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January 20, 2018

A Stormy Set of Revenue Numbers for The New York Times

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First published at Harvard’s Nieman Journalism Lab


On the call for The New York Times’ first quarter financials in April, executives cautioned that the bright Q1 results — up in overall revenue and in print and digital ad revenue — might not hold. They were right.

CEO Mark Thompson — whose chief mandate is to get first revenue and then profit growing again — had a little momentum going: Two of the last three quarters had shown revenue growth. That doesn’t sound like a lot, but it was a real outlier in an industry still struggling to grow revenues, as it has since 2007 (“The newsonomics of zero and The New York Times”).

To be sure, the 0.6 percent downturn in revenues is a minor, mostly psychological setback. It does, though, point to a big problem for all dailies — the great decline in print advertising continues to swamp much of the other progress news companies are making in reader revenue and, for some, new digital ad revenue streams.

Compare this Q2 report to Q1, by the numbers:

  Q2 2014 Q1 2014
Overall revenue -0.6% 2.6%
Print ad revenue -6.6% 4%
Digital ad revenue 3.4% 2%
Circulation revenue 1.4% 2%
Increase in digital-only subs        32,000   39,000
Net operating income $16.5 million        $22.1 million


It’s that awful 6.6 percent print decline that’s the Times’ big issue. If the Times, and others, can moderate losses, then they have a fighting chance to transform the business to digital. Without getting closer to zero (or somehow turning positive, as with that surprise 4 percent in Q1), it’s been near-impossible to grow overall.

One other troubling spot for the Times: circulation revenue. It’s up, but a tepid 1.4 percent, a little less than Q1′s 2 percent. That’s doubly concerning. We expected that Q1 would be lower, given that the Times had saturated much of its full-price market, topping out at 799,000 digital-only subs then. The introduction of NYT Now (“The Newsonomics of NYT Now’s Collective Intelligence“) in late March upped hope that a new substantial market of younger, more cost-conscious ($2/week), mobile-oriented buyers would develop. The introduction of Times Premier, at the same time, promised some upsell money for VIP-status-seeking buyers. (It also launched niche NYT Opinion in June, so we’d expect the financial impact from that product to be minor in this quarterly report.)

The Times didn’t release specific NYT Now, NYT Opinion, or Times Premiere numbers. We do know though that the new products accounted for a majority of the new 32,000 digital-only subs. So let’s say they accounted for 20,000 or so new subs. In and of itself, that’s disappointing, a small number — with lots of marketing and promotion — and small new revenue on what are already lower-priced niche products. It would also tell us that Times’ all-access full-price push has really slowed, to 12,000 or so — an expected plateauing.

If the fundamental growth engine for reader revenue is slowing to a crawl, and the new products aren’t pumping out new customers, that points to what will be a growing problem in the quarters ahead. And for the rest of the newspaper industry — trying to figure out what it might be able to learn from from the Times’ reader revenue pushes — the slow pick-up on NYT Now will be a cautionary tale.

In the Times’ carefully chosen words, we can see that concern: “We’re encouraged by the reaction of users to the products, especially the high consumer satisfaction levels we’re seeing with the NYT Now app. But, while we expected the portfolio to take time to build, we want to accelerate the rate of growth in subscription sales, so over the coming months, we will refine some of the offers and the way we market the portfolio to accomplish this.”

The impact on profits is clear. The Times eked out $16.5 million for the quarter, down $5.5 million from a quarter earlier.

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