Advertising remains a significant source of revenues for The New York Times CompanyNYT , which however is dependent upon the health of the economy. We observed that the company has been struggling with dwindling advertising revenues for quite some time now. Total advertising revenue dropped 7.7% during the third quarter of 2016. Print advertising revenues fell 18.5% in the quarter under review, following a decline of 14.1% in the preceding quarter.
The U.S. newspaper publishing industry has long been grappling with sinking advertising revenues. The downturn in the newspaper publishing industry witnessed over the last few years was aggravated as print readership declined, with more readers opting for online news, thereby making the print-advertising model increasingly irrelevant.
Consequently, The New York Times Company has been contemplating on new avenues of revenue generation. The company is 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.
The New York Times Company is concentrating on online activities, as evident from its pay-and-read model. Its pricing system for NYTimes.com was launched on Mar 28, 2011. The company notified that the number of paid digital subscribers reached 1,557,000 at the end of the third quarter - rising 129,000 sequentially (116,000 came from the digital news products and 13,000 from the Crossword product) and 30% year over year.
The company's initiatives remain on well on track but soft adverting revenues forecast for the final quarter of 2016 raises concern among investors. Management expects total advertising revenue in the fourth quarter to decline at a rate equivalent to that of the third quarter. We observed that year to date this Zacks Rank #4 (Sell) stock has increased marginally by 0.2% compared with S&P 500 Index that surged roughly 11%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today's most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.