Six years ago the New York Times shocked the newspaper industry by rolling out a paid-digital strategy. Since then, online subscriptions have been on an upswing, helped by Donald Trump's rise to the U.S. presidency. But income from print advertising is drastically down, adding to angst over job cuts. A Breakingviews analysis suggests that killing the costly paper product altogether would be radical – but not absurd.
Revenue from the classified, retail and national ads that once fattened the Gray Lady's editions fell nearly 25 percent from 2014 to 2016. With the trend continuing, the company – due to report second-quarter earnings on Thursday – is in the midst of cutting newsroom staff. Yet the print-ad decline makes it less critical to keep the physical presses humming. Although print-advertising and circulation revenue made up two-thirds of the Times' top line in 2016, the proportion is declining and print also accounts for a huge chunk of expenses.
The numbers are getting to the point where going all-digital is plausible. Start with estimated revenue for this year, pegged at over $1.6 billion by Barclays, up from 2016 thanks to another chunky increase in online subscribers. Then strip out print: that removes 58 percent of forecast 2017 revenue and, on a back-of-the-envelope estimate, 40 percent of operating costs.