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NY Times Beats on Q4 Earnings, Digital Subscribers Rise

The New York Times CompanyNYT delivered better-than-expected fourth-quarter 2015 results. Adjusted quarterly earnings came in at 37 cents a share that beat the Zacks Consensus Estimate of 29 cents and surged 42.3% from the year-ago quarter. Including one-time items, the company recorded earnings of 31 cents a share, up from 22 cents in the prior-year quarter.

In the reported quarter, The New York Times Company registered an increase in the number of its digital subscribers, a rise in circulation revenue and a decline of 4.1% in adjusted operating costs. Management now anticipates adjusted operating costs to increase in the low-single digits in the first quarter of 2016. The fourth quarter also witnessed an improvement in digital advertising performance, but a decline in print advertising revenue.

The New York Times Company's total revenue remained flat at $444.7 million and came ahead of the Zacks Consensus Estimate of $439 million.

Circulation revenue grew 1.3% to $213.3 million, primarily backed by the company's digital subscription initiatives and a rise in the home delivery price of The New York Times in 2015. Circulation revenue from digital-only subscription packages jumped 13.3% to $50.4 million. Management now projects total circulation revenue in the first quarter of 2016 to increase at a rate in line with the quarter under review.

Total advertising revenue came in at $204.8 million, down 1.3% year over year. However, the rate of decline decelerated from 2.1% witnessed in the preceding quarter. Print advertising revenue fell 6.6% in the fourth quarter following a decline of 0.9% in the third quarter, while digital advertising revenue advanced 10.6% to $69.9 million after registering a decline of 5% in the previous quarter. The company saw a 3.6% drop in the display advertising category and a fall of 0.3% in the classified advertising category.

The diversified media conglomerate hinted that total advertising revenue in first-quarter 2016 will decline in the range of 2%-4%.

Total adjusted operating profit jumped 13.4% to $117.7 million, while adjusted operating margin expanded 310 basis points to 26.5%. Growth was supported by effective cost management.

Other Financial Aspects

The New York Times Company ended the quarter with cash and marketable securities of about $904.6 million, and total debt and capital lease obligations of approximately $431.2 million. The company incurred capital expenditures of about $10 million during the quarter. Management foresees total capital expenditures of $45 million for 2016.

During the quarter, the company bought back shares worth $23.9 million and still had $18.1 million remaining under its current buyback program as of Feb 2, 2016.

Conclusion

Advertising, which remains a significant source of revenue, is largely dependent on the global financial health. Softness in advertising demand has been weighing on The New York Times Company's performance. Consequently, the company is trying every means to shield itself from the impact of an unstable market and contemplating on new revenue generating avenues. The company had offloaded assets that bear no direct relation to its core operations in order to re-focus on its core newspapers and pay more attention to online activities.

The New York Times Company has been adding diverse revenue streams, such as a pay-and-read model, to stay less vulnerable to economic conditions. The company is also adapting to the changing face of the multiplatform media universe, and has already included mobile and reader application products in its portfolio. Other publishing companies such as Tribune Publishing Company TPUB , Gannett Co., Inc. GCI and The McClatchy Company MNI are also trying to adapt to different revenue generating ways.

Despite hiccups in the economy, what still promises revenue generation is The New York Times Company's pricing system for NYTimes.com, which was launched on Mar 28, 2011. The company notified that the number of paid digital subscribers reached 1,094,000 at the end of the reported quarter - rising 53,000 sequentially and 20% year over year.

The New York Times Company, which carries a Zacks Rank# 3 (Hold), remains committed to streamline its cost structure, strengthen its balance sheet and rebalance its portfolio.

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


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

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