Few industries have been impacted by the Internet more than newspapers. Circulation has declined, while help-wanted and other classified advertising has been displaced by web-based solutions. At the same time, investors, disappointed by earnings, have stormed the boardroom, pushing for divestitures or more.
According to Freedonia Research, circulation of daily newspapers dropped about 0.8% per year during the ten year period from 1994-2004, despite population increases during this period.
Throughout this storm, a few newspaper companies have not only weathered these changes, but embraced them. At the top of that list sits the New York Times.
The Times entered the Internet market in 1995, through its investment in CareerPath.com, along with KnightRidder, Times Mirror, the Washington Post and Tribune Company. A few months later, its Boston Globe division launched boston.com, with the New York Times on the Web launched in early 1996. In 1999, the Times created New York Times Digital, a dedicated operating unit to focus on the growth of its web properties.
Last year, the Times acquired About.com from Primedia for $410M. In hindsight, the deal looks like a bargain, as About.com revenues and EBITDA have continued their rapid ascent. With EBITDA of about $15M for the first 6 months of 2006, the purchase price is only about 14x expected 2006 earnings.
Today, the New York Times on the web is the number one news site on the Internet, with 74 million unique visitors a month. That’s more than double that of CNN and more than fifty times the readership of the print edition. More than one in ten internet users worldwide visit the NYTimes.com site. As a whole, NY Times Internet properties offer more than a billion page views per month. Internet revenues remain modest, however. The Times Q2 2006 Internet revenues of $66m were only 7.7% of their overall revenue for the quarter, but that is up from $49M (5.8%) a year ago.
Revenues include about $9M from the TimesSelect program, begun last November. While it’s fair to debate whether closing off the Times editorial page to non-subscribers makes long-term sense (IMO the negatives to doing so outweigh the positives), the combination of nytimes.com, TimesSelect and About.com gives the Times a diverse set of properties catering to paid subscribers, registered users and open visitors.
Most importantly, the New York Times has grown its brand and expanded its reach dramatically in the Internet age. While other newspapers face uncertain futures, the Times has established its position as the premier source of news for English-speaking readers worldwide.
That positioning, leveraging their reputation built over the past 100 years, means the Times is well-positioned for growth regardless of where technology might take them. The Times’ ability to balance their growth and traditional markets clearly makes them one of the 50 Content Companies that Matter.
