Uncertain Impact from NYT's New Digital Subscription Service


The New York Times ( NYT ) primarily operates in the newspaper business, with ownership of The New York Times, International Herald Tribune, Boston Globe, and About.com.  It competes for online advertising dollars with hybrid publications like News Corp's ( NWS ), The Wall Street Journal (WSJ) as well as Internet-based outlets like Yahoo ( YHOO ), Google ( GOOG ) and AOL ( AOL ).

NYT recently announced the launch of the digital subscription service in which it plans to charge the "heavy users" of its online platform. The company has launched the service in the Canadian market and will soon launch it in the U.S. and globally. We have already analyzed the pros and cons of this service, and the impact that it can have on our $9.09 price estimate for NYT stock in another note titled Upside and Downside Scenarios for NYT's Online Paywall . Our price estimate is in-line with market price.

See our full analysis for The New York Times.

Details of the New Service

NYT plans to start charging the heavy users of its high quality content. According to the company, the users will be able to access 20 articles per month for free but will have to subscribe to the digital service beyond that. According to the company, it will offer three types of digital subscription packages, which include access to smartphones and tablets apps as well. However, the service is free to the home delivery newspaper subscribers. Additionally, the users will be able to access the NYT's articles through search engines.

Our Quick Take

NYT has about 30 million unique visitors on its site visiting it every month, and this is growing quickly. As discussed in our previous analysis, although the new service will provide incremental subscription revenues to the company, the paywall could reduce the number of page views on its site. This is a tricky situation for the company, and it will be interesting to see if the new service helps it gain subscription revenues with little impact on its online advertising revenues.

See the impact on our price estimate from changes in number of subscribers per month in the chart above or visit our site to see the full analysis.

Related Article: Upside and Downside Scenarios for NYT's Online Paywall .

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

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

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



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