Subscription model pays as New York Times reports strong quarter and year

Bucking the recessionary trend in the newspaper industry, The New York Times Co on Thursday reported fourth-quarter earnings and revenues that went well past expectations, bolstered by significant gains in digital subscriptions that led to a healthy 2917.

The company said on Thursday that it added 157,000 net digital-only subscriptions in the fourth quarter of the year, pushing overall subscription revenue to more than $1 billion for the year. Subscription revenue now accounts for 60 per cent of the company's total revenue.

The company's stock, which was frozen until the market opened Thursday morning, shot up more than 11 per cent, hitting the highest level in more than a decade. Shares of the owner of what President Donald Trump continues to call a "failing" newspaper have climbed about 20 per cent this year, CNBC points out. The last time it was trading at the current level of about $24.60 was in July 2007, according to FactSet.

Despite suffering from the industry-wide struggle to successfully maintain advertising revenues in the internet age, the media company posted a 10.1 per cent boost in total revenues from the year-earlier quarter to $484.1 million. That far surpassed estimates of $467.3 million in a Thomson Reuters analyst survey. The company reported adjusted earnings of 39 cents per share versus 29 cents expected in the Thomson Reuters survey.

Much of that upward trajectory stemmed from a sharp increase in subscription revenues year over year. Digital-only subscription revenue increased 46 per cent last year, to $340 million, 51.2 per cent in the fourth quarter from the prior year. Overall subscription revenues increased 19.2 per cent over the same period.

The company reported an increase of 157,000 digital subscriptions from the end of the third quarter of 2017, mainly made up of news subscriptions but including some cooking and crossword subscriptions.

Subscription revenue for the year increased 15 per cent. For the quarter, it rose 19 per cent, to $269 million.

During an earnings call on Thursday, Mark Thompson, the chief executive of The Times, said the company was pleased with the ''continued strong retention'' among the users who subscribed to The Times amid the 2016 presidential election.

The Times also expects earnings for the first quarter of 2018 to yield a boost in subscription revenues in the mid-to-high single digits, but said advertising revenues will decline by the same rate.

While digital advertising revenues increased 8.5 per cent in the fourth quarter, advertising revenues fell 1.3 per cent overall. The lucrative print advertising revenue retreated a full 8.4 per cent.

Thompson said The Times "saw continued challenges in print advertising, though its rate of decline moderated somewhat in the late part of 2017".

"Advertising now represents just one-third of our total company revenues," he said.

''We still regard advertising as an important revenue stream,'' Thompson said, ''but believe that our focus on establishing close and enduring relationships with paying, deeply engaged users, and the long-range revenues which flow from those relationships, is the best way of building a successful and sustainable news business.''

The Times also posted a $68.7-million charge related to the passage of a tax overhaul law that began to take effect in 2018.

Even as Trump attacks media outlets as "the enemy of the American people", they appear to benefit from the eye-popping headlines he and his administration have produced.

The last quarter of 2017 was marked by significant change at the newspaper. The former publisher, Arthur Sulzberger Jr, said he was passing the leadership reins to his son, Arthur Gregg Sulzberger, who assumed the title on 1 January. The company also continued renovations to its Manhattan headquarters, with its employees now consolidated on fewer floors.

In a separate announcement on Wednesday, The Times said it had reached a multiyear agreement to print and distribute Newsday's products out of the company's plant in Queens.

As of Wednesday's close, shares of the Times have surged more than 51 per cent in the past 12 months.