By Supantha Mukherjee and Neha Malara
(Reuters) – The New York Times Co warned of a steep fall in advertising sales in the current quarter after beating Wall Street’s profit and revenue estimates on Wednesday, as it added more subscribers in a period dominated by heavy news coverage around the COVID-19 pandemic.
The Times, which posted the largest increase in quarterly new digital subscriptions in its history, has focused on this area for several years to stem losses from its print subscription platform and to lower its dependency on ad revenue.
But advertising sales have been unpredictable and the sector was one of the hardest hit as companies across industries slashed ad budgets to save cash to buffer the sharp drop in business due to global lockdowns.
Major ad agencies such as Omnicom, Interpublic, WPP and Publicis cut salaries and furloughed employees.
First-quarter advertising revenue, which accounts for less than a fourth of total revenue, fell 15.2% to $106.1 million, and the company expects advertising revenue in the current quarter to slide between 50% and 55% from the year-earlier period.
“The Times’s business model, with its growing focus on digital subscription growth and diminishing reliance on advertising, is very well positioned to ride out this storm and thrive in a post-pandemic world,” Chief Executive Officer Mark Thomson said.
However, on a conference call the company said it does see cost reductions that will likely lead to some job losses in the coming months, adding it expects a comparatively small number with no job reductions in journalism.
In the quarter, the company added 587,000 net new digital subscriptions, pushing digital-only subscriptions to more than five million. Of the new digital subscriptions, 468,000 were for its core news product, which currently has more than four million subscriptions.
“This was despite the fact that we are allowing audiences to access the majority of our coverage related to the coronavirus outside of our pay model,” Thomson said.
It expects digital-only subscription revenue for the current quarter to increase in the high-twenties from last year.
The Times will derive more revenue from the digital business than the print business, on both the subscription and advertising fronts, for the first time in late 2020, Evercore analysts had estimated.
The company’s first-quarter revenue rose 1% to $443.6 million – edging past analysts’ estimates of $441.1 million, according to IBES data from Refinitiv.
Excluding items, the company earned 17 cents per share beating analysts’ estimate of 10 cents.
(Reporting by Neha Malara and Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty, Bernard Orr)