The dream for any newspaper seeking to last longer than print itself is to transition its business model into digital. The New York Times is almost there.
The Times announced its fourth-quarter and full-year 2018 financials this morning, and there’s a lot of good news. (One quick heuristic I like to run with newspaper company earnings reports is searching the press release to see the ratio of “digital” mentions to “print” mentions. Today: 40 to 17.) The most important: The Times generated $709 million in digital revenue in 2018, putting it ahead of the ambitious goal it set out back in 2015 to hit $800 million in digital revenue by 2020. They’ll make that with little trouble — barring economic collapse, civil war, and so on.
Flush with confidence, Times CEO Mark Thompson laid out a new goal: “to grow our subscription business to more than 10 million subscriptions by 2025.” (He’s really formalizing a goal more than laying one out — 10 million subscriptionshas been a Timesian aspiration for several years now. It has 4.3 million now, counting both digital and print.)
The Times brought in a total of $1.748 billion in 2018, which means digital revenue accounted for just over 40 percent of the total. Given the trendlines in print and digital, it won’t be too long until it hits that 50 percent tipping point — I’d guess Q2 2020. (Times guidance projects digital advertising and circulation revenue to grow in the “mid-teens” from here, with overall revenue growing only in the “low to mid single digits.”)
To show the progress the Times has made in this transition, I pulled the share of its advertising and circulation revenue that came from digital every year since 2013, when it started separating out digital circulation revenue. The trend is obvious and positive — the Times becomes less reliant on print revenues every quarter.
I noted back in November that the Times would pass $600 million in digital ad and circ revenue for 2018; the extra bump to $709 million came in large part from the Times’ “other” revenue category, which includes affiliate revenue (thanks,Wirecutter) and some digital licensing revenue. “Other” digital revenue added up to nearly $50 million in 2018.
A common goal in newspaper circles a few years ago was to someday be able to make enough money in digital to cover the cost of the newsroom. Well, at this point, the Times could pay for the newsroom two times over with just digital money. Which is probably why that newsroom keeps growing — the Times reported it now employs 1,600 journalists, an all-time high.
Meanwhile, the company reports having $826 million in cash on hand. Even accounting for the expected cost of buying back its building later this year, the Times has enough money that it could think about significant acquisitions if it saw value. Is there another Wirecutter out there that could fit with Times values and diversify revenue? Is there something in Europe that could drive a spike in subscriptions there? A podcast studio that could multiply The Daily’s success?
As I advised last time: “Take 98 percent of whatever energy you devote to worrying about the future of the Times and rechannel it into worrying about your local daily, which is very likely approaching existential crisis.”
Extra READ. From New York Times. Feb 6,2019
The New York Times Co. Reports $709 Million in Digital Revenue for 2018
The New York Times Company generated more than $709 million in digital revenue last year, growing at a pace that suggests it will meet its stated goal of $800 million in digital sales by the end of 2020.
The results prompted the company to set another lofty target: “To grow our subscription business to more than 10 million subscriptions by 2025,” Mark Thompson, the chief executive, said in a statement announcing the company’s fourth-quarter financial results.
More than 3.3 million people pay for the company’s digital products, including its news, crossword and food apps, a 27 percent jump from 2017. The total number of paid subscriptions for digital and print reached 4.3 million, a high.
Online subscription revenue gained nearly 18 percent to reach $400 million in 2018, while digital advertising rose 8.6 percent, to $259 million. In the last three months of the year, digital subscription sales grew at a slower pace, about 9 percent, to $105 million. That slowdown was partly the result of an extra week in the fourth quarter of 2017 and partly the result of marketing efforts such as introductory discounts for online access. Those offers attract new readers who bring in less revenue — but the company expects many of them to become full subscribers over time.
The Times added 265,000 new digital subscribers in the fourth quarter, the biggest jump since the so-called Trump bump after the 2016 election. About 172,000 of those subscribers signed on for the core news product, while the rest were drawn by digital-only products like Crossword and Cooking.
The company hit another revenue milestone: Digital advertising surpassed print advertising for the first time in the fourth quarter, jumping 23 percent to $103 million. Print advertising fell 10 percent, to $88 million.
The revenue gains will allow the company to spend more on its newsroom operations.
“Our appeal to subscribers — and to the world’s leading advertisers — depends more than anything on the quality of our journalism,” Mr. Thompson said in the statement. “That is why we have increased, rather than cut back, our investment in our newsroom and opinion departments. We want to accelerate our digital growth further, so in 2019, we will direct fresh investment into journalism, product and marketing.”
Last year the company added 120 newsroom employees, bringing the total number of journalists at The Times to 1,600, the largest count in its history.
The company reported the positive financial results at a time when newspapers nationwide have experienced a hollowing out. Gannett has laid off reporters across the country and recently fended off ahostile takeover bid. McClatchy offered buyouts to 10 percent of its staff, about 450 employees.
Digital news organizations have also struggled lately. Last monthBuzzFeed laid off 15 percent of its work force, roughly 220 employees; Verizon Media Group announced a 7 percent cut in its media divisions, which equals about 800 positions; and a 10 percent cut is underway at Vice Media.
At The Times, the total revenue in the fourth quarter was $503 million, a nearly 4 percent increase from a year earlier. Operating profit decreased by 17.5 percent, to $75 million. (The drop was due partly to the extra week in the fourth quarter of 2017.)
The company also announced on Wednesday that it would increase the dividend it pays shareholders by 25 percent. Investors who own Times Company stock will receive 5 cents per share every quarter, costing the company about $33 million a year. That will also benefit the Ochs-Sulzberger family that controls The Times. As of last February, the family reported it owned about 9 percent of the equity in the company.
In the earnings conference call on Wednesday, Mr. Thompson said the
company had plans to test a price increase for digital subscribers in the early part of the year. This would be the first price increase in seven and a half years, Meredith Kopit Levien, the company’s executive vice president and chief operating officer, said.
“We’re confident that our digital subscribers will also understand why the price paid for high-quality journalism sometimes has to increase if the journalism itself is to flourish,” Mr. Thompson said.
Noting that 16 percent of Times subscribers live outside the United States, Ms. Levien said she sees room for international growth. “We believe there is a very big opportunity for The New York Times to be one of the handful of dominant global news producers,” she said.
The company’s cash position continues to grow, and it now has $826 million on hand. In addition to the increase in the dividend and added investments in the newsroom, the company said it would exercise its option to buy back the New York Times Building before the end of this year at a cost of $250 million.
Link to NYT : https://www.nytimes.com/2019/02/06/business/media/new-york-times-earnings-digital-subscriptions.html?utm_source=Daily+Lab+email+list&utm_campaign=69582c8dad-dailylabemail3&utm_medium=email&utm_term=0_d68264fd5e-69582c8dad-395848685