Donald Trump

Coverage of the Trump administration has been a boon for The New York Times. Image source: The White House.

The New York Times Co. (NYSE:NYT) reported fourth-quarter results on Feb. 2. The New York Times newspaper's print business remains in secular decline, but its digital growth initiatives have received a boost from interest in the recent U.S. presidential election.

The New York Times results: The raw numbers

MetricQ4 2016Q4 2015Year-Over-Year Change
Revenue $439.650 million $444.686 million (1.1%)
Net income $37.144 million $51.693 million (28.1%)
Earnings per share $0.23 $0.31 (25.8%)

Data source: The New York Times Q4 2016 earnings press release.

What happened with The New York Times this quarter?

Total revenue fell 1% year over year to $439.7 million, as a 9.7% decline in advertising sales negated a 5% rise in circulation revenue.

Declining print advertising sales were again a drag on The New York Times' business, with fourth-quarter print advertising revenue falling 20.4% as global ad spending continues to migrate to online channels. Conversely, The Times' digital advertising revenue increased 10.9% to $77.6 million, or 41.9% of the company's total advertising revenue, up from 34.1% in Q4 2015.

"As we said we would, we returned to double-digit digital advertising growth in the second half of 2016," said CEO Mark Thompson in a press release. "In Q4, we were up 11 percent year-over-year from solid performances in smartphone, marketing services, branded content and programmatic advertising, with growth in these businesses more than making up for stress on the legacy parts of digital advertising." 

Moreover, The Times enjoyed a net increase of 296,000 paid digital-only subscriptions (which include access to the company's news and crossword products) in the fourth quarter, bringing its digital subscriber total to 1,853,000 at the end of 2016. That helped to drive digital circulation revenue higher by 21.9% compared with the year-ago period, to $63.7 million.

"In Q4, we added 276,000 net new digital news subscriptions, the single best quarter since 2011, the year the pay model launched," said Thompson. "With the rate of growth accelerating over the past year, we believe that there is further opportunity to significantly extend our subscription reach, both in the U.S. and around the world."

Interest in Donald Trump's election as U.S. president has spurred interest in The New York Times' political coverage, even as Trump has publicly derided the newspaper.

In response, New York Times CEO Marl Thompson fired back at Trump during the company's earnings conference call:

Let me turn first to our subscription businesses. President Trump was once again busy tweeting this weekend that our audiences and our subscribers were, to use his word, dwindling. Well not so much, Mr. President. We had spectacular audiences in the quarter with 220 million users coming to us in November, for example.

Thompson went on to state that The Times' digital subscriber growth has remained strong in 2017:

Perhaps the new president was referring to the new year and guessing that there had been a post-election lull. If so, wrong again ... we're continuing to see remarkably strong numbers of new subscribers. And remember that our digital subscription model was already accelerating even before the present intense news environment took hold. Six years in, our pay model remains buoyant and the pool of near-at-hand, already engaged potential subscribers looks not smaller, but bigger than it did a year or two ago.

The Times plans to strengthen its political coverage in the years ahead, including an additional $5 million to be allocated toward investigative journalism focused primarily on events in the nation's capital.

These efforts, along with increased technology and marketing investments, led to a 5% rise in adjusted operating costs to $344 million in the fourth quarter. In turn, adjusted operating profit declined 19% to $95.7 million, and adjusted EPS from continuing operations fell 19% to $0.30.

Looking forward

The New York Times expects total circulation revenue to increase 6% year over year in the first quarter, while total advertising revenue is projected to decrease "in the high-single digits." Additionally, the company anticipates that operating costs will increase "in the mid- to high-single digits" compared to the first quarter of 2016.

"We continue to experience significant headwinds in print advertising, but the robustness of our consumer business, which we expect will continue, provides a strong counterbalance to these market challenges," said Thompson. "We will remain focused on our legacy cost base while continuing to invest in digital growth and innovation."