Despite Solid Q1 Ad Revenue Growth, The New York Times Warns Of Potential Decline

Mark Thompson, CEO NYTCoThe New York Times saw total Q1 2014 revenues increase 2.6% year over year to $390.4 million from $380.7 million.

Advertising revenue increased year over year 3.4% to $158.7 million. Print advertising saw a bigger boost (3.7%) than digital advertising (2.2%); the latter clocked in at $37.8 million for Q1 2014, compared to $37 million from the same period last year.

“[This is] the first time we’ve seen that in a number of years,” said Mark Thompson, president and CEO of the Times, alluding to the growth in both print and digital. However, he cautioned that the company is “not declaring victory yet,” citing month-to-month volatility.

CFO James Follo underscored the point, noting advertising revenue grew 4% in January (driven by digital), declined 1% in February and grew again 6% in March (driven by print). Follo expects Q2 advertising revenue to be a decrease in “the mid-single digits.”

The Times did not mention its programmatic initiatives during the call, a contrast from previous quarters when Follo bemoaned the pressures it placed on ad rates. Nevertheless, the Times told AdExchanger it intends to expand its programmatic activity.

Follo spoke generally about the Times’ immediate and future advertising outlook.

“April got off to a challenging start and we don’t expect to benefit from the momentum we saw in the first quarter,” he said, adding that April is a five-week month and hasn’t closed yet. Additionally, Q2 has traditionally been the Times’ weakest quarter. “April is challenging, May less so,” Follo said. “It’s a blend of a number of different factors.”

Meredith Kopit Levien, the Times’ EVP of advertising, said this blend limits the publisher’s visibility and ability to confidently project, which is why it has a cautious outlook. “It’s hard to string the information together and call it a pattern yet,” she said.

Thompson insisted the Times continues to see “positive trends in advertising” despite this volatility. For instance, the Times hopes to drive significant advertising revenue from some of its new ad products, such as its native advertising units Paid Posts and Mobile Paid Posts, which debuted on the recently released NYT Now, a mobile app featuring editors’ daily selections of major stories.

Levien added the Times’ future advertising product development will continue its focus on digital and mobile, taking advantage of the data the publisher has on its affluent audience that consumes content across multiple platforms.

Circulation revenues also increased 2.1%, in large part because of an uptick in paying digital-only subscribers, which total 799,000; this is 39,000 more from Q4 2013.

What drove this growth? The Times listed three drivers: Its experimentation with different promotional offers, growth from emerging segments (international, corporate and education in particular) and a focus on optimizing its marketing message.

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