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How NY Times (NYT) is Countering Soft Advertising Demand

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The New York Times Company (NYT - Free Report) has been struggling with dwindling advertising revenues for quite some time now. Analysts pointed that increasing online readership has made the print-advertising model redundant. Nevertheless, the company has been contemplating new avenues of revenue generation in a bid to counter the same.

Areas to Counter

The U.S. newspaper publishing industry has long been grappling with sinking advertising revenues. The downturn in the newspaper publishing industry witnessed in the last few years was aggravated as print readership declined.

Advertising remains a significant source of revenue for The New York Times Company, which in turn is dependent upon the health of the economy. We observed that the company has been struggling with dwindling advertising revenue for quite some time now. Total advertising revenue dropped 6.9% during the first quarter of 2017, following declines of 9.7%, 7.7%, 11.7% and 6.8% witnessed in the fourth, third, second and first quarters of 2016, respectively. Maintaining the same chronological order print advertising revenue fell 17.9%, 20.4%, 18.5%, 14.1% and 9%, respectively.

Strategies Adopted

The New York Times Company has been contemplating on new avenues of revenue generation. The company is adapting to the changing face of the multiplatform media universe, and has already included mobile and reader application products in portfolio. Other publishing companies such as New Media Investment Group Inc. , Gannett Co., Inc. (GCI - Free Report) and The McClatchy Company (MNI - Free Report) are also trying to adapt to different revenue generating ways. These endeavors have led the stock to increase roughly 22.5% in the past three months and outperform the Zacks categorized Publishing-Newspapers industry’s gain of 9.2%.

The New York Times Company is concentrating on online activities, as evident from its pay-and-read model. Its pricing system for was launched on Mar 28, 2011. The company notified that the number of paid digital subscribers reached 2,201,000 at the end of first-quarter 2017 – rising 348,000 sequentially (308,000 came from the digital news products and 40,000 from the Crossword product) and 62.2% year over year. We also noted that digital advertising revenue advanced 18.9% to $49.7 million, after witnessing an increase of 10.9% in the final quarter of 2016.

The 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.

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