UPDATE 4-New York Times forecasts weakness in digital ads, shares down 12%Reuters | New York | Updated: 08-08-2019 00:08 IST | Created: 08-08-2019 00:07 IST
The New York Times Co fell short of Wall Street estimates for revenue on Wednesday and warned of declines in digital advertising for the rest of the year, sending its shares down 12%. The outlook overshadowed a better-than-expected second-quarter profit, helped by the 167-year old newspaper's efforts to make money from digital subscribers to counter a relentless decline in readership of its broadsheets.
Those efforts have paid off as company has added online subscribers at a fast pace in the past few years, also aided by the so-called "Trump bump" - the effect of U.S. President Donald Trump's attacks on the paper as well as its coverage of his administration. The company, however, said it now sees digital advertising revenue to fall in the high-single digits percentage, attributing the drop to the timing of some large-scale, multi-month deals.
"We expect the second half of 2019 to be somewhat more challenging for digital advertising than the first half, with this year's revenue coming against our large gains in the third and fourth quarters of 2018," Chief Executive Officer Mark Thompson said in a statement. Douglas Arthur, an analyst at Huber Research Partners, said although he had expected slower growth in digital ad revenue, the forecast was "a disappointment".
The Times added 197,000 digital-only subscribers in the quarter, pushing total subscriptions to 3.78 million. Its digital advertising revenue rose about 14%. The paper has been aggressively rolling out offers to boost online subscriptions as more companies increasingly shift their ad dollars away from print to digital platforms such as Alphabet Inc's Google and Facebook Inc.
The Times said on Wednesday its $1 per week introductory offer weighed on average revenue per user (ARPU), which declined 9% from last year. "(The offer) will continue to put downward pressure on ARPU throughout 2019," the company said on a conference call with analysts.
Total revenue rose 5% to $436.3 million, missing analysts' average estimate of $438.7 million, according to IBES data from Refinitiv. Excluding items, the company earned 17 cents per share, compared with the average estimate of 15 cents.