The U.S. newspaper publishing industry is no longer restricted to print. This is largely because rampant technological advancements and the steady adoption of the same have opened up multiple ways by which the industry can reach its target audience. The New York Times Company (NYT - Free Report) is fast acclimatizing to the changing face of the multiplatform media universe and has already included mobile and reader application products in portfolio.
Undoubtedly, changing consumer preferences and innovative technologies have altered the way in which news is offered and consumed. Readers’ preference for accessing news online, mostly free, has made the industry’s print-advertising model increasingly redundant. Now as readers have swarmed to the Internet, advertisers followed suit and so did newspaper companies.
Other publishing companies such as New Media Investment Group Inc. (NEWM - Free Report) , Gannett Co., Inc. (GCI - Free Report) and The McClatchy Company are also trying to adapt to different revenue generating ways.
Let’s Do a Brief Introspection
The New York Times Company has been contemplating new avenues of revenue generation in a bid to counter the dwindling print advertising revenues. We noted that print advertising revenue fell 1.8% in the first quarter of 2018.
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 recently declared that it has now more than 400,000 standalone subscribers to The New York Times Crossword. The company notified that the number of paid digital subscribers reached 2,783,000 at the end of the first quarter of 2018 — rising 139,000 sequentially and 25.5% year over year. Of the 139,000 subscriptions, 99,000 came from digital news products, while the balance came from Cooking and Crossword products.
Subscription revenue grew 7.5% during the first quarter, primarily due to increase in the number of subscriptions to the digital-only products. Revenue from digital-only subscriptions products surged 25.8%. Management now projects total subscription revenue in the second quarter of 2018 to increase in the mid-single digits.
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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. These helped the company to post seventh straight quarter of positive earnings surprise, when it reported first-quarter 2018 results.
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