The New York Times made no mention of podcasts or its growing audio business when detailing quarterly earnings to investors on Wednesday. But what it did lay out was a growing integration of its newly-acquired sports content and podcast producer The Athletic, which is already leading to a rapid growth of a bundled product the Times sees as key to its growth going forward.
“News remains core to our value proposition. But the bundle helps ensure that The Times is indispensable to an ever-widening group of people – even as news engagement ebbs and flows,” said CEO Meredith Kopit Levien during a conference call with analysts. She said the bundling of content like the flagship New York Times, The Athletic, Cooking, Wirecutter, and Games made up a majority of the quarter’s total net subscriber additions. “Our experience so far is that bundle subscribers — including our newest ones — pay more, engage more frequently, and retain better. So our plan is to lean even more heavily into selling the bundle to new subscribers, and getting existing subscribers to upgrade,” Kopit Levien said.
The bundles boosted The Athletic’s subscriber numbers by 420,000. That is good for podcasting too, since its shows are only available to its roughly 1.1 million subscribers.
The New York Times added about 180,000 net digital-only subscribers in the second quarter of the year, a 70% improvement over the second quarter of 2021. The Times currently has 9.17 million paid subscribers and Kopit Levien said they expect to have 15 million by the end of 2027.
The growth of bundled subscribers helped to offset what the New York Time sees as a slowing advertising market.
“The headwinds are playing out in advertising as we expected,” Kopit Levien said. We are seeing more pressure in some categories. In digital advertising, we saw real pressure on tech, streaming, and finance which you would expect given the macroeconomic uncertainty.” The addition of the sports-focused Athletic and the heavily male audience is also bringing new ad potential. “We are very excited about the opportunity with The Athletic,” she said. “The conversations we are able to have around it in different categories, with different kinds of advertisers – we’re really optimistic that over the medium to long-term that is going to be a real growth driver.”
Yet Kopit Levien said there has been a “pullback” from news content by marketers, which Kopit Levien thinks is part of a normal cycle. “There are occasions when advertisers say they are less interested in being adjacent to news, and we saw a bit of that,” she said. “This is another place where we are very happy to have a wide product set with advertising opportunities across the breath of kinds of content.”
The Times reported total revenue of $555.7 million during the second quarter, a 12% increase from one year earlier. Subscription revenues increased 13% while advertising revenues increased 4%.
While print advertising grew 15% from a year ago, the Times says digital advertising declined 2.4% year-to-year to $69.3 million. Even so, 59% of the company’s ad revenue still comes from digital. “We fully expect digital advertising to be a growth driver over the 3 mid term, and overall advertising to continue to be a significant contributor to the company’s profits,” said Kopit Levien.
During the conference call, CFO Roland Caputo said the Times expects its ad revenue to decline in the low-to mid-single digits during the third quarter, with digital ad revenue expected to be off between four and eight percent.
“Given the uncertain macroeconomic environment, we continue to look closely at costs while strategically investing in areas that widen our moat, like journalism and digital product development,” he said.