META Meta Platforms Inc

By Benjamin Mullin 

Digital subscriptions continued to be the main driver of growth at New York Times Co. in the second quarter, but customer additions slowed and digital ad revenue fell, weighing on the company's top line.

The news publisher posted a 1.8% rise in total revenue, boosted by a 4.2% increase from a year earlier in subscription revenue to $260.6 million. The Times added 109,000 digital news subscribers, 41,000 of which came from the company's Cooking and Crossword products.

Growth in the company's digital-only subscribers, however, has slowed. The Times added 139,000 digital subscriptions in the first quarter, and 157,000 in the fourth quarter of 2017. The Times, like many news outlets, benefited from increased demand for news in the wake of the 2016 U.S. presidential election.

Mark Thompson, chief executive of New York Times Co., said Wednesday on a call with analysts that the second quarter is typically a soft one for digital subscriber growth, but that was less apparent last year because of the heightened interest in news after the election. He was cautiously optimistic about the 2018 U.S. midterm elections providing another bump in subscriptions.

"We're living in unpredictable political times," Mr. Thompson said. "And although every journalist here thinks it's going to be an incredibly interesting and important set of elections, we're going to have to see how the audience reacts to it."

New York Times shares were down 5% in early afternoon trading.

Digital advertising revenue decreased 7.5% in the second quarter to $51 million, owing to a smaller audience and a decline in digital creative services such as those offered by the paper's T Brand Studio, which develops custom advertising campaigns for marketers.

Mr. Thompson said some of the slowdown in digital subscriber growth for the second quarter can be attributed to a decision to curtail marketing on Facebook. Like other news organizations, the Times took issue with Facebook Inc.'s decision to categorize paid promotions of news articles together with political advocacy. Mr. Thompson said conversations with Facebook on that front have been productive.

Print advertising revenue fell nearly 12%. In total, the company reported advertising revenue of $119.2 million, down almost 10% from the year-earlier quarter.

Overall revenue for the second quarter increased to $414.6 million from $407.1 million a year earlier. Net income rose 51% to $23.6 million, compared to $15.6 million in the year-earlier period, when costs were higher due to severance payments.

Subscriptions now account for nearly two-thirds of the company's revenue. Many news organizations are leaning more heavily on subscription revenue as the advertising business becomes increasingly unreliable, including on the digital side. All publishers are competing fiercely for ad dollars against tech firms such as Facebook and Alphabet Inc.'s Google.

Factoring out last year's severance costs, the Times' adjusted operating costs in the quarter increased 3.7%. That was primarily the result of higher marketing and printing costs.

(END) Dow Jones Newswires

August 08, 2018 17:10 ET (21:10 GMT)

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