The New York Times’ fourth-quarter earnings report showed no signs of an advertising renaissance. Investors, however, cheered the 16 per cent increase in circulation sales from a year earlier, sending the newspaper group’s languishing shares up more than 12 per cent initially. But that looked too generous. Subscriptions will eventually flatten out, and the Gray Lady under Mark Thompson, its new chief executive, needs to arrest the decline in ad sales.
The company’s revenue rose five per cent to $576 million in the quarter on the back of a surge in digital subscriptions. But an extra week compared to the same period in 2011 flattered the results. Adjusting for those extra days, while circulation revenue would have increased by 8.6 per cent, ad sales — a roughly equivalent slice of the total — would have dropped by a similar amount. And, it wasn’t just print ads. The digital side also took another hit as advertisers again paid less for online space.
Though it has made good progress, the Times will eventually struggle to add more new subscribers for its digital product. They are already 640,000 strong, a 45 per cent increase over the number paying for access last March, a year after the paper erected its paywall. That pace will be hard to maintain. And, even diehard takers of the print edition could balk if the paper keeps increasing prices as it did in 2012.
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That’s the right call - even if it’s not yet clear that Thompson has the commercial smarts needed to revitalise ad sales. The Times, like most of its industry, is still feeling its uncomfortable way in the digital world. Until there’s a clearer path to financial stability, the cash cushion is an important backstop.
