In its third quarter earnings report, The New York Times Company reported that it had 8.38 million paid subscribers across print and digital products, including paid digital-only subscriptions of 7.6 million. This includes a new milestone of reaching 1 million international digital subscribers. During the quarter, the company added 455,000 net new digital subscriptions, including 320,000 for News and 135,000 for Games, Cooking and Wirecutter, The Times’ product review platform.
“This was our best third-quarter performance in both News and total net subscription additions since the launch of the digital pay model more than a decade ago, and, outside of 2020, our best quarter ever for digital subscription additions,” said Meredith Kopit Levien, president and CEO of The New York Times Company in a November 3, 2021 earnings release.
Kopit Levien said that the “busy news period” was partially responsible for the company’s subscription growth, but the media organization also took action to improve conversions and better showcase the benefits of subscriptions to prospective subscribers through various offers.
“During the quarter, we launched paid subscriptions to Wirecutter and announced plans to test digital product experiences in audio and for kids in the coming months,” Kopit Levien added. “Our progress this quarter reflects the power of our subscription-first strategy, the enduring demand for quality, independent journalism and our long-term potential to mean more to more people across a range of news and life needs.”
Third quarter highlights
Other third quarter highlights include the following:
- Total revenue for the quarter was $509.1 million, comprised of $342.6 million in subscription revenue (a 13.8% year-over-year increase), $110.9 million in advertising revenue (a 39.9% year-over-year increase), and $55.6 million in other revenue (a 19.3% year-over-year increase).
- Subscription revenue during the quarter increased primarily due to the growth in digital-only products including the News product, Games, Cooking, Audm and Wirecutter. Subscriptions that transitioned from promotional pricing to higher pricing also contributed to growth in subscription revenue.
- Print subscription revenue was $144.0 million, a 1.2% decrease due to lower domestic home delivery revenue and lower single-copy sales.
- Advertising revenue continued to rebound with digital advertising increasing 40.2% and print advertising revenue increasing 39.4%. Higher digital advertising can be attributed to higher direct-sold advertising, including traditional display ads and podcast advertising.
- Print advertising increased mostly in the luxury and entertainment categories, categories which took a dive during COVID with luxury brands reluctant to advertise during the pandemic.
- Total operating costs for the quarter were $460.1 million, an 18.8% increase year-over-year.
- Net income for the quarter was $54.7 million, or $0.32 diluted earnings per share, compared to $33.6 million, or $0.20 diluted earnings per share in Q3 2020.
The company provided the following guidance for the fourth quarter of 2021.
- Total subscription revenues are estimated to increase about 12% compared to the fourth quarter of 2020.
- Digital-only subscription revenue will increase approximately 25%.
- Total advertising and digital advertising revenue will increase in the mid-teens compared to the fourth quarter of 2020.
- Other revenues will increase approximately 15% compared to Q4 2020.
- Operating costs and adjusted operating costs will increase 17% to 20% as the company continues to make investments to drive digital subscription growth.
- Capital expenditures during the fourth quarter will be approximately $50 million.
Several years ago, The New York Times Company set a goal of reaching 10 million subscribers by 2025. They will hit that target long before 2025, especially if they continue the path they are on. They continue to do well with their News product, but their ancillary subscription products (Cooking, Games, Audm, Wirecutter) are doing their share of the heavy lifting too. If The Times continues to focus on the subscriber experience and differentiating what offers appeal to prospects, their efforts to drive conversions will pay off. Though Kopit Levien has only been at the helm for a year, she has continued the company’s trajectory into the subscription-first space, becoming a model for other subscription companies to follow.