NY Times Investors Pin Hopes on Digital Subscribers


The New York Times ( NYT ) reported disheartening numbers despite its recent attempts to clamp down on costs and launch its digital platform. Net revenues slumped to $567 million from $588 million last year and advertising revenue sagged to $299 million, or 4.4% year over year. The bright spot is that digital ad sales rose 4.5%. New York Times competes with News Corp's ( NWS ) The Wall Street Journal (WSJ) as well as Internet-based outlets like Yahoo ( YHOO ), Google ( GOOG ) and AOL ( AOL ).

Our price estimate is $9.32 , which is slightly ahead of the market price.

New York Times introduced its paywall March 28 th , something we wrote about recently in a note titled A Quantative Look at NYT's Digital Subscription Service. The goal of the paywall is to charge heavy users by offering 20 per month free and then offer the  user several options for digital subscription based on expected usage and personal preference.

In that note we wrote:

NYT attracts about 30 million unique visitors per month, but only 15% of these fall under the category of "heavy users". Under the new payment structure, all users will be able to access 20 articles per month for free, and can also access NYT's articles through search engines. Subscribers to NYT's print version will also have full access to NYT online. Given this level of availability for NYT content, we believe the number of online subscribers might end up around 500,000 for 2011.

But the real question is whether NYT can continue its subscriber growth momentum. The paywall initiative is still in an early phase, and NYT will likely look to spur subscriber growth by adding new features to its digital subscription service. Price reduction, of course, could provide added incentive for customers. Below we consider how this pricing might trend going forward.

In response around 100,000 digital subscribers have signed up since the paywall roll out, which is a pretty healthy number given that the paywall was rolled out only a few weeks back. This is a positive sign and could help NYT maintain its traffic.

See our full analysis for New York Times.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: AOL , GOOG , NWS , NYT , YHOO



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