New York Times Tries Something New to Help Halt Falling Revenue

Media

Published: June 21, 2016 9:35 am

Last Updated: January 13, 2020 6:34 am

The New York Times Co. (NYSE: NYT) believes it has a new way to increase subscription revenue. It needs one. The newspaper company reported a 1.2% drop in revenue last quarter to $378 million, compared to the same quarter a year ago. The top line keeps shrinking, as it has for years.

The bright spot for the quarter was a 2.4% rise in subscription revenue to $218 million. Digital subscription revenue rose 14.2% to $5.2 million quarter over the quarter a year earlier. However, on a dollar basis, the increase was only $6.7 million.

According to several media reports, New York Times CEO Mark Thompson plans to launch a paid online subscription product that will carry no advertising. The decision apparently is part of a strategy to counter ad-blocking software that has eroded, and will continue to erode, online advertising revenue. Readers can eliminate advertising altogether when they visit ad-supported sites by use of this software.

The New York Times dilemma is that as its advertising revenue falls, it must fill the hole with subscription revenue. The risk it takes with “no advertising” subscriptions is that they will be priced higher than regular online subscriptions to offset whatever advertising revenue comes from the digital pages of current, regular digital products. Will subscribers accept high prices? That is the large gamble. If the New York Times loses, it will face subscription revenue attrition.

Thompson needs to gamble. The New York Times already has hinted that it will chop more jobs as the year progresses. These will be on top of other jobs cuts, which have become routine over the years. The fear in the journalism community is that the Times will need to drop some of its coverage areas. The paper has mostly avoided that, unlike almost every other newspaper in America.

Thompson has been backed into a corner and has few options to get out.

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