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Subscription a Key Catalyst for NY Times (NYT) in 2021

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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 (NYT - Free Report) 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 and lower dependency on traditional advertising revenues and sturdy balance sheet positions it better to tide over the pandemic. Clearly, the aforementioned factors place this Zacks Rank #2 (Buy) stock well going into 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Subscription a Key Driver

The New York Times Company’s digital-only subscribers reached roughly 6,063,000 at the end of the third quarter of 2020 — rising 393,000 sequentially and 2,010,000 year over year. Of the 393,000 total net additions, 275,000 came from the digital news product, while Cooking, Games and audio products made up the rest.

At the end of the quarter, the company had 6,894,000 subscriptions across its print and digital products.

Subscription revenues improved 12.6% to $301 million primarily courtesy of 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 34% to $155.3 million. Management now projects fourth-quarter 2020 total subscription revenues to increase about 14%, while digital-only subscription revenues are projected to surge approximately 35%.

In third-quarter earnings release, Meredith Kopit Levien, president and CEO said, “For the second quarter running, total digital revenue exceeded print revenue. And for the first time, total digital-only subscription revenue exceeded print subscription revenue, making digital-only subscriptions not just the central engine of the Company’s growth, but on its way to being our largest revenue stream.”

Wrapping Up

It comes as no surprise that the concerted efforts have helped the shares of The New York Times Company to advance 48.4% in a year compared with the industry’s rally of 45.1%.

Markedly, 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 sustaining momentum.

3 More Key Stocks

Fox Corporation (FOXA - Free Report) has a trailing four-quarter earnings surprise of 106.6%, on average. Currently, the stock carries a Zacks Rank #2.

Nexstar Media Group, Inc. (NXST - 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 32.9% in the past three months. The stock carries a Zacks Rank #2.

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