NYT’s Revamped Mobile Website Will Strengthen Its Offering

The New York Times Company (NYSE:NYT) has recently redesigned and re-launched its mobile website. This launch is critical for NYT’s digital subscription and online advertising division as it might help NYT in compensating the decline in revenues from its print circulation and advertising division. Additionally, NYT also seeks to gain a strong and sticky user base in the competitive digital news landscape by delivering content across its digital platforms.

The re-launch marks the first mobile web refresh since it was launched in 2006. Now smartphone users can access articles on the mobile website that could only be viewed on the full desktop site in their browsers earlier. This could translate into an increase in unique user count across NYT websites. We expect this launch to not only help NYT in acquiring new subscribers in the existing markets, but also in international markets, especially the emerging markets where many users are accessing Internet for the first time on their mobile devices.
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Mobile Website Upgrades

The mobile website will augur well for NYT as it will bolster its existing mobile platform that includes entertainment services on mobile apps. The website will allow a user to post comments on articles and keep abreast with the latest news. Moreover, the mobile website also lets a user save articles which can then be accessed across any of the NYT websites and services. The new mobile website also includes enhanced advertising capabilities for full screen interstitial units, which will bolster online ad revenues for NYT.

Mobile Website will drive RPM

According to our estimates, NYT currently derives 25% of its value from the online advertising division, revenues for which are primarily dependent on the unique user count and number of page views. Since this mobile website offers easy access to desktop website content, it can increase unique users count for NYT as number of smartphone device users is increasing. Especially users in the emerging markets that are accessing Internet for the first time on their mobile devices are more likely to use their mobile devices for accessing NYT websites. Additionally, as more users log onto the site, they will consume more content by viewing more pages, which will further translate into higher number of ads viewed. As the number of ads on NYT sites improves, RPM (revenue per 1,000 impressions) will increase over the long term.

Opportunity To Sell More Subscription Services

Since the mobile website will now provide access to the same content as a PC website, NYT can now sell its subscription services to subscribers who are accessing Internet for the first time through smartphones and tablets. A mobile website is a value added service for an existing subscriber, as he can now access the premium content across platforms. We believe that this launch will increase NYT’s ability to market and up-sell its subscription services to casual NYT website user.

We currently estimate NYT’s number of online subscribers to increase to around 1.4 million by the end of our forecast period. However, if the number increases to 2 million, we would see a 10% upside to the Trefis price. You can assess the impact that digital subscriber growth has on New York Times’ stock value by moving the trend line in the chart below:

We are currently have a $8.20 price estimate for New York Times, which is approximately 15% below the current market price.

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