New York Times Q4 Earnings Preview: Growth In Paid Subscriptions To Boost Top Line

The New York Times Company (NYSE:NYT) is scheduled to report its Q4 results on Thursday, February 2. A higher digital subscriber base helped the company stabilize its circulation revenues in the first three quarters of fiscal 2016. However, NYT’s print circulation continued to decline in the same period, reflecting the secular downturn in the print industry.

During the third quarter, headwinds in print circulation and advertising revenues offset the gains made in digital circulation and related advertising revenues, causing NYT’s total revenues in the quarter to decline 1% year-over-year (y-o-y) to $364 million. However, we expect NYT to post relatively solid results in the fourth quarter, owing to the surge in paid subscriptions since the U.S. Presidential election. In fact, NYT added 41,000 paid subscriptions across its print and digital platforms in the first week after the presidential election, representing the largest subscription increase since it introduced its pay-wall in 2011. We expect this surge to continue into 2017 as well.

In the fourth quarter, NYT’s stock price climbed more than 20% following the U.S. presidential elections, which resulted in a more-than-tenfold increase in the newspaper’s daily subscription sign-ups since the election, far surpassing any other news medium. In fact, on a number of individual days, more than 10,000 new subscribers have signed up, which would be almost 20 times the rate of subscription sign-ups relative to a year ago. ((Behind the Times’ surge to 2.5 million subscribers, politico.com, Dec 2016)) In fact, NYT’s CEO Mark Thompson mentioned in the annual UBS Global Media Conference that the media company sold 2,00,000 new digital-only subscriptions since October, which could potentially add more than $30 million to NYT’s top line. ^[1]

NYT could have gained subscribers driven by the publicity and controversy surrounding the President-elect, as he has been highly critical of the newspaper and has attacked it several times on Twitter, calling it “failing” and criticizing its coverage. To add to that, some consumers could have turned to the Times due to the increase in circulation of “fake news,” as the Times is considered one of the most trusted news outlets in U.S., according to a Pew research survey ^[2] This brand recognition and trust could provide NYT an opportunity to grow its readership further in the coming quarters.

In the upcoming fourth quarter results, NYT expects overall growth in circulation revenues to be likely driven by continued growth in digital subscription revenues, partially offset by declines in print circulation. Meanwhile, the company expects the downtrend in advertising to continue in the fourth quarter of 2016 as well, with revenues falling in the range of 5-7% y-o-y. However, NYT expects the digital advertising segment to grow around 10% y-o-y based on higher engagement on branded content, smartphones, programmatic video, VR and other new forms of storytelling. An increase in new subscribers in Q4 could lead to solid growth in the company’s circulation revenues, which contribute to more than half of the company’s total revenues.

Have more questions? Please refer to our complete analysis for New York Times 

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology

1. Newsonomics: The New York Times is setting its sights on 10 million digital subscribers, niemanlab.org, Dec 5 2016 [↩]
2. Political Polarization & Media Habits, journalism.org, Oct 2014 [↩]