NYT - New York Times

[SlowAppreciation]

Anyone else following The New York Times?

• 6.5M Subscribers, growing 30%+ YoY
  
• ~$100 ARPU
  
• 4X more subscribers than the print era peak
  
• Management thinks they could reach 30M subscribers
  
• Owns one of—if not the—most popular podcasts in the world
  
• Profitable (and FCF > Income)
  
• Few competitors, and NYT is one of only a handful of publishers investing in high-quality journalism
  
• Flywheel business
  
• Customers have $0 marginal costs
  
• Their model is high fixed cost, low variable cost. So should have tons of operating leverage
  
• $0 Debt
  
• $725M Cash/Long-term securities
  

I made a deck if anyone is interested.

[johnny]

High operating leverage for an entity that has positioned itself as bullwark against its own country’s chief executive during a once-in-an-empire political/institution crisis. NYT (and the rest) have, without much veiling or humility, framed subscribing to their offerings as a morally obligatory act of resistance against the Trump presidency. How do we begin to estimate what fraction of current subs will find themselves uninspired to re-up during the Kamala’s third term?

 

This isn’t an investment killer, but just a general question I would guess I could never answer.

 

And of course, just because they’re building that 30% YoY growth on the back of Trump doesn’t necessarily mean that when he’s gone thy disappear. But I wonder!

[bizaro86]

I think discounts are a big factor in that 30% sub growth. I picked up a NYT subscription for $1/month earlier this year. I get it at that price for a year. I don't even know what it renews at, because I will definitely cancel. I'm getting about $20/year in convenience value, but there's no way I'd pay anything close to $100/year.

 

 

[doc75]

I think discounts are a big factor in that 30% sub growth. I picked up a NYT subscription for $1/month earlier this year. I get it at that price for a year. I don't even know what it renews at, because I will definitely cancel. I'm getting about $20/year in convenience value, but there's no way I'd pay anything close to $100/year.

 

Wow.  I'm at 4 CAD / month, which seemed pretty reasonable when I subscribed and is also at least 50% off the regular price (that presumably nobody pays?). There are plenty of good non-political articles but I rarely have time to read them now so unsubscribing was on my to-do list.    It'd be worth $1 per month if I could get it.

 

I would expect all media outlets to see a significant decrease in traffic once Trump leaves office, though I haven't seen any numbers to back this up. 

 

[SlowAppreciation]

"And if I can just perhaps add, John. Part of also what we're looking at is the period of the 2016 election, where we hit a peak, as we said, in the first quarter 2017, not as big a peak as we've just hit now. And then after a couple of quarters, our audiences fell back, but a lot of people have come to The Times because of that, and they stayed. And we -- after the Trump Bump effect diminished, we had a much higher run rate of subscribers then. And particularly given what Meredith says about the large number of registered lockdown users we're gaining, we've got real confidence that, although certainly, a lot of people are coming to us now for the coronavirus, that many of them will stay, and we hope, will become loyal, long-term users and subscribers of The Times."

 

"To put that in context, 587,000, total digital-only additions is 2/3 more net adds than we brought in, in the first quarter of 2017 at the peak of the so-called Trump bump."

 

“Between…early 2015 and 2018, we more or less halved churn through better tactics and more expertise. Our challenge now is really holding churn down as we massively expand the base. And I would say so far, that's going well."

 

“The success of our price rise tests, and our growing confidence in our ability to deliver discrete messages to different segments of our subscriber base has convinced us that we can execute a price rise for tenured subscribers with minimal risk of reducing new subscriber growth momentum.”

 

[Spekulatius]

The NYT is one of the few newspapers with national (and in some respect global ) reach left, as most city newspaper have hollowed out. So who is left is NYT, Washington Post and the WSJ and not much else.

 

I think it’s a little bit like the music industry where the cheese was moved due to changes in distribution, but now we have a few survivors that can thrive and use digital distribution to their advantage.

 

No position.

[BG2008]

I think discounts are a big factor in that 30% sub growth. I picked up a NYT subscription for $1/month earlier this year. I get it at that price for a year. I don't even know what it renews at, because I will definitely cancel. I'm getting about $20/year in convenience value, but there's no way I'd pay anything close to $100/year.

