A Closer Look At New York Times’ Valuation
New York Times (NYSE: NYT) has mostly seen its results come in above its guidance and market expectations so far this year, driven largely by the political climate in the U.S. NYT has witnessed significant digital growth in its readership since the 2016 election, which largely offset the secular declines in its print business. In the first nine months of fiscal 2018, the company saw weak print advertising trends, with print advertising revenue declining 5% y-o-y. However, digital advertising revenues increased slightly during the same period. Overall, the company’s overall revenues grew 5% y-o-y to $1.2 billion in this period, driven by more than 20% y-o-y growth in digital-only subscription revenues to $295 million. NYT reported unprecedented growth in digital-only subscribers, which grew by 24% y-o-y to 3.1 million. This increase in new subscribers led to growth in NYT’s overall subscription revenues, which contribute more than half of the company’s total revenues. The company’s total subscriptions now stand at more than 4 million.
We have summarized our forecasts in our interactive dashboard on the New York Times’ Fundamental Value. You can modify assumptions such as changes in expected segment revenue or EBITDA margins to see how they impact the company’s value. The charts below show some of the key steps in identifying NYT’s valuation sensitivity to changes in its segment revenues. We detail how changes in revenue or segment EBITDA margin impacts total EBITDA, which in turn impacts its enterprise value (assuming a constant EBITDA multiple). We have maintained our long-term price estimate for NYT at $25, which is slightly below the current market price.
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Detailing Forecasts For NYT
NYT’s online subscriber base has grown from 800,000 in 2013 to 3.1 million in Q3 2018. Going forward, we estimate NYT’s online subscriber base to be its biggest value driver and forecast this growth to pick up in the coming years and reach 4.3 million by 2022. As of now, we forecast the company’s subscription revenue for 2018 to grow by 27% y-o-y to $1.3 billion. Further, we forecast advertising revenue to decline slightly to around $550 million in 2018, on the back of the continued decline in the display (print) advertising and traditional website display advertising.
Our forecasts for the year are summarized in our dashboard for the New York Times. If you have a different view, you can modify various inputs to see how updated inputs impact the company’s valuation. You can also share the links to scenarios created on our platform.
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