New York Times' New Outlook Disappoints Wall Street
The New York Times' new forecast for the third quarter is grim, and investors aren't happy -- the stock is now off nearly 5 percent. CEO Janet Robinson spoke at the Goldman Sachs Communacopia conference, sharing the company's new, more negative outlook, and talked about the company's direction, and the fact that the company is straddling its print past and its digital future. (Track NYT here)
Digital comprises 16 percent of the company's revenues — when will it over take print?
Robinson wouldn't say what kind of balance she's looking for between the two, just saying she thinks of the company as a "multiplatform brand" rather than a newspaper company.
The problem, and one reason driving the stock lower, is the fact that the company still is primarily a newspaper business — about three quarters of the news businesses revenues comes from print. And Robinson isn't letting go of that, saying that the company "will be expanding both its print product and our footprint in digital in the years to come."
In the third quarter the New York Times Co. expects total revenues to decline two to three percent, dragged down by a roughly 5 percent drop in print ad revenues, and a 5 percent decline in circulation revenue. Meanwhile operating costs are expected to grow one to two percent. The company's also taking $22 million in charges and $1 million in severance costs; those charges will put the company's quarterly loss between five and seven cents per share.
The good news: digital ad revenues are on track to grow some 14 percent in the third quarter, which is significant considering that in the year-ago quarter the company's web dollars fell 7.2 percent. And the company is readying its digital pay wall to launch at the end of the year, which the company says will help it retain print subscribers. Robinson still hasn't revealed the strategy for the digital pay wall — how much it'll charge and how it'll combine digital and print subscriptions. And the company's SVP of digital operations Martin Nisenholtz wouldn't comment on whether the company will shift all of its classified ads online.
A lot of the questions about the company's digital future will be answered when it launches its paid digital product. Despite Robinson's optimism about the print business, Wall Street is watching the area that's growing, which is digital.
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