If TV networks like CNN and CBS are happy with the higher ratings and advertising revenue that Donald Trump has brought them, they aren’t the only ones benefiting from his ascent to power. The New York Times has also seen a dramatic increase in paying subscribers since the election, and that is helping keep the company afloat as print continues to decline.
According to CEO Mark Thompson, the newspaper added more digital subscribers to its paywall plan in the last three months of 2016 than it did in all of 2013 and 2014 put together. That’s 276,000 new sign-ups, to be exact, and those additions pushed the paper’s digital subscribers to over 1.8 million.
Unfortunately for the Times, while digital subscriptions are growing, print advertising— which still generates the lion’s share of the company’s revenue, although a smaller proportion than in the past— is still in free fall.
In the most recent quarter, revenue from print ads fell by a whopping 20%, and the paper has seen similar double-digit declines every quarter for the past year or more. In 2016 as a whole, print ad revenue dropped by 16%. This is what Thompson described in a comment to his own paper as the “significant headwinds” the Times is facing.
Note: This was originally published at Fortune, where I was a senior writer from 2015 to 2017
The paper’s digital advertising revenue is rising, but it is still a smaller part of the whole than print is, accounting for 42% of the total ad revenue in the last quarter. And in some cases that revenue costs more than print does, because the Times has had to add staff to roll out native advertising (which is more labor intensive) as well as video.
In the most recent quarter, the Times‘ net income dropped by 27%, and for the full year it was down by 62%. Adjusted operating profit fell by almost 17%, and revenue declined by 1.5%.
In a nutshell, the company is trying to increase the amount of money it brings in from digital subscriptions and digital advertising quickly enough to offset the steep declines on the print side. Getting a boost from Donald Trump has helped it do so over the past three months, but that’s not enough to get it over the hump completely.
In order to get digital to the point where it is compensating for print’s decline, the Times would have to add as many new subscribers this quarter as it did in the last quarter, and then do so again in the next quarter, and the one after that, and the one after that.
The bottom line is that adding 276,000 new subscribers contributed about $10 million at most to the company’s revenue in the fourth quarter. If print continues to drop the way it has been— and there’s no reason to think that it won’t do so, if not accelerate its fall even further—then that means significantly less money coming in every quarter.
Reading between the lines of the company’s quarterly results, print advertising was a little over $100 million in revenue, down about $35 million or so from a year earlier. Digital ad revenue climbed by 10%, or about $7 million. So that means the Times is losing almost twice as much on print every quarter as it is making up in digital subscriptions and ads.
Obviously, as print continues to drop, digital will become an even larger part of the Times‘ business than it already is (it accounts for about 42% of advertising revenue and about 25% of subscription revenue), and the amount of money being lost on print every quarter will therefore continue to shrink.
For now, however, there is still a fairly large gap there, and likely will be for some time. And if print readers of the Times start to cancel their subscriptions in larger numbers, that’s going to eat into revenue significantly as well.
The Times is continuing to experiment with new distribution and revenue models, including a recently announced partnership with Snap for Snapchat’s Discover feature. But it is also widely expected to announce layoffs across the organization soon, in an attempt to cut costs.