New York Times profit better than expected due to digital push

[NEW YORK] The New York Times Co reported a better-than-expected rise in quarterly profit as a jump in digital circulation revenue helped offset higher operating costs at the newspaper publisher.

The company, which has been grappling with declining print ad sales, marked 2016 as the "investment year" for raising the bar on digital investments, with plans to invest more than US$50 million over the next three years to cement its presence outside the United States.

On an adjusted basis, the company earned six US cents per share from continuing operations in the third quarter, beating the average analyst estimate of 4 US cents, according to Thomson Reuters I/B/E/S.

Digital ad revenue rose 21.4 per cent from a year earlier, after two quarters of declines. Digital ads account for 35.5 per cent of total ad revenue, up from 27 per cent a year earlier.

While digital advertising accounts for more of the company's bottom line, print advertising continues to decline. This quarter, ad revenue from print declined 18.5 per cent from a year ago, accounting for only 22 per cent of total revenue, said chief executive officer Mark Thompson during the earnings call Wednesday morning.

"We're talking about a company which once had a reliance of, maybe, 80 per cent of revenue on print advertising," said Thompson.

The gains in digital advertising revenue primarily came from what Meredith Kopit Levien, chief revenue officer, described as their "growth" businesses: mobile, branded content, virtual reality and other forms of video. These somewhat offset declines in traditional digital display.

For the second straight quarter, these new forms of digital advertising outpaced traditional display, or so-called legacy businesses, but Levien added that it was "meaningfully larger" this quarter.

"That is a very positive trend and sort of suggests that the strategy is working," she said.

Mr Thompson said in July that digital ad sales would improve in the second half of the year, offsetting any decline in print ad sales.

Circulation revenue from the company's digital-only subscriptions rose 16.4 percent.

Operating costs rose 3.2 per cent to US$345.5 million, as the company ramped up its digital business.

Net profit attributable to the company fell 95.7 per cent to US$406,000, or break-even per share, hit mainly by restructuring charges related to headcount reductions.

Revenue fell one per cent to US363.6 million, below analysts' average estimate of US$365 million.

Shares of The New York Times rose 0.5 per cent to US$10.95 on the New York Stock Exchange.

REUTERS