DIGITAL DESTINY
The New York Times for the first time reports quarterly revenue owing more to digital products than to print.
NEW YORK: Over a three-month period dominated by the coronavirus pandemic and a slowdown in advertising, The New York Times Co for the first time reported quarterly revenue that owed more to digital products than to the print newspaper.
As much of its staff worked remotely, the Times brought in $185.5 million in revenue for digital subscriptions and ads during the second quarter of 2020, the company announced on Wednesday. The number for print revenue was $175.4 million.
The company added 669,000 net new digital subscribers, making the second quarter its biggest ever for subscription growth.
The Times has 6.5 million total subscriptions, a figure that includes 5.7 million digital-only subscriptions, putting it on a course to achieve its stated goal of 10 million subscriptions by 2025.
In a statement, Mark Thompson, the chief executive, called the company’s shift from print revenue to digital “a key milestone in the transformation of The New York Times.”
Attracting subscribers willing to pay for online content is a high-wire act that practically every company in the news business is trying to pull off.
The Times started charging for digital content in 2011, when asking news consumers to pay for what they read on their screens was seen as a risky gambit.
“We’ve proven that it’s possible to create a virtuous circle,” Thompson said in a statement, “in which wholehearted investment in high-quality journalism drives deep audience engagement, which in turn drives revenue growth and further investment capacity.”
Last month, the Times Co announced that Thompson, formerly the director general of the British Broadcasting Corp, would leave the company after eight years. He will be succeeded as chief executive and president on Sept 8 by Meredith Kopit Levien, the chief operating officer, who has been an executive at the company since 2013.
Adjusted operating profit for the second quarter was $52.1 million, a 6.2% decline from $55.6 million in the same time last year.
The pandemic posed challenges to the news industry in April, May and June as businesses across many industries cut back on marketing, leading to sharp declines in advertising spending and tens of thousands of furloughs, pay cuts and lay-offs at media organisations.
At the Times Co, ad revenue fell 32% in the digital part of the business and 55% in print compared with the equivalent period last year. Total ad revenue fell to $67.8 million, from $120.8 million, a 44% drop. That figure fell short of the 50% to 55% decline forecast by Times executives in May.
The company laid off 68 employees in June, most of them in advertising, including all those who worked at its experimental marketing agency Fake Love, which was closed. The newsroom and opinion departments were not affected by the cuts.
The company’s headquarters in Midtown Manhattan were all but shut down in March because of the pandemic, and employees have been advised that they will not be required to return to the office before January.
The quarter’s surge in digital subscriptions was probably related to strong interest in news of the pandemic, the widespread protests against racism and police violence that started in May and the 2020 presidential campaign.
Levien said in an earnings call Wednesday morning that the Times averaged 130 million digital readers per month during the quarter, according to Comscore, a slight falling off from a tremendous March surge but still a 32% rise compared to the second quarter of 2019.
“We don’t expect the exceptional peaks in audience we saw in the early months of the coronavirus story to last forever, but we also know we’re about to enter the crucial last months of a presidential election,” she said.
The company signed up 493,000 net new subscriptions to what it calls its “core news product” during the three-month period. The cooking and crossword apps, along with other digital offerings, brought in an additional 176,000 subscriptions.
Citing the pandemic, the company offered a bleak outlook for advertising revenue in the third quarter, projecting an overall decline of 35% to 40%. For digital ad revenue, it said it expected a 20% decline over last year’s third quarter. That would be an improvement over the second quarter’s slide.
Digital circulation revenue rose 29.6% during the quarter, to $146 million, compared with the equivalent period last year. At the same time, print circulation revenue fell 6.7%, to $147.2 million. The company attributed that drop to a fall-off in newsstand sales; home-delivery print circulation revenue remained flat.
Total circulation revenue rose 8.4%. The company said it expected total subscription revenue to rise 10% and digital-only circulation revenue to have a 30% increase in the next quarter. Total adjusted operating costs fell nearly 8% during the second quarter, to $351.6 million, with sales and marketing costs declining 36%.
A category the company calls “media expenses” — indicating how much it spent to promote subscriptions — was more than halved during the quarter, falling to $16.5 million from $33.9 million. Even while taking a hit because of other companies’ curbs on how much they laid out for marketing, the Times Co did the same thing itself.