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New York Times Co. Reports an Advertising Drop, Though Digital Results Grew New York Times Co. Reports an Advertising Drop, Though Digital Results Grew
(about 7 hours later)
The New York Times Company reported a steep decline in print advertising revenue for the third quarter on Wednesday, adding to the newspaper industry’s woes. The New York Times Company on Wednesday reported a steep decline in print advertising revenue for the third quarter, adding to the newspaper industry’s woes.
For the quarter, print advertising revenue fell 19 percent, driving an 8 percent decline in total advertising revenue. The drop followed a 14 percent decline in print advertising revenue in the second quarter.For the quarter, print advertising revenue fell 19 percent, driving an 8 percent decline in total advertising revenue. The drop followed a 14 percent decline in print advertising revenue in the second quarter.
Digital advertising revenue, however, which now represents 36 percent of the company’s advertising revenue, increased 21 percent in the quarter, to $44 million, a welcome relief for the company after a decline in digital advertising last quarter. The Times also added 116,000 net digital-only subscriptions for its news products during the quarter, bringing its total to 1.3 million. Including crossword product subscriptions, it has about 1.6 million digital-only subscribers.Digital advertising revenue, however, which now represents 36 percent of the company’s advertising revenue, increased 21 percent in the quarter, to $44 million, a welcome relief for the company after a decline in digital advertising last quarter. The Times also added 116,000 net digital-only subscriptions for its news products during the quarter, bringing its total to 1.3 million. Including crossword product subscriptions, it has about 1.6 million digital-only subscribers.
This is an anxious and challenging time for the newspaper industry. The Times results were announced the same day that The Wall Street Journal informed its staff of sweeping changes to its print paper, including a cutback to its Greater New York section. On Tuesday the Gannett Company, the publisher of USA Today and more than 100 other papers, walked away from its deal to acquire Tronc, formerly Tribune Publishing, in part because of the financial obstacles involved.
Print advertising revenue, which once sustained newspaper companies, has been falling in the industry for years. But the pace of the decline has accelerated, and digital advertising and other forms of revenue have not yet bridged the gap. Last week, Gannett said print advertising revenue in its publishing segment fell 15 percent in its third quarter compared with the same period a year earlier.
Bedi Ajay Singh, the chief financial officer of News Corporation, which owns The Wall Street Journal, said in an earnings call in August that domestic advertising at The Journal had declined about 12 percent compared with the same period a year earlier. (News Corporation will report its quarterly earnings on Monday.)
In an earnings call on Wednesday, Mark Thompson, the chief executive of the Times Company, said it had been “a much tougher quarter for print advertising” for the company, but he focused largely on The Times’s digital success.
“We have full confidence in our strategy and believe that our results show the rapid progress we are making in pivoting The Times from a print-dominated business model to a digital one,” he said.
At The Times, adjusted operating profit, the company’s preferred method for assessing performance, fell to $39 million, from $48 million in the same quarter a year earlier.
The Times took a $2.9 million charge related to the closing of its Paris editing and prepress operations and had an additional $13 million in severance costs.
Circulation revenue increased 3 percent, to $217 million, as digital-only subscription revenue rose 16 percent, to $59 million.Circulation revenue increased 3 percent, to $217 million, as digital-only subscription revenue rose 16 percent, to $59 million.
Total revenue for the quarter fell 1 percent, to $364 million from $367 million in the same period last year.Total revenue for the quarter fell 1 percent, to $364 million from $367 million in the same period last year.
“This quarter proved yet again that The New York Times has a very compelling digital revenue story to tell,” Mark Thompson, the company’s chief executive, said in an earnings release. This year, The Times began a sweeping review of its newsroom to determine how to transform it for a digital age. The resulting report is expected to be released in some form in the next few weeks.
He added: “The quarter was also marked by real pressure on print advertising both for us and for the rest of the industry. We expect print advertising to remain challenged in the fourth quarter and while we will continue innovating and investing where we think it makes sense, we will remain focused on our cost structure and on rapidly growing our digital business.” At the same time, The Times has aggressively pursued new revenue opportunities to make up for the decline in print advertising. Last week, it announced that it had acquired The Wirecutter, the product recommendation site, and its sibling, The Sweethome. And on Tuesday, it introduced a virtual reality video project called The Daily 360.
Adjusted operating profit, the company’s preferred method for assessing performance, fell to $39 million, from $48 million in the same quarter a year earlier. Through a partnership with Samsung, which provided the cameras and equipment, The Times will produce at least one video a day for Times platforms, including mobile and virtual reality apps. Times journalists, including correspondents and photographers, will create the videos, and two full-time employees are dedicated to the project.
The Times took a $2.9 million charge related to the closing of its Paris editing and prepress operations and had an additional $13 million in severance costs. During the earnings call, Mr. Thompson did not mention potential layoffs, which are expected to come early next year. But he did say the company would continue to focus on lowering its costs.
Print advertising revenue, which once sustained newspaper companies, has been falling in the industry for years. But the pace of the decline has accelerated, and digital advertising and other forms of revenue have not yet bridged the gap. Last week, for example, the Gannett Company said print advertising revenue in its publishing segment fell 15 percent in its third quarter compared with the same period a year earlier. “Over the coming months, we will take a series of steps to reduce the legacy cost base of the company so that we can continue to invest in digital growth and grow operating profit,” he said.
As print advertising revenue continues to plummet, companies including The Times, Gannett and Dow Jones, which includes The Wall Street Journal, have had to cut back. Buyouts and layoffs, along with aggressive reorganizations, have happened or are looming in newsrooms across the country. At The Wall Street Journal, employees say anxiety in the newsroom has been particularly high since buyouts were announced in mid-October. On Wednesday, Gerard Baker, the editor in chief, outlined a revamping of The Journal’s print newspaper that will be introduced on Nov. 14.
Earlier this year, The Times began a sweeping review of its newsroom to determine how to transform it for a digital age. The resulting report is expected to be released in some form in the next few weeks. The changes, which Mr. Baker described in a memo to the staff, include eliminating Greater New York as a separate section and moving that coverage into the main section. At a meeting, employees working on the section were told they could reapply for jobs at the company, which were to be posted later on Wednesday, according to several people with knowledge of the discussion.
At the same time, The Times has aggressively pursued new revenue opportunities. Last week, it announced it had acquired the product recommendation site The Wirecutter and its sibling, The Sweethome. And on Tuesday, it introduced a virtual reality video project called The Daily 360. The Journal will also combine two business sections in the paper — Business & Tech and Money & Investing — into one, and will consolidate its coverage of arts, culture, entertainment and sports coverage that was in the paper’s Personal Journal and Arena sections into a new section called Life & Arts that will be in the main section of the paper.
Through a partnership with Samsung, which provided the cameras and equipment, The Times will produce at least one video a day for Times platforms, including its mobile and virtual reality apps. Times journalists, including correspondents and photographers, will create the videos, and two full-time employees are dedicated to the project. In his memo, Mr. Baker did not provide details on the number of employees who had requested buyouts. But he said there would “unfortunately need to be an elimination of some positions as part of this process.”
“All newspapers face structural challenges,” Mr. Baker said, echoing the mantra of the industry, “and we must move to create a print edition that can stand on a sound financial footing for the foreseeable future while our digital horizons continue to expand.”