The New York Times Co. for the first time Wednesday reported higher revenues from its digital business than its print operations, a “watershed moment” in the newspaper’s nearly 170-year history, according to CEO Mark Thompson.
“And we don’t think it’s likely we’re going to go back from this moment,” Thompson said on CNBC’s “Power Lunch.”
The Times reported $185.5 million in revenues from digital subscriptions and advertisements, compared with $175.4 million in revenues from print subscriptions and advertisements. In the year-ago quarter, the company reported $220.56 million in print subscription and ad revenues and $170.66 million in digital subscription and ad revenues.
The company’s stock rose 1.26% Wednesday to close at $47.38 per share, reversing earlier declines in the session. The stock, which has risen nearly 44% so far this year, is trading at levels not seen in over 15 years.
The Times reported a 7.5% decline in overall year-over-year revenues as advertising sales tumbled 43.9% in the quarter due to the coronavirus pandemic. However, revenues from digital advertising checked in at $39.5 million, or 58.3% of its total ad sales. That’s up from 48.1% of total sales in the same quarter last year.
Subscription revenues rose 8.4% year over year, powered by a 29.6% increase in digital-only revenues to $146.0 million. Print subscription revenues dropped to $147.2 million, a 6.7% decrease, mostly due to lower sales at newsstands.
The Times, and the media industry in general, has needed to overcome declining print newspaper circulation in recent years by harnessing the expanded reach of the internet into a formidable business operation.
“The Times’ physical paper … remains very strong, which is why it’s taken a while to see this crossover point. But digital has grown enormously over the last eight years when I’ve been chief executive,” said Thompson, who is leaving the job in September. “We had something like 650,000 digital subscribers back in 2012 when I arrived, and we’re getting pretty close to 10 times that.”
Mark Thompson speaks during the CNBC Evolve New York event on June 19, 2019.
Astrid Stawiarz | CNBC
The company added 669,000 net digital subscriptions in the second quarter — 493,000 of which were for the news product, while 176,000 were for other digital products, including its cooking and crossword puzzle sections. It ended the quarter with about 6.5 million paid subscribers, including print and digital.
The net new digital subscribers total far exceeded expectations from JPMorgan, which had projected subscriber additions of 380,000. In a note Wednesday, analysts at the firm maintained its $50 price target on the stock for December 2021. It also has an overweight rating.
Analyst Alexia Quadrani said in the note that New York Times shares may “take a bit of a pause” until the impacts of the coronavirus pandemic come more into focus. But she expressed confidence in the company’s digital transformation and believes it has a clear path to reach its goal of 10 million subscribers in 2025.
“We continue to like the story longer term given the success of the company’s migration to digital, with growth in circulation cushioning ad declines,” Quadrani wrote. “Near term, we expect digital-only sub growth to continue to be supported by the stronger news cycle and heightened promotional activity, which is a clear benefit to circulation at NYT.”
Thompson, the former director general of the British Broadcasting Corporation, said he believes the company’s shares have far outpaced the broader stock market this year because Wall Street recognizes its waning reliance on advertising revenue.
“Although the percentage numbers in advertising, the losses are pretty significant on the advertising side, look at profitability on the whole and the picture is much more mixed,” he said. “What the market has seen is that underlying engine of digital subscription growth with really quite spectacular year-over-year gains in digital revenue as a result.”
— CNBC’s Michael Bloom contributed to this story.