Failing? No, says New York Times after online boost

Vibhuti Sharma, Reuters

Posted at Nov 02 2018 07:51 AM | Updated as of Nov 02 2018 03:48 PM

The New York Times office is shown in this file photo. Don Emmert, AFP

The New York Times Co, assailed by a US president who brands it as "failing," signed up more than 200,000 paying online subscribers in the third quarter, helping it top Wall Street estimates for both profit and revenue.

Online subscriptions have become central to the Times' future as revenue from print advertisements dry up and the increase was the highest since a bump at the start of last year driven by President Donald Trump's repeated mentions of the paper.

Shares in the publisher rose 8 percent after quarterly results showed digital-only subscribers rose to 3.1 million at the end of September, the result of a combination of aggressive discounting and heavy spending on marketing.

The company's stock has now risen 54 percent this year.

The paper has faced repeated criticism from Trump on its coverage of the administration. The president attacked the paper several times with tweets, saying the paper was "failing".

When asked about the president's comments, Chief Executive Officer Mark Thompson told Reuters that the White House receives many copies of the paper and said they were very loyal, long serving subscribers.

"And we always admire and thank our subscribers," Thompson said.

In an earlier conference call, Thompson said digital growth in the quarter was charged by a gripping news environment with events that played to the paper's strengths - like the Kavanaugh hearings.

"There is no doubt that the heavy Washington DC news cycle and NYT's record of breaking news in that area is attracting new subscribers," said Douglas Arthur, an analyst at Huber Research Partners.

Arthur also said the paper is successfully making the transition to a digital platform from a print-based model.

The paper has continued to discount heavily while marketing itself as a source of unbiased reporting in a deeply divided America. Some digital subscriptions begin at just $1 a week.

"The first, and probably most significant driver, was the $1 a week introductory offer domestically, which ran I think the last 6 weeks to the quarter," Chief Operating Officer Meredith Levien said on a conference call with analysts.

The company's digital advertising revenue, now responsible for over 70 percent of overall advertising revenue, jumped about 17 percent to $57.8 million in the third quarter, while print advertising revenue continued to decline.

The newspaper's net income fell 22.7 percent to $25 million, as total expenses climbed 8.4 percent, led by higher marketing costs.

Excluding one-time items, the company earned 15 cents per share from continuing operations, while total revenue rose 8.2 percent to $417.3 million.

Analysts on average had expected earnings of 11 cents per share and $408.5 million in revenue, according to IBES data from Refinitiv.