revenues from digital-only products jumped 29.6% to $146 million. Management projects third-quarter 2020 total subscription revenues to increase about 10%, while digital-only subscription revenues are projected to surge approximately 30%.

It comes as no surprise that the concerted efforts have helped the shares of this Zacks Rank #3 (Hold) company to gain 36.2% so far in the year compared with the industry’s rally of 31%.

Few Aspects to Know

Rapid digitization in the core areas of advertising, subscriptions and sales, and distribution services has turned out to be a major source of revenues. With the growing inclination of readers toward the Internet, newspaper companies started trimming their print operations, and divert resources toward online publications. The New York Times Company has been constantly making efforts to rapidly acclimatize to the changing face of the multiplatform media universe. The company adopted pay-and-read model in 2011.

The 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. We believe that such consistent endeavors will aid the stock in retaining momentum.

Near-Term Concerns

Advertising remains a significant source of revenues for The New York Times Company. Total advertising revenues declined 43.9% during the second quarter, while digital advertising revenues decreased 31.9%. Looking into the third quarter, management cautioned about sharp fall in advertising revenues. Total advertising revenues in the third quarter are estimated to decline approximately 35-40%. Also, management expects digital advertising revenues to decrease roughly 20% in the third quarter, owing to the ongoing pandemic.

Bottom Line

The U.S. newspaper publishing industry has been grappling with declining print readership and advertising revenues for quite some time now, and the scenario has worsened thanks to the coronavirus pandemic. Nevertheless, the industry participants are evolving from being just pure news-content providers and advertisement platforms.

3 Stocks That Deserve Your Attention

TEGNA (TGNA - Free Report) , which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gray Television (GTN - Free Report) , which carries a Zacks Rank #2, has a long-term earnings growth rate of 10%.

Shares of The E.W. Scripps Company (SSP - Free Report) has gained 20.3% in the past three months. The stock carries a Zacks Rank #2.

Zacks’ 2020 Election Stock Report:

In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins.

Check out the 2020 Election Stock Report >>