New York Times 2021 Q2 Earnings: 8 Million Subscribers

The company is intensely focused on increasing subscriptions and has been experimenting with how to convert its 100 million registered readers into paying readers. (It’s free to register.) The Times is also encouraging people who pay for at least one of the company’s digital products to subscribe to another, part of its bundling strategy.

That’s most likely why the company’s stock, like that of a Silicon Valley behemoth, trades at a hefty premium.

Investors are paying about $41 for every $1 of expected profit to own Times stock. That’s more than what people are paying to own Facebook, at $21, and Google, at $25. Rupert Murdoch’s News Corp, which publishes The Wall Street Journal, trades at a commensurate $40 for every $1 of expected profit. Shares in Netflix (another subscription service priced similarly to The Times) cost more, at $62 for every $1 of future income.

Even so, Times stock has dropped nearly 17 percent this year as a new administration took over the White House in January. The SP 500 index, by comparison, has risen nearly 18 percent.

The Times continues to invest in its digital business and expects costs to increase 18 to 20 percent in the current quarter, with capital expenditures for the full year totaling $50 million. That pales next to the cash the company holds: $947 million at the end of June.

Holding that much cash is typically seen as an inefficient use of capital that could be put to better use in investments or acquisitions — in other words, use it or lose it. The company does pay a quarterly dividend that costs about $40 million a year, but its approach to mergers and acquisitions has been relatively conservative. It spent $25 million last year to acquire Serial Productions, the company behind the hit podcast “Serial.”

“In general, our preference is to use the strong balance sheet that we have to invest in our strategy and maximize the value of our product,” Ms. Levien said in the earnings call with investors after the report.

Article source: https://www.nytimes.com/2021/08/04/business/media/nyt-new-york-times-earnings-q2-2021.html