The New York Times Co. started off the year with increased profits, driven by “strong” revenues from digital subscribers and even a boost in print.
The newspaper tallied an operating profit of $34.1 million, an increase of 22 percent, compared to the same quarter last year, on total revenue of $413.9 million, a 3.6 percent increase. Revenues from subscriptions increased 7.5 percent during the quarter, while advertising revenue fell 3.4 percent. That dip was led by a 6 percent decrease in digital ads, which fell to $46.7 million, coupled with a 1.8 percent dip in print ads. Nevertheless, the first quarter was the best for print advertising The Times has had since 2015.
The decline in digital ads reflects “a continued decrease in traditional web site display advertising, which more than offset increases in revenue from smartphone advertising,” the company said.
Operating costs increased 2.5 percent during the quarter to $378 million, mainly due to increased compensation, but the company said that was “partially offset” by a decrease in print production. The Times also spent close to $2 million on the consolidating of its New York newsroom and plans to lease a total of seven floors, four of which are already leased an expected to be generating revenue by the second half of this year.
But subscriptions made up the difference. The Times saw a big boost in paying digital-only readers, which rose by 139,000, or 25.5 percent, during the quarter to about 2.78 million in total. Of those new subscribers, 99,000 signed up for news, and the rest for digital products like the Cooking and Crossword sections.
Mark Thompson, The Times’ president and chief executive officer, attributed the rise in subscriptions to “the strong demand for the high quality, independent journalism that The Times produces.” He noted during a call with financial analysts that total subscribers including print now exceeds 3.7 million.
“We’re seeing good retention of new cohorts of subscribers and continue to believe there is a big opportunity to further grow this increasingly important part of our business,” Thompson added. “Subscription revenues accounted for nearly two-thirds of the company’s revenues and, as we continue to adapt our subscription model and introduce new products, we expect that trend to continue.”
Longer term, Thompson sees subscribers, led by digital, hitting 10 million. Efforts around raising international expansion, moves into television and more branded events, along with leveraging platforms like Facebook and Google, are all part of plans to get there.
“When we talk about 10 million, we’re talking about a [three-fold] increase recognizing that we’ve already seen a [two-fold] increase during my time as ceo,” Thompson, who has been in his role since late 2012, said. “Without being fanciful, I think there’s probably a great deal of scope for this model to grow in a way that will not see direct costs growing at the same rate.”
While the first quarter ended on a good note, the results come as The Times continues to deal with sexual harassment issues within its newsroom. This week, The Times Metro editor Wendell Jamieson, who’d been at the paper for 18 years, abruptly resigned over what he reportedly and vaguely described in a memo as “mistakes.” Times staff have since reported that Jamieson was accused by at least three women of “inappropriate behavior.” Another Times staffer, White House reporter Glenn thrush, faced varying allegations of work misconduct in the wake of the #MeToo/Time’s Up movement The Times galvanized with its initial story on decades of harassment and assault by film producer and studio head Harvey Weinstein, which just won the paper a Pulitzer Prize. Thrush was suspended last year but has since returned to work.
As for digital advertising, Thompson attributed the decrease in digital to “the lumpiness of our strategic partnership business,” along with the fact that the size of The Times audience “did not quite reach the peaks of the immediate post-election and inauguration period” of last year. But he also noted that these changes are not all bad.
“I can’t remember a time when conversations with [chief marketing officers] were more positive,” Thompson said. “In the era when a single campaign can be worth more than $10 million to us — we’re definitely there.”
Looking ahead, Thompson admitted that digital advertising revenue is expected to be down again next quarter, by a percentage in the low-teens, but he sees a return to growth by the third quarter of this year given things that are already in the pipeline. Subscriptions, on the other hand, are expected to keep growing in the second quarter, by a mid-single digit percent.
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