According to the New York Times Co., for the first time on Wednesday it reported higher revenues from its digital business from its printing operations, a “turning point” in the newspaper’s nearly 170-year history, according to CEO Mark Thompson.
“And we don’t think we’re likely to come back from now on,” Thompson told CNBC’s Power Lunch.
The Times reported $ 185.5 million in digital subscription and advertising revenue, compared to $ 1
Shares of the company rose 1.26% on Wednesday and closed at $ 47.38 per share, which reversed earlier declines in the session. Shares, which have risen nearly 44% so far this year, are trading at levels not seen for more than 15 years.
The Times reported a 7.5 percent drop in total revenue from year to year as advertising sales fell 43.9 percent in the quarter due to the coronavirus pandemic. However, digital advertising revenue amounted to $ 39.5 million, or 58.3% of total advertising sales. This is 48.4% of total sales for the same quarter last year.
Subscription revenue grew 8.4% year over year, driven by a 29.6% increase in digital technology revenue alone to $ 146.0 million. Print subscription revenue fell to $ 147.2 million, down 6.7 percent, mostly due to lower newspaper sales.
The Times and the media industry as a whole must overcome the declining circulation of print newspapers in recent years by harnessing the expanded scope of the Internet into a great business operation.
“The physical paper of the Times … remains very strong, so it took a while to see this crossover. But digital has grown tremendously in the last eight years when I was CEO,” said Thompson, who is leaving work. in September. “We had something like 650,000 digital subscribers in 2012 when I arrived, and we’re pretty close to 10 times that.”
Mark Thompson spoke at the CNBC Evolve event in New York on June 19, 2019.
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The company added 669,000 net digital subscriptions in the second quarter – 493,000 for news, while 176,000 were for other digital products, including its cooking and crossword puzzle sections. It ended the quarter with about 6.5 million paid subscribers, including print and digital.
The total number of new digital subscribers far exceeded expectations from JPMorgan, which projected an additional 380,000 subscribers. In a note Wednesday, the company’s analysts maintained their $ 50 share price for December 2021. It also has an overweight rating .
Analyst Alexia Quadrani said in a note that the shares of the New York Times could “take a break” until the effects of the coronavirus pandemic are no longer in the spotlight. However, she expressed confidence in the digital transformation of the company and believes that there is a clear path to reaching its goal of 10 million subscribers in 2025.
“We continue to like the story for a longer period of time, given the success of the company’s migration to digital, with the increase in volume, the ad cushion decreases,” Quadrani writes. “In the near future, we expect digital-only growth to continue to be supported by a stronger news cycle and increased promotional activity, which is an obvious benefit to NYT distribution.”
Thompson, a former CEO of British Broadcasting Corporation, said he believes the company’s stock has far surpassed the broader stock market this year as Wall Street acknowledges its declining reliance on advertising revenue.
“Although the percentage numbers in advertising, the losses are quite significant on the advertising side, look at the profitability in general and the picture is much more mixed,” he said. “What the market has seen is that the main driver of digital subscription growth is with really quite spectacular profits from the digital year as a result.”
– You’re CNBC Michael Bloom contributed to this story.