How "the Story Behind the Story" Can Drive Growth for The New York Times

The New York Times (NYT 0.39%) has long held the motto "All the news that's fit to print." But to expand its revenue streams, the media company is now generating content that sheds light on its own journalistic, story-building processes.

Check out the video below to learn how the print and digital newspaper is capitalizing on its respected brand in print, film, and more.

A full transcript follows the video.

This video was recorded on July 31, 2018.

Vincent Shen: In terms of the longer-term outlook for this company, I'm curious, Asit, what are you seeing, in terms of what The Times' management is doing to sustain its growth and adapt into more of a platform business? I know we have Wirecutter, I know we have some of the vertical expansions into cooking and the crosswords business. Anything else you're seeing, in terms of things that are irons in the fire for the company a few years from now?

Asit Sharma: Sometimes, someone on an executive team wakes up in the morning, and they have a thought come into their head, a few words, and it's a very persuasive narrative which they can communicate with the rest of the management team. I like something that I'm hearing out of The Times' management over the last couple of earnings calls. They're starting to focus on what they call the story behind the story. It's an easy, five-word phrase. What it refers to is the really persuasive interest that subscribers have over how content is made at The Times.

Let's talk about the elephant in the room. We talked about this in October. In the overarching theme of the current political climate, in which The New York Times and the Trump Administration are foils for each other, and each benefits, as we talked about in the fall, from this relationship, consumers of media want to understand how the stories that are breaking news -- it seems like, to me, every few hours, not even every few days -- how those get made. The Times is capitalizing on the regard for its content. It has a surprise hit in The Daily, which is a podcast, which seeks to uncover how an emerging news story breaks. They've announced a couple of interesting partnerships. They're going to now have a spin-off concept on The Daily called The Weekly. Hulu -- which we talked about just a few moments ago, in relation to Disney and Fox -- is going to have rights to screen this content.

Always, with The Times, remember as well that its lofty reputation is driven by investigative journalism. I have noticed that while the company did cut some of its copy-editing stuff, it has poured more resources into investigative journalism. They broke the Harvey Weinstein sexual assault story, and won a Pulitzer Prize for that. That's turning into more content, as now, The Times is making a feature film about breaking that story.

You see how even just reporting the news, for a company which has the brand dominance in journalism, The Times, can be parlayed into something greater. There's an ever-growing field of content. It's really analogous to this idea of Disney and Fox taking their assets and trying to make something of them.

That's what I'm looking for longer-term -- how The Times takes its content and monetizes it further. Certainly, consumers seem to have a growing appetite for this.

Shen: I'll expand on that. I think, maintaining that brand and monetizing it and working off of it is going to be really important. You have this situation, thinking longer-term, where the print business is mature, it's still profitable, but it's ultimately running on a timer. Management has framed it as a cash generator that can fuel other investments for the company, with the digital platform also consistently growing, becoming a bigger part of The New York Times. I'll just point out, this time ten years ago, advertising in terms of revenue was over 60% of the top line. In the most recently reported quarter, the advertising share was just 30% of revenue, with subscriptions filling the void. The problem there is, as print advertising budgets shrink -- this has been a long, ongoing headwind for The New York Times -- that part of their revenue is also shrinking with those advertising budgets. It was down 14% last year. They're losing out on an income stream that they've said has 95% gross margin, really profitable for them.

They're experimenting a lot with the podcast, which has been immensely successful. They're spinning it out into shows, movies. The company is really thinking about these other opportunities, dedicating teams and resources within the company to looking at what else can work, in terms of these different verticals, things that are similar to cooking or crosswords or Wirecutter. They've mentioned a few other categories, such as parenting, or brain teasers, that readers might enjoy, as other areas that they can experiment in and play with.

I'll also add, CEO Mark Thompson had some interesting comments during an industry conference in May. Again, coming to the issue of The New York Times' brand and how powerful it is. In the print business, customers largely accepted, year after year, about a 5% price increase, with low churn as a result of that. That's encouraging for the company, ultimately. Right now, they're really focused, in terms of their subscriber strategy. They have a goal of expanding the subscriber and reader base. But, there's a point when, with the precedent set, in terms of the print business and the trend that they saw there, ultimately potentially being able to increase prices for the reader base, once they're at the point where they want to start maximizing revenue, looking at that more.