New York Times ad revenue declines by 15.2% in Q1 as Coronavirus weighs on demand

In a statement on Wednesday, the New York Times (NYSE: NYT) warned of a 50-55% decline (year over year) in advertising revenue in the second quarter as Coronavirus weighs on demand. In the first quarter, the company boasted 587K new digital subscriptions that marked the highest quarterly increase in digital subscriptions for the New York Times in history. Subscriptions make up roughly 70% of NY Times’ total revenue.  

Following the release of the Q1 earnings report, the company was seen trading around 7% higher on Wednesday.

New York Times posts a 5.4% increase in Q1 revenue

At £230.73 million, Times recorded a 5.4% increase in its Q1 revenue as compared to the same quarter last year. The company said that it started May with over 6 million digital and print subscriptions combined.

Its revenue from advertising, however, saw a 15.2% annualized decline in the recent quarter to £85.78 million. COVID-19 affected demand from advertisers in entertainment, luxury, media, and finance categories that resulted in a 7.9% decline in digital ad revenue and a broader 20.9% decrease in revenue from print advertising in the first quarter.

On a year over year basis, the company estimates its revenue from subscriptions to see a mid-to-high single digits increase in the second quarter. According to CEO Mark Thompson, Times greater reliance on subscription revenue is sufficient to cushion the economic blow from COVID-19 despite a significant hit to the company’s advertising revenue. Thompson further added on Wednesday:

“What’s interesting is both the millions of new registered users we’re getting and the many hundreds of thousands of new subscribers, far more than we’ve ever had before, what’s so interesting is amongst these are definitely younger, definitely ethnically diverse, more geographically widely spread people than we’ve seen, so one of the things we’re seeing is a real broadening, not just of the total Times audience, but the engaged audience is a broader audience. It’s a much more diverse and a younger audience than we’ve seen before.”

New York Times considers cost-cutting and layoffs

The hit to ad revenue, however, is likely to weigh on the company’s profitability in the upcoming quarters. To weather the impact, therefore, Times is considering cost-cutting and may resort to layoffs. But the company is confident that the job cut will not be in journalism.

Times is currently around 7% up year to date in the stock market. The £4.67 billion company has a price to earnings ratio of 41.67.