NYTimes is one of the newspapers that saw the writing on the wall a few years ago when it committed to the transition from an advertising-dependent model to a subscription-centric one. Let’s look at their performance.
In Q3 2020, The New York Times recorded more than $300 million in Subscriptions revenue, out of $427 million in total revenue. In other words, 70% of the company’s revenue came from subscriptions. In the meantime, advertising dropped significantly by 30% YoY and made up only 19% of the total pie, down from 26% from the same period last year.
In hindsight, it was a great move of the newspaper to move to subscriptions. Had they not done that, Covid-19 would have wrecked their financials as companies cut back on advertising. The company still needs to look at their revenue growth. Even though 2020 can be excused because of Covid, last year still saw only about 2-3% of YoY revenue growth. Plus, while the company’s gross margin is about 50-60%, their operating margin hasn’t reached two digits for the last 4 third quarters. Since NYTimes doesn’t break out operating margin for segments, it’s hard to tell which fares better than the others.
Despite the fact that the outlet is now focused more on digital products, print advertising still made up for 40% of the company’s ads revenue. However, print advertising dollars dropped significantly this year by 47% YoY, to about $32 million, compared to the 13% drop by digital advertising.
With regard to paid digital subscriptions, the New York Times recorded 6.1 million paid digital subscriptions as of the end of Q3 2020, up from 4.1 million a year ago. When breaking down this digital subscriber base, digital news subscriptions grew by 46% YoY and other digital subs (crosswords and cooking) by 63%. The growth in digital news subscriptions was very encouraging for the news outlet, even though it’s likely that Covid-19 may have had a positive contribution.
| Q3 2017 | Q3 2018 | Q3 2019 | Q3 2020 | |
| Digital News Subs (in thousands) | 2131 | 2541 | 3197 | 4665 |
| Other Digital Subs (in thousands) | 355 | 554 | 856 | 1398 |
| Digital Subs (in thousands) | 2486 | 3095 | 4053 | 6063 |
| Print Subs (in thousands) | 865 | 831 | ||
| Total Subs (in thousands) | 2486 | 3095 | 4918 | 6894 |
In short, things look relatively positive for the New York Times. The transition to the subscription-centric model seems like a success. Despite the unprecedented health crisis that we are facing, the company’s business looks resilient enough with great growth in digital subscriptions and momentum. Compared to other news outlets, the paper is miles ahead in terms of paid digital subscription. Even after Trump leaves office, the appetite for quality journalism, whatever “quality” means is in the eyes of the beholders, will still persist, I believe. Whether the company can maintain its appeal to readers or come up with other products to improve revenue growth and operating margin remains to be seen. Personally, I came so close to being a subscriber myself many times, but the Opinion column of the NYTimes put me off with some outlandish articles.
| Count (in millions) | Source | As of | |
| Washington Post | 3 | Axios | Nov-20 |
| NYT Times | 6.1 | Company Figures | Sep-20 |
| Gannett | 1.03 | Poynter | Sep-20 |
| Los Angeles Times | 0.26 | Poynter | Dec-20 |
| Tribune Publishing | 0.3 | Poynter | Sep-20 |
| WSJ | 2 | Company Figures | Feb-20 |
| Bloomberg News | 0.25 | WSJ | Nov-20 |
