Advertising remains a significant source of revenue for The New York Times Company (NYT - Free Report) . The U.S. newspaper publishing industry has been grappling with declining print readership and advertising revenues for a quite long time now. Readers’ preference for accessing news online, mostly free, has made the industry’s print-advertising model increasingly redundant.
Although, the company's total advertising revenue improved 1.3% year over year during the second quarter of 2019, management expects the same to decline in the high-single digits during the third quarter. Print advertising revenue fell 8% in the quarter under review, following a decline of 11.9% in the preceding quarter.
Further, management’s announcement that the second half of 2019 is likely to be challenging for digital advertising as a result of comparisons against sturdy performance in the prior-year period was also not well received by investors. The company expects digital advertising revenue to fall in the high-single digits during the third quarter.
As a result of above, shares of this Zacks Rank #4 (Sell) company have fallen roughly 18.4% compared with industry’s decline of 10.6% in the past three months.
Nonetheless, The New York Times Company is constantly making efforts to rapidly acclimatize to the changing face of the multiplatform media universe. With growing inclination of readers toward the Internet, advertisers followed suit, and so did the newspaper companies. Trimmed print operations paved the way for online publications that led to the development of a pay-and-read model.
Notably, the number of paid digital subscribers reached roughly 3,780,000 at the end of second quarter of 2019 – improving 197,000 sequentially and 30.7% year over year. The New York Times Company added 66,000 new subscriptions to Cooking and Crossword products.
Subscription revenue grew 3.8% to $270.5 million during the quarter under review primarily courtesy of increase in the number of subscriptions to the company’s digital-only products. Revenue from digital-only subscriptions products jumped 14.1% to $112.6 million. Management now projects total subscription revenue in the third quarter to increase in the low to mid-single digits, while digital-only subscription revenue is likely to rise in the mid-teens. The company has set a goal to reach 10 million subscriptions by 2025.
The New York Times Company is diversifying business, adding new revenue streams, realigning cost structure and streamlining operations to increase efficiencies. The company has been making concerted efforts to lower dependency on traditional advertising and focus on digitization. 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.
Other publishing companies such as New Media Investment Group Inc. , Gannett Co., Inc. (GCI - Free Report) and The McClatchy Company are also trying to adapt to different ways of revenue generation.
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