New York Times Reports Flat Revenue in Fourth Quarter, Baquet Plans Newsroom Strategy Review
On an earnings call Thursday morning, New York Times Co. CEO Mark Thompson put a positive spin on the company's fourth-quarter earnings report, which showed that revenue is flat, and said the company had "a strong quarter and a very encouraging 2015."
The company booked an adjusted operating profit of $117.7 million for the quarter (compared to $103.9 million a year earlier), and an adjusted operating profit of $289 million for all of 2015, up from $256.3 million in 2014.
For the quarter, a print advertising revenue decline of 6.6% was partly offset by a 10.6% increase in digital ad revenue. In total, ad revenue fell 1.3% in the quarter, compared with the quarter a year earlier.
For all of 2015, print ad revenue dropped 8%, while digital ad revenue increased 8.2%. Total ad revenue fell 3.6%, and overall revenue including other components slipped 0.6%.
Separately on Thursday, Executive Editor Dean Baquet said in a staff memo that he and David Leonhardt, editor of The Upshot at The Times, would conduct a newsroom strategy review. "Instead of cuts and additions without a clear picture of where we are headed, we want to approach the task thoughtfully, with our mission and values clearly in mind," Mr. Baquet wrote in the memo. "Everything we do must either be part of that mission or help generate the revenue to sustain our journalistic dominance."
The Times Co. has set a goal of doubling digital revenue to $800 million from $400 million by 2020, and Mr. Thompson said "it was very encouraging to see tangible steps toward that target in 2015."
Digital subscriptions are at the center of that revenue strategy. The company said it added 53,000 new digital subscribers in the most recent quarter, bringing its total to 1,094,000.
Circulation revenue grew 1.3% in the fourth quarter, compared to the quarter a year prior, and 1% in 2015 as a whole.
The company has attempted to court new subscribers by offering discounted pricing options ("target pricing") to selected groups such as college students, and has made international growth a particular focus.
Chief Revenue Officer Meredith Kopit Levien said the company has also been focused on keeping existing digital subscribers.
"Some of the new techniques we've deployed around retention are really starting to take root," she told analysts.
Mr. Thompson called the company's in-house advertising unit, T Brand Studio, "a particular success story," and said the plan is to keep building it out.
"We believe we've got a really rapidly growing business in T Brand Studio, and we think that the range of services we can offer ... those partners could be broader than it currently is, and we'll be investing in that," Mr. Thompson said.
Ms. Kopit Levien, who called 2015 "a very good year" for T Brand Studio, said that branded content is beginning to represent "a more meaningful percentage" of the company's revenue.
"We're going to keep investing in people and technology around advanced storytelling formats," she said, singling out virtual reality technology.
Ms. Kopit Levien attributed month-to-month volatility in advertising revenue to industry trends, and the shift in preference from display formats to branded content. And while print ad dollars are increasingly moving to digital, Ms. Kopit Levien said "there are plenty of categories that remain quite strong in print."
Video, she said, "is still a fairly small percentage" of the business, but is growing.
Looking forward, the company has projected an advertising revenue decline of between 2% and 4% for the first quarter of 2016. It expects to add another 50,000 digital subscribers to the fold next quarter.
Overall, Mr. Thompson assured analysts, "We are committed to returning to operating profit growth as soon as we can."