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NY Times (NYT) Q3 Earnings Beat, Digital Subscribers Surge

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The New York Times Company (NYT - Free Report) reported better-than-expected third-quarter 2018 results and registered higher digital-only subscriptions. Digital advertising also improved significantly. This was the ninth straight quarter, when this NY-based company delivered positive earnings surprise, while revenue also beat the Zacks Consensus Estimate for the fourth consecutive quarter.

The company delivered adjusted earnings from continuing operations of 15 cents a share that beat the Zacks Consensus Estimate of 13 cents, and rose from 12 cents in the year-ago period. The newspaper publisher's total revenue of $417.3 million rose 8.2% year over year, and came ahead of the Zacks Consensus Estimate of $410.3 million.

Let’s Delve Deep

Subscription revenue grew 4.5% to $257.8 million, primarily due to increase in the number of subscriptions to the digital-only products. Revenue from digital-only subscriptions products surged 18.1% to $101.2 million. Including the impact of the additional week in 2017, management now projects total subscription revenue in the fourth quarter of 2018 to decline in low to mid-single digits, while digital-only subscription revenue is likely to rise in the high-single digits.

Total advertising revenue came in at $121.7 million in the reported quarter, up 7.1% year over year. In the preceding quarter, total advertising revenue had declined 9.9%. Total advertising revenue in the fourth quarter is projected to decline in the mid-single digits.

Print advertising revenue fell 0.7% to $63.9 million in the quarter under review, following a decline of 11.5% in the preceding quarter.

Digital advertising revenue increased 17.3% to $57.8 million, following a decline of 7.5% in the preceding quarter. Management expects digital advertising revenue to increase in the mid-single digits in the final quarter.

Adjusted operating costs came in at $363.7 million during the quarter, up 9.7% year over year on account of rise in marketing and commercial printing costs. Management now anticipates adjusted operating costs to increase in the mid-single digits.

Total adjusted operating profit declined 0.7% to $53.7 million as growth in digital subscription, digital advertising and other revenues was offset by increased adjusted operating costs.

The New York Times Company Price, Consensus and EPS Surprise



The New York Times Company Price, Consensus and EPS Surprise | The New York Times Company Quote

Other Financial Aspects

The New York Times Company ended the quarter with cash and marketable securities of about $794.5 million, and total debt and capital lease obligations of approximately $252.8 million. The company incurred capital expenditures of about $15 million during the quarter. Management envisions capital expenditures of $60 million for 2018.

Wrapping Up

The New York Times Company has come a long way from being a sole provider of news content and advertising on print publications. The company is no longer restricted to print. As readers swarmed to the Internet, advertisers followed suit and so did newspaper companies. Trimmed print operations paved way for online publications that led to the development of paywalls.

The New York Times Company’s pricing system for The company notified that the number of paid digital subscribers reached 3,095,000 at the end of third-quarter 2018 – rising 203,000 sequentially and 24.4% year over year.

Industry experts cited that focus on new avenues of revenue generation is necessary to counter the dwindling print advertising revenues. Surely, The New York Times Company has succeeded in this space. The company’s efforts to aid growth have led this Zacks Rank #3 (Hold) stock to surge roughly 23% in the past six months compared with the industry’s growth of 6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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.

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