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NY Times (NYT) Earnings Beat Estimates in Q4, Fall Y-o-Y

The New York Times CompanyNYT posted second straight quarter of positive earnings surprise, when it reported fourth-quarter 2016 results. The company delivered adjusted earnings from continuing operations of 30 cents a share that came ahead of the Zacks Consensus Estimate of 23 cents but declined 18.9% from the year-ago quarter.

In the reported quarter, The New York Times Company registered an increase in the number of digital subscribers and a rise in circulation revenue. The quarter also witnessed a decline in print advertising revenue but an increase in digital advertising revenue.

Adjusted operating costs came in at $344 million during the quarter, up 5.2% year over year. Management now expects adjusted operating costs to increase in the mid to high-single digits in the first quarter of 2017.

The New York Times Company's total revenue of $439.7 million came ahead of the Zacks Consensus Estimate of $437 million but decreased 1.1% year over year.

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Circulation revenue grew 5% to $226 million, primarily backed by the company's digital subscription initiatives and a rise in the home delivery price of The New York Times in 2016. Circulation revenue from digital-only subscription jumped 21.9% to $63.7 million. Circulation revenue from digital-only subscriptions to news products rose 21.2% to $61.1 million. Management now projects total circulation revenue in the first quarter of 2017 to increase at a rate of 6%.

Total advertising revenue came in at $185 million in the reported quarter, down 9.7% year over year. We observe that the rate of decline increased from 7.7% witnessed in the preceding quarter. Print advertising revenue fell 20.4% in the fourth quarter, following a decline of 18.5% in the previous quarter.

Digital advertising revenue surged 10.9% to $77.6 million, after witnessing an increase of 21.4% in the preceding quarter. Higher digital advertising revenue came on the back of rise in revenue from mobile platform, programmatic buying channels and branded content, partly offset by a fall in traditional website display advertising.

The company saw an 11.6% drop in the display advertising category and a 17.4% fall in the classified advertising category. The diversified media conglomerate hinted that total advertising revenue in the first quarter of 2017 is likely to decline in the high-single digits.

Total adjusted operating profit plunged 18.7% to $95.7 million on account of a fall in print advertising revenue and higher costs, partly offset by rise in circulation revenue.

Other Financial Aspects

The New York Times Company ended the quarter with cash and marketable securities of about $737.5 million, and total debt and capital lease obligations of approximately $247 million. The company incurred capital expenditures of about $9 million during the quarter.

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 avenues of revenue generation. 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.

These initiatives have led the stock to increase roughly 25.5% in the past three months and outperform the Zacks categorized Publishing-Newspapers industry that advanced 23.3% in the same time frame.

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 New Media Investment Group Inc. NEWM , 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 1,853,000 at the end of the reported quarter - rising 296,000 sequentially (276,000 came from the digital news products and 20,000 from the Crossword product) and 45.9% year over year.

The New York Times Company remains committed to streamline its cost structure, strengthen its balance sheet, and rebalance its portfolio.

The New York Times Company currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today's Zacks #1 Rank stocks here .

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New York Times Company (The) (NYT): Free Stock Analysis Report

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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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