The New York Times Co. reported a first quarter loss on Thursday. Despite being in the red, many pundits managed to find some areas that were looking up. Bloomberg even ran a headline talking about digital growth instead of focusing on the losses.
Gerry Smith’s story for Bloomberg focused on the digital subscriber growth – the highest in two years:
New York Times Co. reported its biggest quarterly increase in digital subscribers in two years, partly by bringing more traffic to its website from social media.
The publisher added 47,000 digital subscribers last quarter and now has 957,000 in total. The gains helped Times Co. post first-quarter earnings that beat analysts’ estimates even as overall advertising revenue continues to drop.
Times Co. has been investing in video, mobile and marketing messages designed to resemble news stories to offset declines in print advertising and circulation as more readers shift to the Web. The company said this month it would stop charging for its mobile app NYT Now in May, an acknowledgment that its attempt to attract more young digital readers with a fee-based subscription hasn’t been working.
The app will get more users now that it’s free, Times Chief Executive Officer Mark Thompson said.
“A bigger audience means we can think about building advertising revenue from it,” he said on an earnings call.
Rick Edmonds wrote for Poynter that the loss wasn’t as bad as it might seem:
Advertising chief Meredith Kopit Levien, whose job has recently been expanded to heading marketing as well, cited five factors in the digital ad growth:
- Success with “Paid Posts” (also known as native advertising). She described the two-year-old initiative as “just getting started” and said it can be expanded into international markets.
- Mobile/smart phone ad revenue is increasing too with a bigger audience and improvements in the design and positioning of ad placements on smaller screens.
- In programmatic advertising (that is placed electronically often through real-time bidding), the Times Co. is developing “preferred and private” deals at higher rates.
- Video, though “still small for us” is “growing nicely.”
- The sales staff has become more digitally oriented and that has resulted in better sales execution.
As for the print ad declines, Thompson said comparisons were against the same period in 2014 when the Super Bowl was played in New Jersey and the Oscar competition was intense. Still the company expects blended print and digital ad revenues to be down again “in the mid-single digits” in the second quarter.
Even so, Thompson said, “we do significantly better in national advertising than competitor companies.” And because the Times only gets 3 percent of its print ad revenue from pre-printed inserts, it has less exposure as some retailers shift money out of those budgets to various digital approaches.
The Reuters story by Arathy S. Nair also chose to point out in its lead that the loss was less than expected for the third quarter in a row:
New York Times Co’s profit beat market estimates for the third quarter in a row as the newspaper publisher’s cost cuts offset a decline in revenue.
The company, whose shares jumped as much as 7.3 percent on the New York Stock Exchange on Thursday, also said it expects operating costs to decrease at a low-single digit percentage rate for the current quarter.
New York Times, which said in October it would cut about 7.5 percent of its newsroom positions and shut its NYT Opinion mobile app, said operating costs fell about 4 percent to $350.3 million in the first quarter.
Like several newspaper and magazine publishers, New York Times has been under pressure to replace an evaporating pool of print advertising dollars with digital ads and money from subscriptions.
Coverage of the earnings in the paper itself was more straightforward as Ravi Somaiya led with the loss for The New York Times:
The New York Times Company posted a $14 million net loss for the first quarter of 2015, driven by a pension settlement charge and a drop in lucrative print advertising. But digital subscriptions continued to show solid growth, the company said on Thursday, and digital advertising grew at a double-digit pace.
Adjusted operating profit grew to about $59 million, from about $57 million in the same quarter last year. Cost reductions helped to offset a drop in revenue.
Tess Stynes of MarketWatch pointed out the pension charges that hurt results and offered some context in relation to other news organizations:
Newspapers have struggled for years with pressured advertising revenue, as readers increasingly migrate to the web.
The Times’ efforts to create digital applications to diversify its revenue have generated mixed results. For instance, the company said earlier this month that it would stop charging for its $15-a-month NYT Now mobile app, which was aimed at younger readers. Meanwhile, a free cooking app launched late last year has been off to a promising start.
The company also has taken steps to bolster its print offerings, such as the recent launch of a once-monthly print section dedicated to men’s fashion, although the Times ended its auto and home sections in recent months. The Times has also moved to create Chinese-language print offerings, aiming to tap into a growing ad market where government censorship has limited foreign media penetration.
And the point that a larger audience will lead to more revenue is a good one. Right now, companies don’t pay as much for digital, but as the Times learns more about customers through it’s various apps, that information will become valuable – leading to larger payouts down the road. Marketers are sure to like the increased number of eyeballs, which can only be good for the paper.
