The New York Times Company NYT delivered better-than-expected second-quarter 2015 bottom-line results. Quarterly earnings came in at 13 cents a share that beat the Zacks Consensus Estimate by a couple of cents, and surged from 7 cents delivered in the year-ago quarter. The strength witnessed at digital advertising and effective cost management supported the bottom line.
Including one-time items, earnings came in at 10 cents a share, up significantly from 6 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 both circulation and digital advertising revenues and a decline of 4.4% in adjusted operating costs. However, the quarter saw a decline in print advertising revenue. Management now expects adjusted operating costs to be flat to marginally down in the third quarter of 2015.
The New York Times Company’s top line dropped 1.5% year over year to $382.9 million, following a decline of 1.6% in the first quarter. However, revenues came in line with the Zacks Consensus Estimate of $383 million.
Circulation revenue grew 0.9% to $211.7 million primarily on the company’s digital subscription initiatives and rise in the home delivery price of The New York Times. Circulation revenue from digital-only subscription packages jumped 13.8% to $47.5 million. Management now projects total circulation revenue in the third quarter of 2015 to increase at a rate in line with the quarter under review.
Total advertising revenue came in at $148.6 million, down 5.5% year over year. Print advertising revenue declined 12.8%, while digital advertising revenue climbed 14.2% to $48.3 million. The company saw a decline of 4.9% in the display advertising category and a 16.3% fall in the classified advertising category. The diversified media conglomerate hinted that total advertising revenue in third-quarter 2015 would decline in the mid-single digits.
Total adjusted operating profit jumped 15.6% to $64.4 million, while adjusted operating margin expanded 250 basis points to 16.8%.
Other Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $879.7 million, and total debt and capital lease obligations of approximately $428.8 million. The company incurred capital expenditures of about $6 million during the quarter. Management now foresees total capital expenditures of $35 million for 2015.
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 its online activities.
The New York Times Company has been adding diverse revenue streams, such as a pay-and-read model, to make it 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 990,000 at the end of the reported quarter – rising 33,000 sequentially and 19% year over year – and crossed the one million paid digital-only subscriber mark as of Jul 30.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment