Thursday, April 21, 2011

NYT reports drop in earnings due to print advertising; reports digital subscriptions have surpassed 100,000

This morning's financial earning reports include surging iPhone sales at Verizon and declining print advertising at The New York Times – neither report was unexpected.

The NYT earnings report brings into focus how unique the Times is versus most other newspaper across the country. Like the WSJ, the NYT brings in a larger share of its total revenue from circulation than does other papers: 45 percent. The New England Media Group, another NYT property that includes the Boston Globe, brings in slightly less than 40 percent from circulation. The Regional Media Group, which includes such papers as the Santa Rosa Press Democrat, brings in around 32 percent of its revenue from circulation.
If you are a publisher, and love looking at financial (yeah, I know, I'm a freak) the contrast between what your P&L looks like and that of the NYT is interesting. OK, forget about the size of the numbers and concentrate on the segments. The NYT is heavily skewed towards national advertising, with classified advertising down to only 17 percent of total ad revenue. ASs a former CAM, this brings tears to my eyes (I was once a national ad manager, too, but my allegiance is still with the classified team).

This weighting is important to keep in mind when considering the NYT's move towards paid digital subscriptions.

Digital subscription packages on and across other digital platforms have been well received, and approximately three weeks after the global launch, paid digital subscribers have surpassed 100,000. So soon after the launch, the Company does not yet have visibility into conversion and retention rates for these paying customers after the initial promotional period, although early indicators are encouraging. – from the press release
We are most certainly at least one more quarter away from getting a better feel about how well the NYT is doing converting readers into digital subscribers. Because of this, the real issue will be total performance. Unlike the Times of London, the NYT has not gone completely behind a paywall. Because of its metered approach, it will be hard to do a definitive 'thumbs up' or 'thumbs down' on the strategy.

But will be matter? Ultimately, investors will judge the compan;s performance based on earnings, while editors and reporters will judge performance based on job security.