 

Wow.  I'm at 4 CAD / month, which seemed pretty reasonable when I subscribed and is also at least 50% off the regular price (that presumably nobody pays?). There are plenty of good non-political articles but I rarely have time to read them now so unsubscribing was on my to-do list.    It'd be worth $1 per month if I could get it.

 

I would expect all media outlets to see a significant decrease in traffic once Trump leaves office, though I haven't seen any numbers to back this up.

 

I don't want to get all political, but I can't resist this.  I'll bet all the left leaning media personalities LOVE trump because he is such a lightning rod.  I wouldn't be surprised if these talking heads get together and smoke cigars and drink Scotch Whisky and say "Obama is such a bore, Trump makes the cash register go Cha Ching!"

 

Please don't devolve into a political discussion.  Trump's free cash flow conversion rate for left media is likely over 100%, whatever that means.  In Cable Cowboys, John Malone mentioned that Rupert Murdoch called him up and wanted to get his take on creating a similar product to CNN.  Malone suggested that since there is a left leaning platform, maybe he should offer a more right leaning platform.  According to Malone, this is literally how Fox became so hated today for its conservative stand.  For a news station that is hated by liberals, its sole creation was a suggestion by the "Darth Vader" himself.  Al Gore must hate this.   

[BG2008]

I think discounts are a big factor in that 30% sub growth. I picked up a NYT subscription for $1/month earlier this year. I get it at that price for a year. I don't even know what it renews at, because I will definitely cancel. I'm getting about $20/year in convenience value, but there's no way I'd pay anything close to $100/year.

 

I think feedback from a bunch of cheap value investors are terrible.  We need to get feedback from the more everyday readers.

[Liberty]

New presentation/writeup on the NYT by @MineSafety:

 

https://minesafetydisclosures.com/blog/newyorktimes

[Jurgis]

New presentation/writeup on the NYT by @MineSafety:

 

https://minesafetydisclosures.com/blog/newyorktimes

 

Unless I'm mistaken SlowAppreciation is @MineSafety.

[Liberty]

My bad, I didn't look at the top of this thread, it was already posted... Apologies. I guess it counts as bumping it up. ¯\_(ツ)_/¯

[SlowAppreciation]

My bad, I didn't look at the top of this thread, it was already posted... Apologies. I guess it counts as bumping it up. ¯\_(ツ)_/¯

 

I'll take it!

[OnTheShouldersOfGiants]

Slowappreciation, great work. I was unaware of the transformation that has taken place at the NYT. I appreciate you sharing the presentation.

[zicaminvestor]

Slowappreciation, great work. I was unaware of the transformation that has taken place at the NYT. I appreciate you sharing the presentation.

 

Agreed, awesome deck. Perhaps you're the reason why the stock was up so much today?!

[Foreign Tuffett]

Good job on the presentation; clearly lots of thought, time, and effort went in to it.

 

A few things:

 

1) On page 161 you model $1.2 billion in "other revenues." Do you can have a breakdown somewhere of how you came to that number?

 

Based on the numbers you gave on previous slides, TTM print and print ad revenues were almost $830 million, but obviously are in decline (I don't think you'll get any disagreement from anyone there). How much print revenues baked in to the "other revenues" number?

 

2) johnny's thoughts are similar to the ones I had when I first saw this thread. Trump, whether you love him or hate him, is an incredibly polarizing President and the NYT has, with some degree of success, set itself in opposition to his Presidency. This is no different than how good the Obama Administration was for Fox News.

 

I would also argue that the "Trump bump" was not a one-time thing tied to the 2016 election. Trump is like the 24/7 news cycle anthropomorphized. What happens when the Trump tailwind is gone?

 

3) Finally, I would push back hard on that 30 million potential subs number. If we assume that the 25% international, 75% domestic mix you provide continues going forward, then to get to ~30 million subs the NYT would need ~22.5 million domestic subs. The total population of the USA is ~320 million. One of out every 14 or 15 men, women, and children in the US eventually subscribing to the NYT at $100 a year is prima facie absurd.

