The decline of print media cannot be halted, yet some publications have navigated paths to success within evolving landscapes. The New York Times, despite experiencing a decrease in print subscribers, showcased growth by achieving an increase in digital subscriptions. Between April and June, around 230,000 paid digital subscribers were added, while 20,000 print subscribers were lost. These changes contributed to a rise in total revenue, reaching $686 million for the quarter, reflecting a 9.7 percent increase from the previous year. Meanwhile, net income experienced a 34 percent rise year-over-year, hitting $107 million. The company’s shares witnessed a significant uptick, appreciating by over 13 percent following the earnings announcement.
Earlier reports indicated a consistent rise in digital engagement for The New York Times, marked by steady additions to its digital subscriber base. However, print subscriptions have been consistently on the decline over several quarters. This trajectory underlines a transition period where traditional and digital media dynamics continue to shift.
How Did The Times Achieve This Growth?
The Times reported that its subscriber base reached 11.9 million with contributions from various digital segments, including Audio, Games, Cooking, Wirecutter, and The Athletic. While print subscriptions dwindled by 50,000 over the past year, bringing the tally to 580,000, The Times still ranks as the second-largest print newspaper in the U.S., trailing The Wall Street Journal. Digital endeavors successfully generated $350 million in revenue for the quarter, dwarfing the $131 million from print subscriptions.
Why Does Advertising Still Hold Value?
Advertising remains a key player in The Times’ revenue stream, especially with digital advertising hitting $94 million—a 19 percent year-over-year rise. The earnings report highlighted revenue from display, audio, email, and video ads, supplemented by creative services fees. The growth in this area underscores the resilience of advertising, even as the landscape shifts more toward digital platforms.
The Times diversified its revenue streams by earning through referrals and affiliate links, predominantly through Wirecutter, a site known for its product reviews and rigorous standards. This entity, acquired in 2016, played a vital role in supplementing digital revenue streams.
Since purchasing The Athletic for $550 million in 2022, the sports publication fortified its value. Although initially operating at a loss, it drew $54 million in revenue and $5.8 million in operating profit in the April-June quarter, validating its acquisition.
On another front, The Times is engaged in a legal battle with OpenAI and Microsoft (NASDAQ:MSFT), incurring $3.5 million in expenses. The ongoing lawsuit addresses alleged copyright infringement where its articles were used to train A.I. chatbots without authorization. Despite this, the expense is marginal compared to The Times’ total operating costs, which stood at $579 million.
The Times anticipates an 8 to 10 percent growth in total subscription revenue for the forthcoming quarter, alongside a single-digit rise in advertising revenue. However, operating costs are projected to increase by 5 to 6 percent, a portion attributed to legal expenses from the lawsuit.
Focusing on digital growth has allowed The New York Times to successfully navigate the declining print industry. An earlier expansion into the sports sector with The Athletic has shown promising returns. Although print subscriptions might continue to fall, digital revenue growth, strategic acquisitions, and diversified income streams through advertising and affiliation remain crucial for sustaining operations.
