As the megatech companies struggle with their subscription / user business models, there is more evidence from the US that a successful digital subscription strategy is paying off for old line media such as print.
Take the two giants of American print journalism – The New York Times (NYT) and News Corp’s Wall Street Journal (WSJ).
Both papers have been ’saved’ by the adoption of aggressive subscription policies, though the WSJ is not strictly comparable to the Times as the Murdoch family-owned paper has offshoots such as a news wire, a growing compliance and corporate services businesses.
The NYT is much larger in terms of its subscriber base because of its more generalist approach to journalism and middle of the road style whereas the WSJ is business and economy focused with extremely conservative editorial pages closer in substance to Donald Trump and the hard American right.
For the past four years the New York Times Co had a target of 10 million subscribers for its paper, puzzles, cooking and other offerings by 2025. This week it confirmed it had reached that figure three years ahead of schedule and will now try and get another five million by 2027, taking the total to 15 million.
Thanks to its purchase of sports website The Athletic, the company has added more than a million subscribers to its base. NYT Co paid $US550 million for the website which officially became part of the company on Tuesday of this week.
(That gives a rough valuation of around $US500 for each subscriber acquired which values the 10 million at around $US5 billion – compared to the company’s market value of nearly $US7 billion).
The Times reported it added another 375,000 subscribers to its various products (the paper, cooking, Wirecutter or puzzles) to take the total to just on 8.8 million.
The milestone means that the company has built a 10 million subscriber base in the 10 years since it decided to go down the subscription-only route.
The original target of 10 million subscribers by 2025 was set just three years ago and for much of the growth, the company can thank former President Donald Trump for helping boost subscriber numbers from the 4.3 million in total when the 2025 target was set.
Trump and his antics (and the polarisation of American life and politics) saw NYT’s digital subscriber numbers surge from 1.2 million at the start of 2016, and before Donald Trump started his run for the Presidency and 7.5 million in the same quarter of 2021, after Trump was replaced by Joe Biden and the January 6 insurrection at the US Capitol and Congressional building in Washington by Trump supporters.
At the end of December, The Times 8.8 million subscriptions consisted of 5.9 million were for digital news, more than two million were for the other digital products, and almost 800,000 were for the print newspaper.
Last month it bought The Athletic – with 400 journalists covering more than 200 sports teams in the US, Britain and Europe – for $US550 million. The deal was financed from existing cash on hand and no debt. This week the NYT bought the online word puzzle game Wordle for a “low seven figure price”.
For the 2021 financial year to December, revenue jumped nearly 16% to more than $US2.07 billion, thanks to a 13.9% rise in subscription revenues to more than $US1.36 billion and a 26.8% surge in ad revenues – most of the growth coming from digital – to more than $US497 million.
Digital only news subscriptions rose nearly 28% to $US773.8 million and print subscriptions were flat at $US529 million and one-off newsstand sales fell 13% to $US59 million because of fewer sales in lockdowns and other Covid-related restrictions over the year. Total print subscriptions fell 1% to $US588 million.
Print ad revenues improved over 2021 as advertisers opened their budgets – up 15.3% to nearly $US189 million but that was dwarfed by a 35% surge in digital ad revenues to more than $US308 million
Earnings surged 52% to $US268 million before tax and more than doubled to a smidge under $US220 million after tax.
The company said that with The Athletic on board it is looking to boost total revenues by 23% to 28% this quarter and digital ad revenues by more than 20% which will be partly offset by the extra costs of owning The Athletic.
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News Corp reported some details of the continuing improvement at the Dow Jones Co which owns the Wall Street Journal.
News said that during the second quarter, total average subscriptions to Dow Jones’ consumer products rose 17% to more than 4.7 million (including 126,000 subscriptions to Investors Business Daily which was acquired last year.
News said that digital-only subscriptions to Dow Jones’ consumer products grew 23% with total subscriptions to The Wall Street Journal growing 12% compared to the prior year, to over 3.6 million average subscriptions in the quarter.
Digital-only subscriptions to The Wall Street Journal grew 19% to over 2.9 million average subscriptions in the quarter, and represented 81% of total Wall Street Journal subscriptions.
The total number of digital only subscribers to the Journal has more than doubled from 1.3 million in the September, 2017 quarter.
While the NYT has growing its subscriber base faster than News has for the Journal and Dow jones as a whole, News has driven broad growth at Dow Jones in the period to the point where it is now a separate business inside the Murdoch controlled company, separate to the News and Information operations which house the Australian and UK newspapers.
Dow Jones revenues at $US508 million for the December quarter were more than those from News’ US and Australian digital real estate operations ($US456 million) or subscription video (basically Foxtel) with $US498 million.
At $US144 million for the quarter, Dow Jones was the second most profitable part of News Corp behind the digital real estate operations ($US178 million).
