NYT Earnings Preview: Digital Subscription To Grow, Print Subscription Revenue To Stabilize
The New York Times Company (NYSE:NYT), one of the leading newspapers in the U.S., is set to report its third quarter earnings Thursday, October 30th. As the secular decline in print advertising and publishing continues, NYT is offering a comprehensive suite of digital content which includes both a video and digital print offering. 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. Furthermore, since the company continues to expand to newer regions to boost its flagging revenues, we expect this result will give us a fair indication how it is faring in its expansion endeavors. We will closely monitor both factors in this earnings announcement.
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Digital Subscription Expected To Grow
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According to our estimates, the NYT’s print circulation and digital subscription division contributes over 46% to its stock value. While the NYT’s daily print circulation continues to decline, its digital subscriber base is gaining traction. 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 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 Subscription To Stabilize
Over the past few quarters, NYT has been able to leverage its brand name and popularity to raise print subscription prices, which has helped the company to stabilize its print subscription revenues and boost margins. We expect this trend to continue in Q3, and print subscription revenue to stabilize. Currently, we forecast NYT Times weekly price to increase to $15.40 by 2020.
Expansion Plans In Focus
One of the key strategies for the company has been expansion to new geographies, especially south east Asian countries that have a large population of English speakers. The company continues to roll out local content in these regions to attract users for its services. We believe that local content together with world class international content syndicated through its web portal should enable the company to make some headway in regions where it has expanded recently. In this earnings announcement, we are closely monitoring the growth in NYT’s revenue from international markets.
Print Advertising Revenues To Decline
Print ads are 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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