New York Times beats quarterly revenue estimates on strong digital subscriptions as ad revenue falls

The New York Times set a record for its subscription business in 2020, a year when a pandemic, social unrest and a bitterly contested presidential race made headlines, the company said in an earnings report Thursday.

After adding 2.3 million digital-only subscriptions in 2020, more than in any previous year, The Times exceeded 7.5 million subscriptions for its digital products and print newspaper, The New York Times Company’s fourth-quarter report said.

The largest gains of 2020 occurred during two news-heavy periods. In the quarter that started in April, when a great number of Americans were weeks into a routine of working remotely because of the coronavirus pandemic, the company added 669,000 digital subscriptions. In the fourth quarter, which included Election Day, The Times had an increase of roughly 627,000 digital subscriptions. That was nearly double the 324,000 the company added a year earlier.

“In 2020, we reached two key milestones, both of which we expect to be enduring: Digital revenue overtook print for the first time, and digital subscription revenue, long our fastest-growing revenue stream, is also now our largest,” Meredith Kopit Levien, the company’s chief executive, said in a statement. “Those two milestones, and our best year on record for subscriptions, mark the end of the first decade of The Times’ transformation into a digital-first, subscription-first company.”

For the year, The Times’ primary digital offering, its news product, gained 1.7 million subscribers, a 48% increase over 2019. More than 5 million Times subscriptions are for the news product alone, The Times said. Other digital offerings, like the Cooking and Games apps, gained more than 600,000 subscriptions in 2020, a 66% rise, for a total of roughly 1.6 million. The remaining subscriptions — about 833,000 — are for the print newspaper.

In the fourth quarter, digital subscription revenue was $167 million, a 37% jump from the final months of 2019. For the year, it was $598.3 million, a 30% rise. Total subscription revenue in 2020 was up 10%, to $1.195 billion.

A downside to the quarter, and the year, were ad sales. The closings and suspensions of businesses during the pandemic took a toll across the media industry, cutting into the marketing budgets of many companies that buy ads. Total ad revenue at The Times fell 26% in 2020, to $392.4 million, with print ad revenue bearing the brunt of the annual decline, at 39%, the company said.

In the fourth quarter, digital advertising revenue dropped 2% from a year earlier, to $90.1 million. Print ad revenue declined 38% in the fourth quarter, to $49.1 million. The print ad decline was quickened by the pandemic but was also related to larger trends, The Times said. In the quarter, 65% of total ad revenue came from digital, compared with 54% a year earlier.

Fourth-quarter revenue was $509.4 million, a 0.2% rise from 2019. Adjusted operating profit rose 1.4% from the fourth quarter of 2019, to $97.7 million, and 0.9% over the year, to $250.6 million.

The subscription gains last year put The Times on its way to achieving its stated goal of reaching 10 million by 2025. The increase occurred even as The Times, which started charging for online content in 2011, raised the prices of some digital news subscriptions.

“With a billion people reading digital news, and an expected 100 million willing to pay for it in English, it’s not hard to imagine that, over time, The Times’ subscriber base could be substantially larger than where we are today,” Levien, who succeeded Mark Thompson as chief executive in September after seven years at The Times, said in a statement.

In its report, The Times projected a roughly 15% increase in total subscription revenue in the current quarter from the first quarter of 2020, and a jump of 35% to 40% in digital subscription revenue. Ad revenue this quarter is expected to fall a little less than 20%, the company added.

The company also announced an increase in its dividend payments to investors, to 7 cents a share from 6 cents, which will cost the company about $46.8 million a year. It was the second time within a year that the board had agreed to raise the dividend, a move that will benefit the Ochs-Sulzberger family that controls The Times.