The New York Times had a solid 2018 year, despite a dip in profits during the fourth quarter.
The newspaper tallied net income of $127.5 million for the full fiscal year on total revenue of $1.75 billion, led by subscription revenue. This represents a 4.4 percent increase from fiscal 2017, when the company pulled in $1.67 billion in total revenue and a net income of only $6.8 million. Diluted earnings per share for 2018 also rose to 75 cents, compared to just 3 cents in 2017. Subscription revenue rose to $1.04 billion, a 3.4 percent boost over $1 billion a year ago.
For the fourth quarter, the picture came out a bit differently, despite the company netting 265,000 new digital subscriptions, which chief executive officer Mark Thompson said is the “biggest gain since the months immediately following the 2016 election.” Nevertheless, subscription revenue came out to $263.6 million for the fourth quarter, compared with $269.4 million a year ago (a period that included an extra week due to a change in calendar), but net income grew to $56.9 million, compared to a loss of $57.8 million a year ago. Total revenue during the period also grew, coming out to $502.7 million, compared to $484.1 million a year ago, while operating profit fell to $74.7 million, a 17.5 percent decline from $90.5 million in operating profit a year ago.
The company cited increased costs related to marketing, its advertising business and subscription acquisition as cause for the operating profit decline, and said it expects profits for the upcoming first quarter to increase around 10 percent.
For the year overall, The Times’ segment that saw the most growth was its “other” category, which represents revenue from affiliate referral links, syndication and licensing, rental income and live events, increasing 36 percent year-over-year to $147.8 million. Digital projects alone in this category, mainly affiliate referrals and licensing related to the digital archive, drove $49.4 million in revenue.
Meanwhile revenue from advertising remained essentially flat for 2018 at $558.3 million, despite growth in the fourth quarter of 5 percent to $191.7 million. The fourth quarter also saw for the first time digital advertising exceed print advertising, with a 54 percent to 46 percent split, respectively. In a call with analysts, Thompson said proportions in future quarters may change, “but this is still a significant moment in the digital transition of The New York times.” He went on to point out that print ad revenue during the fourth quarter was actually the paper’s smallest revenue stream, overall, and fell 6 percent year over year.
Thompson touted the company reaching $709 million in total digital revenue during 2018, noting a five-year goal of hitting $800 million by 2020, and reiterated the company’s “new goal” of hitting 10 million subscriptions by 2025. It’s ambitious considering The Times has 4.3 million subscriptions, 3.4 million digital, and means the company will need to add around 815,000 new subscribers a year until then.
“There’s reason to believe the ultimate number of subscribers could be far larger,” Thompson said.
As for how the paper will reach that goal, or exceed it, Thompson said it will be through continued investment in its journalism, focused on investigative work, along with opinion and multimedia, like podcasts and TV.
“I never tire of reminding people that nearly three quarters of the audience to The Daily, Apple’s most downloaded podcast of 2018, are 40 years old or younger,” Thompson said.
There will also be an expansion of its digital product and marketing segment, in order to further drive subscription.
Thompson went on to note that audience behavior around the year’s subscription additions “suggest that our present moment is broad-based and far less reliant on the politics of the moment that the surge two years ago.” The Times’ over the last year has also rolled out separate subscriptions for its crossword and recently its cooking section (which has a full advertising campaign behind it) and subscriptions to both grew 18 percent year over year.
While The Times is clearly in investment mode, it’s also comfortable in its profit position, leaving the board to approve a dividend increase to 5 cents a share, up from a previous 1 cent per share.
“We’re still exploring the scope for further investment to accelerate the growth of our existing digital model,” Thompson said. “Nonetheless, we’ve clearly made some progress.”
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