The New York Times' first-quarter earnings show why digital news won't rescue print. The US newspaper company's advertising woes aren't just a print problem. Digital ad sales fell again in the quarter even though more readers signed up for virtual subscriptions. Apps on iPads help, but they won't stop the rot for the Gray Lady or ink-stained rivals.
The online ad market, while growing overall, has restored only a fraction of the print revenue publishers have lost. At the Times, digital ad sales actually dropped 4 percent in the first quarter from a year earlier. In total, ad revenue fell by double digits. Executives said there's no quick fix, though they noted some improvement in the current quarter.
That leaves paid subscriptions to fill the gap. The Times' circulation gains - revenue was up 6.5 per cent in the first quarter from a year earlier - have been fueled by the company's aggressive push to get readers to pay for online content, which was mostly free until 2011. With more than 700,000 people already signed up, it will become harder to find consumers willing to pay for their news.
Mark Thompson, the paper's chief executive, hopes beefing up video, offering customized content and broadening the organization's reach overseas will increase readership and possibly ad revenue. But the flagship Big Apple paper will have to do the heavy lifting. If he can find a buyer he plans to jettison the Boston Globe, recently much praised for its coverage of the Boston marathon bombing.
In the first quarter, print and digital circulation revenue for the New York Times and the International Herald Tribune totaled about $205 million. The company's first-quarter revenue has declined by about $100 million from five years ago thanks mostly to lost ad sales. If Thompson is to make up that shortfall by persuading more people to pay for the Times' core content, he needs to increase circulation revenue by 50 per cent.
The former BBC director general has $866 million of cash to fall back on - an advantage over some industry rivals. But with pension obligations, a sizable debt load and shareholders clamoring for a dividend, he has his work cut out for him. Thompson is looking for someone to head a newly created ad unit. Maybe he should seek out the most famous employee of the fictional Daily Planet.
