The Street is wondering whether the New York Times Co.’s digital strategy has stalled after new products failed to accelerate subscriber additions while a decline in print advertising dragged down profits.
Shares closed down more than 8 percent, to $12.89, on Tuesday after the company reported disappointing second-quarter results.
The number of digital subscribers rose by 32,000 in the quarter, a slowdown from 39,000 additions in the first quarter, even though the paper rolled out less-expensive niche products, including NYT Now, NYT Opinion and Times Premiere.
“In and of itself, that’s disappointing, a small number — with lots of marketing and promotion — and small new revenue on what are already lower-priced niche products,” said media analyst Ken Doctoroff. “It would also tell us that Times’ all-access full-price push has really slowed, to 12,000 or so.”
Paid subscribers to digital-only products totaled about 831,000 at the end of the quarter.
CEO Mark Thompson acknowledged that growth for its “core digital bundles” was lower than expected.
“We underestimated the challenge of presenting the new, wider range of choices to our users and left some consumers confused as a result — obviously we are working hard to pivot and correct that,” he said in a call with analysts.
Net income plunged 54 percent as increased investments in digital products failed to offset a 6.6 decline in print advertising.
“We saw some loss of momentum in print advertising in the second quarter after a very good start to the year,” Thompson said in the call.
Total revenue decreased by 0.6 percent, to $389 million, from $391 million in the period a year ago. Most of the drop can be attributed to the 4.1 percent decline in ad revenue.
The results also reflected $2.2 million in severance, which likely includes any payment to ousted editor Jill Abramson, who was fired in May.