The New York Times Tops 6 Million Subscribers as Ad Revenue Plummets

In the first three months of the year, The New York Times Company added more digital subscribers than it had gained during any quarter since it started charging readers for online content in 2011. But that increase was driven by widespread interest in news of the coronavirus pandemic, which has ravaged the United States economy and cut deeply into The Times’s advertising revenue.

By the end of a dramatic quarter, Times employees had grown accustomed to working remotely, and readers were flocking to the newspaper’s website, drawn by articles on the coronavirus and its effects that were offered at no charge.

Many of those readers bought subscriptions. The company reported on Wednesday that it had netted 587,000 new digital subscriptions during the quarter. The majority — 468,000 — were for the core news product, and the remaining 119,000 were for other digital products, including apps like Cooking and Crossword.

At the end of March, The Times had more than five million digital subscribers, a high. Of those, there were 3.9 million subscriptions for news and 1.1 million for apps. The total number of subscriptions, including those to the print newspaper, stood at 5,841,000. Overall subscription revenue rose 5.4 percent during the three-month period, to $285.4 million. Total revenue rose 1 percent, to $443.6 million.

By the end of April, the company noted in a news release, the number of total subscriptions, including digital and print, had surpassed six million.

In keeping with a trend that has affected other news organizations during the pandemic, The Times attracted new readers while the money it brought in from advertising plummeted. Overall ad revenue fell more than 15 percent, to $106.1 million, in the quarter. Digital ad revenue declined 7.9 percent, while print ad revenue had a drop of 20.9 percent.

Over all, adjusted operating profit for the quarter was $42.3 million, a decline from the $52.4 million the company made during the equivalent period last year.

Looking ahead, the chief executive, Mark Thompson, said ad revenue would continue to fall by as much as 55 percent in the second quarter. But he predicted that the subscription business would bolster the company.

“We saw advertising fall rapidly toward the end of the quarter and believe that advertising in the second quarter will fall between 50 percent and 55 percent compared to a year ago with limited visibility beyond that,” Mr. Thompson said in a statement Wednesday. “Nonetheless, we believe that the company will emerge from this global crisis with a distinctive and valuable advertising revenue stream to complement a digital news subscription business, which is now by far the largest and most successful in the world.”

Despite the bleak forecast for ad revenue, Mr. Thompson described the company as “financially sound” and said it would “safely invest in our digital growth strategy and continue to hire new talent to help execute it.”

The Times has grown more reliant on subscriptions than advertising on Mr. Thompson’s watch, which began in 2012, after he had served as the director general of the British Broadcasting Corporation. Wall Street has rewarded that strategy, and the pandemic has accelerated it.

“The Times’s business model, with its growing focus on digital subscription growth and diminishing reliance on advertising, is very well positioned to ride out this storm and thrive in a post-pandemic world,” Mr. Thompson said in the statement. “We’ve seen historic audience levels and an unprecedented rate of subscriber growth as well as real pressure on advertising revenue.”

Adjusted operating costs rose 2.9 percent during the quarter, partly because of the production of the television newsmagazine “The Weekly,” a coproduction between The Times and the FX cable network, and the addition of more newsroom employees.

While panelists at media conferences have predicted the death of print for decades — indeed, the number of Times print subscriptions fell 7.9 percent, to 840,000, during the quarter — ink and newsprint accounts for the majority of subscription and ad revenue. For the quarter, the print subscription business brought in $155.4 million for the company, while the digital subscription business accounted for $130 million. On the ad front, print generated $55 million, versus $51 million from digital.

The Times Company is one of the first publicly owned newspaper businesses to report quarterly earnings since the virus swept the United States. Gannett, the nation’s largest newspaper chain, is scheduled to give its first report of the year on Thursday.

The Times’s headquarters in Midtown Manhattan has been all but empty since March 13, with employees working remotely. In a memo on Tuesday, the publisher A.G. Sulzberger, the chief operating officer Meredith Kopit Levien, the chief financial officer Roland A. Caputo and Mr. Thompson told employees that “the earliest day we will ask people who are currently working remotely to return to our offices in New York will be on Sept. 8, the Tuesday after Labor Day.” Employees at the main printing press, in College Point, Queens, have operated under socially distanced rules.

Subscription revenue in the first quarter may have been affected by pricing changes. In February, long-tenured digital subscribers experienced the first increase in the cost of a subscription to the core news product — from $15 to $17 every four weeks — since the establishment of the paywall nine years ago.

The number of Times readers spiked in March, according to comScore, a measurement company, with 153 million unique visitors for the month. In January, before the World Health Organization had proposed the official name < a target="_blank" class="css-1g7m0tk" href="" title="" rel="noopener noreferrer">Covid-19 for the disease caused by the coronavirus, that number was 101 million.

Edmund Lee contributed reporting.

Source Article