As The New York Times operated at full tilt through a fraught election — one of the most consequential votes in modern American history — the company announced a milestone: As of last week, it topped seven million paid subscribers, a high.
The New York Times Company has bet on digital readers as the future engine of its business since 2011, when it started charging for online content — and it has largely been a good gamble. In the three-month period ending in September, for the first time, the revenue from digital subscribers was greater than the money the company brought in from print subscribers, The Times said Thursday as part of its third-quarter financial report.
“Our strategy of making journalism worth paying for continues to prove itself out,” Meredith Kopit Levien, who took over as chief executive in September, said in a statement. Digital subscriptions would not only be the central driver of the publisher’s growth, Ms. Levien added, but will eventually become its biggest business.
Total revenue during the third quarter of 2020 was flat, at $426.9 million, and adjusted operating profit jumped 28 percent, to $56.5 million, beating investors’ expectations on both counts. Net income doubled to $33.6 million.
There is little doubt that Donald J. Trump’s presidency has helped lift The Times’s subscription business, but the readership numbers have risen at a steady pace during his years in office. The company set a goal of 10 million subscribers by 2025, a mark that appears within striking distance.
“The continued demand for quality, original, independent journalism across a range of topics makes us even more optimistic about the size of the total market for digital journalism subscriptions and our position in it,” Ms. Levien said.
The company added 393,000 digital subscribers during the three months ending in September, bringing the total of paid online readers to more than six million. Of that group, about 4.7 million pay for the core news product, with the rest subscribing to the crossword and cooking apps. An additional 831,000 readers continued to pay for print subscriptions, a drop from last year, reflecting a steady decline in the broadsheet business.
The jump in digital readers fell short of the paper’s record-breaking run in the second quarter as the coronavirus pandemic raged across the country, but the performance was enough to lift total digital revenue. Online sales are now on pace to exceed print operations for the first time on an annual basis.
But a worrying trend might be this: Digital readers were the only growth business for The Times. Every other unit fell. As online subscription revenue rose 34 percent, to $155.3 million, print subscriptions decreased 3.8 percent to $145.7 million. And advertising sales, once the lifeblood of the newspaper business, dropped 30 percent, to $79.3 million. The pandemic has cut even deeper into ad sales, which were already falling as fewer people read the paper in print and many companies cut their marketing budgets.
Online advertising has fallen, too, despite the gains in digital readers. The decline came about, in part, because of a falloff in the company’s native content business, in which it creates paid articles for sponsors. As a whole, digital advertising fell 12.6 percent, to $47.8 million.
Altogether, advertising is likely to become a more narrow business for The Times, even as Facebook and Google continue to thrive in that area.
For the last quarter of the year, the company expects both subscriptions and advertising to move at the same year-over-year pace as they did in the third quarter. Subscription revenue is estimated to rise about 14 percent, with digital subscription sales increasing about 35 percent. Total ad revenues are expected to fall 30 percent, with online advertising dropping around 15 percent.
The publisher’s cash hoard continued to grow: The Times now has $800 million on the books, with $250 million available through a revolving credit line. The company no longer has any debt, having paid off a loan last year that allowed it to buy back its headquarters building in Midtown Manhattan.
The publisher’s sizable cash position could mean more acquisitions to come. This year, the company spent more than $30 million buying several start-ups, including Serial Productions, the company behind the hit podcast “Serial.”
Source: Read Full Article