Is New York Times a Good Media Stock?

The New York Times (NYSE:NYT) is a long-standing media outlet that started with an eponymous newspaper. It’s one of the most renowned news outlets in the country, with a circulation of over eight million subscribers. And its digital subscriber base far eclipses the approximately 800,000 people (or less than 10 percent of total subscribers) who opt in for the media company’s physical newspaper.

The New York Times stock grew by over 235 percent in the past five years. But can it keep up that growth pace?

History of The New York Times

The media landscape has drastically changed since the company was founded in the 19^th century. The New York Times was founded by journalist and politician Henry Jarvis Raymond and former banker George Jones in 1851.

It has been published almost every day since, covering politics, business, crime, and culture happening throughout the city of New York and beyond.

Although impartial on principle, it publishes political editorials with a clear bias toward one party or another. These days it’s liberal leaning, but it was founded as a mostly conservative newspaper that occasionally catered to the radicals.

In the 1930s and 1940s, the paper began expanding its breadth, including a fashion section and the now famous crossword puzzle. The Ochs-Sulzberger family obtained control during this time still holds control to this day; the family trust holds about 88 percent of the company’s class B shares, and any restructuring must be approved by its board members.

The company evolved into much more than a newspaper since the height of the publishing industry though. This evolution prepared the company to compete against rising digital upstarts in both media and social media.

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Death of the Newspaper Industry

The rise of the internet complete disrupted the newspaper industry as consumers turned to other news sources. As mobile devices proliferated society, people were more likely to get their news from social media and other websites/apps/search engines than picking up a physical newspaper. Pew Research shows nearly half of all U.S. adults get news from social media at least some of the time.

Poynter Institute for Media Studies report found 2,100 of the 9,000 newspapers published in 2004 are already dead. That equates to about a quarter of all newspapers from the time, while blogs, newsletters, and digital-only media sites like Buzzfeed (NASDAQ:BZFD) flourished.

Concerns over the future of publishing triggered workers at the NY Times (among others) to unionize, and the Wirecutter Union threatened a walkout during holiday 2021 negotiations.

Now the New York Times operates several websites, podcasts, and apps. You can find its content across nearly every platform, including augmented and virtual reality and the NFT craze, along with social media. In fact, it has deals with giants like Meta Platforms to create and publish content on their platforms, such as Facebook and Instagram.

That’s just one revenue stream.

How the New York Times Makes Money

The New York Times has three revenue streams:

• Subscription,
• Advertising, and
• Other.

Digital and print news subscriptions make up the lion’s share of that revenue while Other digital products make up the balance. The single-digit percentage decline in print is compensated for by growth across its digital subscriptions.

In the first nine months of the year, its $1 billion+ in subscription revenues represents a nearly 15-percent increase from the same period of the prior year. And it gained on advertising revenue too.

Ad revenue of $320 million is 26 percent higher than the prior year’s tally. Both digital and print advertising revenues grew, which is no surprise given that print newspapers were a hard sell when lockdowns spread across the country.

Of course, the war to remain relevant in the media is never over, and its biggest rival is not a rival newspaper like the Washington Post or Wall Street Journal. The entirety of the media is competing for revenue with Big Tech’s advertising giants.

New York Times Rivals and Headwinds

Alphabet Inc (NASDAQ:GOOGL) and Meta Platforms Inc (NASDAQ:FB) earn an estimated 53 percent of global advertising revenue. And these ad empires virtually control the market, implementing rules that benefit their platforms at the expense of competing advertisers. Why bother with programmatic advertising on a single platform when you can reach a broader audience through Google?

Google is more than a gatekeeper – its move to accelerated mobile pages (AMP) through the 2010s stored ad-free web content on its own servers. This is said to be for the sake of serving content more efficiently on a mobile platform, but it also chokes media’s ability to grow ad revenue.

Paywalls could provide a new opportunity for rivals. If competitors can monetize free content better than the New York Times can monetize paid subscriptions, readers may be lost forever.

The New York Times also pulled out of the Apple’s (NASDAQ:AAPL) iOS-centric News platform. While it has the power to do so now, it could find itself struggling if it can’t find ways to increase advertising and other revenue.

The Bottom Line on New York Times Stock

The New York Times is a longstanding media outlet that’s been around nearly as long as the country itself. While its editorial views are arguably biased, the company still retains a large subscriber base across its digital and print platforms. No longer a newspaper, it’s involved in video, audio, photojournalism, social media, and more.

It fought a long and hard battle to get where it’s at, and its growth prospects look good over the next decade. News junkies aren’t likely to go extinct anytime soon, and the brand exists across emerging web3 platforms. And it’s still thriving in the face of Big Tech companies attempting to take all of the advertising revenue pie for itself.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.