[SlowAppreciation]

Good job on the presentation; clearly lots of thought, time, and effort went in to it.

 

Thank you, I appreciate that.

 

1) On page 161 you model $1.2 billion in "other revenues." Do you can have a breakdown somewhere of how you came to that number?

 

Based on the numbers you gave on previous slides, TTM print and print ad revenues were almost $830 million, but obviously are in decline (I don't think you'll get any disagreement from anyone there). How much print revenues baked in to the "other revenues" number?

 

Looking out ~ 5 years, probably something like this. Though the farther out you go, the more print—and print advertising in particular—will decline.

• $500M print sub
  
• $100M print ad
  
• $300M digital advertising
  
• $300M "Other"
  

2) johnny's thoughts are similar to the ones I had when I first saw this thread. Trump, whether you love him or hate him, is an incredibly polarizing President and the NYT has, with some degree of success, set itself in opposition to his Presidency. This is no different than how good the Obama Administration was for Fox News.

 

I would also argue that the "Trump bump" was not a one-time thing tied to the 2016 election. Trump is like the 24/7 news cycle anthropomorphized. What happens when the Trump tailwind is gone?

 

This has been by far the biggest pushback on this presentation. I think many believe if Trump loses re-election, NYT loses all momentum and may even start shedding some of the new subs. But we always live in unprecedented times, and crazy things are always happening. So to me, producing high-quality journalism around those events seems timelessly valuable.

 

Trump surely brought in more new people to NYT than would have otherwise. But if he loses, I don't think sub adds stop, nor that existing subs. Definitely a good chance I'm wrong, but I feel like the risk/reward is in my favor. Time will tell.

 

3) Finally, I would push back hard on that 30 million potential subs number. If we assume that the 25% international, 75% domestic mix you provide continues going forward, then to get to ~30 million subs the NYT would need ~22.5 million domestic subs. The total population of the USA is ~320 million. One of out every 14 or 15 men, women, and children in the US eventually subscribing to the NYT at $100 a year is prima facie absurd.

 

Yeah this I think is a more valid criticism than the dependency on Trump. And I think you're right that with today's product @ $100/yr, you're not going to get 22.5m domestic subs. But they can get really aggressive with price, where at a certain point each new sub is pure profit.

 

And they're only going to keep investing more in their product. So you may not get 22.5M people paying $100/yr for the News. But will you get a few million paying for cooking, or games, or podcasts, or parenting content, or video (live news? books? etc.)? And could you then up-sell those people by bundling with other stuff, like News? Maybe....

 

Honestly there's a lot they can do now that all the digital infrastructure is built and they have a customer base that is generally affluent and engaged with the product. Who knows what it looks like, but I think they have a good foundation in place and am excited to see where it goes.

[Jurgis]

I sub to NYT and WaPo. I seem to read way more WaPo than NYT, but then I had just WaPo app on mobile. Installed NYT app now, opened it, but it did not look that great. Maybe I'm accustomed to WaPo.

 

Not sure if I'll continue to sub both long term. Honestly I'm probably fine without either of them. Might have to try to unsub and see if I really miss the access. IMO newspaper subs are way below Netflix in addictiveness.

I also sub to paper Barron's and I'd prioritize Barron's way above NYT and WaPo. But that's a vertical, not general news.

 

NYT tried to upsell me, but I'm not really interested in their other content.

 

I think the thesis is interesting. Spreading/growing could work out. E.g. I'd love if they (or someone else reputable) spreading internationally started providing in-depth Lithuania local news coverage. Right now there's only crappy local news portal. Probably too small market though.

 

I'm hesitant about their spread into other content. Not sure they have moat or quality or whatever. E.g. I look at computer games news sometimes. It seems that there's this Forbes journalist who's really good in covering stuff interesting to me. Not sure how the heck Forbes ended up with a good gaming journalist and if they care about it and if they will sustain it. Just an observation that NYT won't necessarily dominate verticals just because of their mainstream newspaper content/app/journalists/etc.