Amid all the hype about Facebook, Apple and the angst of the current strike at Fairfax Media about job losses and cost cuts, the New York Times produced a small beacon of light for the embattled legacy media businesses around the world in its March quarter report this week.
Labelled constantly as ‘failing’ by the weakest President in decades, the New York Times has shown that people are willing to pay for good journalism that is far from ‘fake news’.
In fact President Trump’s constant sniping (supported by attacks from rightwing groups such as Fox News, owned by the Murdochs) sees to have mobilised a surprising number of people – especially younger consumers – and convinced them it is worth paying for news.
While many of these are on cheap plans but for the moment the paper has close to 3.5 million print purchases, subscribers and digital subscribers.
In fact being the leader of the so-called ‘opposition’ to Trump and his fake news mantra is paying off big time for the New York Times as it shows slower-moving legacy media managements elsewhere (such as Fairfax Media and News Corp Australia) how it is done.
While the Times report shows that for a second quarter Donald Trump has been the biggest single influence on the company’s fortunes, it was the management response to that and its exploitation of the desire for Americans to avoid ‘fake news’ that boosted the paper and gave its best quarter for more than five years.
So successful has been the Times and its management execution is that it now has more subscribers than the Murdoch clan’s stumbling Fox News.
The Times saw another record inflow of digital subscriptions in the quarter to the point where the company’s 2.2 million digital only subscribers is half a million ahead of the daily average audience for the Murdoch clan’s Fox News (1.7 million) in the three months to March. That helped the Times avoid the impact of a nasty near 18% slump in print ad revenues in the quarter.
Of course Fox News is vastly more profitable (as we will see next week when Fox’s quarterly figures are released), but eyeballs are the only measure that counts these days in media (more important thank clicks). At the end of the March quarter The New York Times 2.2 million digital-only subscriptions was up 62.2% over the past year. By way of contrast, the Fox News 1.7 million viewers a day was the highest ever and up a more sedate 27% over the year. "
And unlike Fox which skews heavily to older demos, especially those above the age of 55, the Times says its subscriber demos are skewing younger; “demographically, the new audience is tending to be younger and skewing slightly more female…” The “single largest cohort of growth” is millennials,” according to a Times executive at a briefing overnight Wednesday in the US.
The Times earned a modest net profit for quarter of $US13.2 million in the first quarter, much better than the loss of $US8.3 million the same time last year. But that is hardly “failing”, to quote the current occupant of the White House.
The Times’ results and their make up was of more interest than the figures of another company that released its profit overnight Wednesday.
On the surface, the big surge in revenue and profits for Facebook in the March quarter was the usual story of nasty social media company eating the legacy media’s food – at a time of the sackings at Fairfax Media and one week strike, the job losses coming at News Corp’s Australian papers and the problems at the Ten Network, that’s the conventional wisdom. In fact it still rings very true for a lot of media groups.
Facebook reported net profit of $US3.06 billion, up 76.6% from the first quarter of 2016, on revenues of $US8.03 billion, up 49.2%. Monthly active users, at 1.94 billion, exceeded market forecasts for 1.91 billion. It was up from 1.74 billion at the end of December 2016.
No wonder the Times’ share price rose more than 12% overnight Wednesday to $US16.10, close to the highest it has been for three years and up 40% since Trump’s election on November 8, leaving the shares in Trump’s biggest media supporters, 21st Century Fox and News Corp (both controlled by the Murdoch clans) far behind.
Fox shares fell more than 5% overnight Wednesday and are now just over 10% higher than they were on November 8 when Trump was elected. News Corp shares at $US12.85 are just 75 cents higher than they were back on November 8, so being independent is paying off for the Times and its shareholders.
The New York Times added more subscriptions than at any other point in its history – 308,000 net new digital subscriptions, up from the previous record 276,000.
And despite the ongoing slide in print ad revenues, it was also able to make up enough from digital advertising, subscriptions, and brand-spanking-new so-called ‘affiliate revenue ‘from its 2016 buy of the Wirecutter/Sweethome websites that it actually grew revenues for the quarter – by 5% to almost $US399 million.
It is in fact the first time in years that the paper has been able to replace the lost print sales and ad revenues in quarter with inflows of money from digital sources.
The company said circulation revenue from its digital-only subscriptions (which includes news and Crossword subscriptions)” was up 40% over this time in 2016, to $US75.8 million. $US73 million of that came from subscriptions to news products, meaning that the Crossword product subscriptions are pulling in around $US3 million a year (and had 40,000 extra subscribers during the quarter).
Digital ad revenues were up 19% to $US49.7 million, while print advertising fell by 17.9%. Digital now makes up 38.2% (an all time high) of the company’s total advertising revenues, up 8.3% compared to this time last year.
The $US29 million purchase of The Wirecutter and The Sweethome in October 2016 added $US26.4 million in “other” revenues in the first quarter, up 20.9% percent increase compared to a year ago. According to the company’s earnings release, this was “largely due to affiliate revenue associated with the product review and recommendation websites, The Wirecutter and The Sweethome, which the Company acquired in October 2016.” Those websites added $US5 million in revenue in the quarter to the company’s total income figure, meaning it will be repaid the purchase price by the end of the March quarter of 2018.
