NYTimes Reports 'Turbulence' In Digital Advertising

Readers continue to shower The New York Times with money. Advertisers, not so much.

The publisher added 273,000 new online subscribers in the third quarter, for a total of four million digital readers, the company reported Wednesday. The number of total subscribers, including print and digital, hit 4.9 million, a high. Advertising was the weak spot, falling 6.7 percent over all, with digital ad revenue dropping 5.4 percent.

The decline in print advertising was not unusual, as readers continue to prefer getting their news on screens. The drop in digital ads, however, was more surprising for The Times, an established publisher with a growing base of online readers.

The stock, which fell as much as 9 percent in early trading on Wednesday, was down 3.7 percent at the close.

In the earnings statement, Mark Thompson, the chief executive, chalked up the decline to the “continued turbulence in the digital advertising space.” Last year, the company benefited from a more robust ad business when it drew marketers like Google, which spent heavily to promote its cloud service. The company said it expected a “challenging” fourth quarter as well, with digital advertising expected to fall somewhere around 15 percent.

For the third quarter, the company earned $44 million in adjusted profit, or 12 cents a share, on $428.5 million in revenue, beating expectations on income. Wall Street had expected a profit of about $40 million, or 10 cents a share, on $428.6 million in sales. Costs rose 5.4 percent, to $401 million, largely from higher newsroom expenses, which included new hires. The company, which is nearing 1,700 newsroom staffers, expects operating costs to increase “to higher levels” starting next year.

The New York Times Company kept the focus on its digital subscriber gains in its report, and Thompson called the period from July to September “our best-ever third quarter for new digital news subscriptions.” The majority of the new additions, about 209,000, paid for the main news product. The rest came from subscriptions to the Crossword and Cooking products.

Despite the steady rise in online readership, each subscriber brings in less revenue on average as the company continues to offer promotions. The Times sold subscriptions for $1 a week starting in August 2018, and those customers are now seeing their rates rise after the one-year offer expires. Renewals for those readers have been fairly positive, Thompson said.