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Subscription Revenues a Key Driver for NY Times (NYT) in 2022

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With rapid digitization in the core areas of advertising and the growing inclination of readers toward the Internet, newspaper companies have been diverting resources toward online publications. No wonder, The New York Times Company (NYT - Free Report) has been making consistent 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. Its business model with greater emphasis on subscription revenues bodes well going into 2022.

Subscription Revenues a Key Pillar

The New York Times Company notified that the number of paid digital-only subscribers reached roughly 7,588,000 at the end of the third quarter of 2021 — rising 455,000 sequentially and 1,525,000 year over year. Of the 455,000 total net additions, 320,000 came from the digital news product, while the remaining came from Games, Cooking and Wirecutter.

At the end of the third quarter, the company had approximately 8,383,000 subscriptions across its print and digital products.

In the quarter, subscription revenues improved 13.8% to $342.6 million primarily due to an increase in the number of subscriptions to the company’s digital-only products, which include news products, and Games, Cooking, Audm and Wirecutter, as well as a benefit from subscriptions graduating to higher prices from introductory promotional pricing. Revenues from digital-only products jumped 27.9% to $198.6 million.

For the final quarter, management anticipates an increase of about 12% year over year in total subscription revenues and a rise of approximately 25% in digital-only subscription revenues.

Zacks Investment ResearchImage Source: Zacks Investment Research

Digital Advertising Also a Driving Force

Digital advertising revenues, which represented 60.4% of total advertising revenues, surged 40.2% to $67 million in the third quarter. This followed an increase of 79.6% in the second quarter. The year-over-year increase can primarily be attributed to higher direct-sold advertising, including traditional displays and podcasts.

Total digital advertising revenues are anticipated to increase in the mid-teens in the final quarter. However, management informed that the rate of growth is likely to decelerate from the third quarter, partly as a result of more difficult comparisons in the fourth quarter.

Wrapping Up

The New York Times Company, which carries a Zacks Rank #3 (Hold), has been diversifying business, adding 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 also focusing on lifestyle products and services.

Shares of The New York Times Company have advanced 6.5% in the past six months compared with the industry’s rally of 7.5%.

3 Key Stocks

Some better-ranked stocks include AMC Networks Inc. (AMCX - Free Report) , Entravision Communications Corporation (EVC - Free Report) and News Corporation (NWSA - Free Report) .

AMC Networks, a global entertainment company known for its popular and critically-acclaimed content, carries a Zacks Rank #2 (Buy). AMCX has a trailing four-quarter earnings surprise of 185.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for AMC Networks’ current financial year revenues and EPS suggests growth of 8.5% and 20.1%, respectively, from the year-ago period.

Entravision Communications, a global media, marketing and technology company, has a Zacks Rank #2. EVC has a trailing four-quarter earnings surprise of 29%, on average.

The Zacks Consensus Estimate for Entravision Communications’ current financial year revenues and EPS suggests growth of 118.7% and 9.3%, respectively, from the year-ago period.

News Corporation, a diversified media and information services company, carries a Zacks Rank #2. NWSA has a trailing four-quarter earnings surprise of 300%, on average.

The Zacks Consensus Estimate for News Corporation’s current financial year revenues suggests growth of 6.5% from the year-ago period.