In the Audit Bureau of Circulation’s recently released circulation figures for the six months ending September 2011, the bureau not only compiled circulation figures for print newspapers but also released a list for digital subscriptions. According to their report, The Wall Street Journal, USA Today, and The New York Times were among the leading print papers with the Journal reporting nearly 2.1 million subscribers, followed by USA Today’s 1.78 million and The New York Times’s 1.15 million during the period. As expected, digital editions continued to increase in popularity and the number of subscribers increased 47% over the period. The Journal remained the leader in the digital segment with more than 537,000 subscribers.
News Corp’s Financials
News Corp’s (NASDAQ: NWS) Q1 revenues grew 7% over the year to $7.96 billion driven by strong performance at their cable and broadcast television offerings. The market was expecting revenues of $7.66 billion. EPS of $0.32 was in line with the Street’s expectations.
Over the summer of 2011, News Corp was embroiled in the hacking scandal surrounding their U.K.-based tabloid News of the World. They shut down the newspaper after charges that reporters had hacked into the voice mail of murder victims, politicians, and others to gather content. Serious trouble with U.K. regulators also resulted in their calling off the $14 billion bid to own the remaining 61% shares of British Sky Broadcasting. News Corp took a hit of $91 million on account of the closure of the tabloid.
Despite the scandal, overall performance across all segments continued to improve. Cable Network Programming revenues grew 13% to $2.12 billion driven by 13% growth in advertising revenue with domestic cable channels and 23% growth in advertising revenues with international cable channels. The Filmed Entertainment segment revenues grew 18% over the year to $1.78 billion because of the successful performance of the film “Rise of the Planet of the Apes.” Both TV and Direct Broadcast Satellite Television revenues grew 8% over the year to $0.92 billion each. Publishing revenues grew 1% over the year to $2.07 billion despite the shutting down of News of the World.
News Corp’s Digital Focus
To continue to dominate the digital market, News Corp launched the first exclusive app for Amazon’s Kindle Fire. The app is free to download at the Amazon store, but access to content comes at a price of a digital subscription of $17.99 a month. News Corp is justified in launching the Kindle Fire app as the Fire is expected to be the second best-selling tablet after the iPad.
News Corp’s International Expansion
News Corp recently acquired minority stake in MOBY, a Dubai-based company that focuses on Central Asia, Afghanistan, and the Middle East. Under the agreement, News Corp and MOBY have entered into a joint venture in Broadcast Middle East, a Farsi-language TV offering that already has two successful Farsi-language channels, FARSI1 and Zemzemeh.
News Corp’s stock is trading at $18.92 with a market capitalization of $47.7 billion. It touched a 52-week high of $19.22 in January 2011.
New York Times’s Financials
Meanwhile, The New York Times Company’s (NYSE:NYT) Q3 revenues fell 3% over the year to $537.2 million, short of analyst expectations of $540.5 million. However, EPS of $0.05 managed to exceed the market’s projections of $0.04.
By segment, advertising revenues fell 9% over the year driven by a 10% drop in print advertising, which was not compensated for by 4.5% growth in digital advertising. The struggle to increase advertising revenues was believed to be the main reason CEO Janet Robinson resigned from her position.
Digital subscriptions to the New York Times grew 15% over the year and helped increase circulation revenues by 3.4% despite a fall in print sales. They ended the quarter with 324,000 digital subscribers. The growth of digital subscribers was not as impressive because of the introduction of metered paywalls. The New York Times introduced metered paywalls to get users to pay to access more than the 20 articles available free each month. However, the New York Times doesn’t have a choice because they’re moving customers off free, unlimited use to a paid content model. The Journal did not have to deal with this since they charged for their content all along.
The New York Times’s Digital Focus
To improve their digital revenues, The New York Times continued to experiment with a mix of free and paid content through standalone news apps. Their new election-focused app, “Election 2012” provides election news and content from political blogs. The app itself is free to download, and it comes with free access to the top six news stories of the day. But to access most of the other content, users have to pay for the subscription.
A similar app was released for the fashion and lifestyle segment last year. The Collection is an iPad app that lets users access the newspaper’s fashion and style coverage. The content on the app is free for now but will shift to a subscription-based model starting in March.
Also, About.com continued to expand their digital reach as they tied up with Flipboard to become the first website to provide content across several content categories, including Health, Travel, Style, Parenting, Food, and Home & Garden. About’s content will be updated on Flipboard frequently with more than 50 new articles added daily. Relevant content will also be available in Flipboard’s own Living and Travel sections. About is hopeful of giving their users the feel of a magazine through this Flipboard initiative, thus encouraging user engagement.
New York Times’s Divestment
To improve their financial performance, the New York Times Company recently sold their 16 regional newspapers across the U.S. Southeast and California to Halifax Media Holdings for $143 million. The sale is part of their drive to control costs and increase focus on their bigger newspapers and digital assets. These newspapers included the Sarasota Herald-Tribune in Florida, The Press Democrat in California, and the Herald-Journal in South Carolina. Analysts believe that since local advertising has not reported as strong growth as national advertising, regional newspapers that relied more heavily on local advertising have lower margins than usual. The sale of these newspapers is expected to increase the overall margins of the company.
The stock is trading at $8.08 with a market capitalization of $1.2 billion. It touched a 52-week high of $11.72 in February 2011.