The New York Times Earnings Preview: What We are Watching
The New York Times Company (NYSE:NYT), one of the leading newspapers in the U.S., is set to report its first quarter earnings Thursday, April 24. The secular decline in print advertising has pushed New York Times to move away from its core competencies as a print publisher, and offer a comprehensive suite of digital content which includes both video and digital print offering. Therefore, in this earnings announcement the focus will be on the growth in New York Times’ digital subscriber base, which is expected to drive revenue growth in the future. However, with the sale of New England Media Group (NEMG) complete, we expect the company to report a marked improvement in its revenue growth and profit margins, and will closely monitor these in this earnings announcement.
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- NY Times’ Stock To Likely See Little Movement Post Q2
- NY Times’ Stock To Likely Trade Lower Post Q1
Margins And Revenue Growth In Focus
NYT has been able to maintain its market share in the print industry, and its circulation revenue has grown on the back of increases in subscription price and distribution through the internet. Furthermore, with the sale of New England Media group complete, company’s operations are unencumbered by a division that had very low margins. We anticipate that NYT’s margins and revenue growth should significantly improve in Q1.
Digital Subscription Expected To Grow
According to our estimates, the NYT’s print circulation and digital subscription division contributes over 45% to its stock value. While the NYT’s daily print circulation continues to decline, its digital subscriber base is gaining traction. In 2013, NYT’s digital subscriber base grew by 14% year over year. The company continues to add content, especially video content, to its properties in an effort to attract more users. Additionally, the NYT continues to leverage its brand popularity to expand abroad and rope in new digital subscribers. We expect the NYT to show further improvement in online subscriptions in the quarter, and we will continue to watch this metric closely during this earnings announcement.
Print Advertising Revenues To Decline
Print ads is the second largest division of NYT and makes up for nearly 28% of its value by our estimates. With the advent of the Internet, the print ads business has been on a decline since most advertisers have increased spending on online ads. This division has not been able to buck the trend and continues to report a decline in revenue. We expect the trend to persist this quarter too.
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