The New York Times Company has reported a robust second-quarter performance, surpassing analysts' expectations and highlighting its continued growth in digital subscriptions. The newspaper publisher announced earnings of 45 cents per share, exceeding Wall Street's forecast of 41 cents. Revenue reached $625.1 million, slightly above the anticipated $624.6 million. This performance underscores the Times' successful diversification strategy amidst a challenging landscape for the media industry, characterized by layoffs, the rise of artificial intelligence, and declining readership.
Meredith Kopit Levien, CEO of The New York Times, emphasized the company's innovative approach during an earnings call. "Games had another strong quarter in Q2 and contributed to our business in multiple ways," she noted. The Times has ventured beyond traditional journalism, launching games and cooking subscription services, and acquiring the sports news site, The Athletic. These initiatives have bolstered the company's subscriber base, which grew by 300,000 digital subscribers in the quarter, bringing the total to 10.84 million, surpassing forecasts of 10.74 million.
The digital segment, a key driver of growth, saw a 12.9% year-over-year increase in digital subscription revenue, totaling $304.5 million. This was largely fueled by the addition of bundle and multi-product subscribers. "Our subscribers were deeply engaged in Q2," Levien said, highlighting that the share of subscribers engaging with the Times' site and apps hit a multi-year high. "That's a clear sign that we're delivering unique value to users, and building long-term relationships," she added.
Ad revenue for the quarter was $119.2 million, slightly below estimates of $119.7 million. Print advertising revenues fell by 10%, but this decline was offset by a 7.8% increase in digital advertising revenues, which reached $79.6 million. Digital advertising now constitutes 66.8% of total advertising revenues, reflecting a strategic shift towards online platforms.
The Athletic, acquired by the Times in 2022 for $550 million, has proven to be a valuable addition. The sports news site posted a 33.4% year-over-year revenue growth in the quarter, reaching $40.5 million. Subscription revenues for The Athletic grew by 19.4% to $29.3 million, primarily due to subscription growth and bundling strategies. Advertising revenues for The Athletic also saw a significant increase, up 30% to $7.1 million.
The Times' ability to diversify its offerings and tap into various revenue streams has positioned it well in the evolving media landscape. "The combination of our world-class news destination plus market-leading lifestyle products means we have complementary offerings in big spaces, each with multiple growth levers fueling multiple revenue streams," Levien stated. This diversified portfolio, she believes, makes The Times resilient and well-positioned for continued value creation.
Despite the positive results, The New York Times faces challenges. The company incurred a $2 million pre-tax litigation expense related to a copyright infringement lawsuit filed in December against Microsoft and OpenAI. This lawsuit, which represents the first major case from news publishers over generative AI capabilities, underscores the growing tensions between traditional media companies and tech giants over the use of news content to train AI models.
Looking ahead, The New York Times expects digital-only subscription revenues to grow by 12-15% in the third quarter, with total subscription revenues projected to increase by 7-9%. This optimistic forecast reflects the company's confidence in its strategic direction and its ability to navigate the complexities of the modern media environment.
