The New York Times Company on Wednesday reported first-quarter results that were better than expected, as gains in digital advertising and subscriptions outpaced the inexorable decline of its once-mighty print business.
The total number of paid subscriptions, including digital and print, topped 4.5 million, a high. More than 3.5 million people pay for the publisher’s online products, with the company adding 223,000 customers for its news, crossword and cooking apps during the quarter, a 29 percent increase over last year.
Revenue generated by online advertising was a bright spot. It rose 19 percent, to $55 million, helped by the company’s podcast business, notably “The Daily.” Revenue from the paper’s digital subscription and advertising businesses combined rose 16 percent, to $165.4 million. (The company does not disclose specific figures for its podcast business.)
The future of the company hinges on digital growth as the print newspaper becomes a specialized product for an ever-shrinking base of readers.
The Times has made steady progress as an online publisher. Last year, it generated more than $709 million in digital revenue, making it likely the company will meet a stated goal of $800 million by 2020. Earlier this year, Mark Thompson, the chief executive, set another lofty target: to increase the number of subscribers to more than 10 million by 2025.
“We had another strong quarter, and we’re continuing to optimize our business to deliver on our goal,” he said in a statement.
The company is seeing positive results at a time when newspapers nationwide have been suffering. Last week, the bulk of The Times-Picayune news staff in New Orleans was fired after the paper was acquired from Advance Publications by a rival publication in Louisiana, The Advocate. Gannett, the publisher of USA Today and 100 other newspapers, has laid off reporters across the country and is fending off a hostile takeover bid.
Digital news organizations have also struggled in recent months. BuzzFeed laid off 15 percent of its work force, Verizon announced a 7 percent cut to its media divisions, and Vice Media eliminated about 10 percent of its staff.
At The Times, costs have continued to rise, in part because of increased spending on marketing to help advertise digital subscription products. The company spent $47.5 million on marketing during the first quarter, a 50 percent jump over the same period last year. That is likely to continue.
The company’s practice of offering heavily discounted promotions has attracted new subscribers, but has also lowered the contribution of each customer. In the first three months of the year, individual subscribers to the core news product generated an average of $11.94 in monthly revenue, significantly lower than the $14.95 the publisher took in per customer during the same period three years ago. Subscribers to the Crossword and Cooking apps, which are sold separately, have been paying a steadier rate.
Times executives said they expected the average rates of subscription revenue to decline modestly as part of the company’s overall strategy to reach 10 million subscribers by 2025. To do so, the company will have to sign up an average of 203,000 new customers every quarter.
Since the so-called Trump Bump at the end of 2016, when The Times booked a record number of subscribers after the election of Donald J. Trump as president of the United States, the company has generated an average of 200,000 subscribers each quarter. Maintaining that rate of growth will be challenging.
Major news events continue to be a driving force behind new readers, Mr. Thompson said on an earnings call with analysts Wednesday, and The Times plans to invest more in the newsroom.
“The mission of this company is to deliver great journalism to the world,” Mr. Thompson said. “We attribute the recent success of our digital strategy to the fact that this mission drives everything we do — including our investment decisions.”
The company separately announced the debut of a new site, Parenting, aimed at “parents who want help having and raising kids today.” The site is meant to be a stand-alone service like the Times Crossword or Cooking app, and The Times has the goal of turning it into another subscription product.
As The Times’s digital businesses grow, its print operation continues to diminish. Print advertising fell 11.9 percent, to $69.5 million, and print subscription revenue decreased 2.6 percent, to approximately $161 million.
Operating profit for the first three months of the year was $34.6 million, similar to the same period last year, while total revenue rose 6.1 percent, to $439 million. Wall Street investors were anticipating an operating profit of $27 million on sales of $436.5 million.
Last week, the company’s shareholders elected two new board directors. Amanpal Bhutani, an executive with Expedia, joined the board in September and was elected by shareholders last Thursday. David Perpich, a fifth-generation member of the Ochs-Sulzberger family that controls The Times, was also elected to the board last week. He runs the paper’s product-recommendation site, Wirecutter.
Mr. Perpich is part of a trio of family members who lead the paper. He is a cousin of the publisher A. G. Sulzberger and of Sam Dolnick, an assistant managing editor who has helped spearhead The Times’s video efforts. Mr. Dolnick is one of the executives behind the company’s forthcoming television series, “The Weekly,” which will air on FX and Hulu in June. The effort is seen as a way to capitalize on the success of “The Daily” and extend the paper’s journalism into television and streaming.
Stocks making the biggest moves premarket: Lions Gate Entertainment, Legg Mason, Lyft & more
Lions Gate Entertainment — Lions Gate received an informal offer from CBS to buy its Starz cable network, according to sources who spoke to CNBC. No deal is imminent, however, sources say. CBS had made an offer for Starz before it was bought by Lions Gate in 2016.
Legg Mason — Legg Mason is near a settlement with activist hedge fund Trian Management, according to Dow Jones. People familiar with the matter say the money manager would gave Trian three or four seats on the board, and that a deal could be announced soon.
Lyft — Lyft was sued by a group of investors over its initial public offering. The suit said Lyft misled investors about its market position and labor matters, and that the company’s “false and misleading” statements inflated the company’s share price. The stock has lost 25% since going public.
Target — Target was upgraded to “equal-weight” from “underweight” at Morgan Stanley, which said its concerns about Target’s medium term profit margins now appear to be reflected in the stock’s price. The retailer is scheduled to report its quarterly earnings on Wednesday morning.
Tesla — An analyst report at Wedbush is raising concerns about underlying demand for the automaker’s Model 3 in the U.S. and said Tesla faces a considerable uphill climb in achieving its second half profitability goals.
T-Mobile US — T-Mobile is set to announce asset sales and other concessions to win approval for its deal to buy wireless competitor Sprint, according to a Bloomberg report.
Uber — Uber’s initial public offering was undermined by big investors, according to The Wall Street Journal. The paper said BlackRock, Tiger Global Management, and other pre-IPO investors passed on buying more shares in the offering, and that some tried to sell stock before or as part of the IPO.
GrubHub — GrubHub was sued by a Philadelphia restaurateur, seeking $5 million in damages and class action status for the suit. The New York Post reports the delivery service is accused of charging restaurants for phone calls even if no order was made. GrubHub said it disputes the claims and that the suit is without merit.
Boeing — Boeing won a wide-body jet order from Air New Zealand, according to people with direct knowledge of the matter who spoke to Reuters. That would end an 18-month competition for Air New Zealand’s business between Boeing and Airbus.
International Game Technology — The maker of slot machines and other gambling products reported adjusted quarterly profit of 12 cents per share, well short of the 23 cents a share consensus estimate. Revenue also came in below Wall Street forecasts. The company managed to return to profitability, however, after reporting a year-ago loss.
Canada Goose — The outerwear maker was rated “buy” in new coverage at HSBC, which thinks the brand has strong growth prospects and that the company is successfully shifting itself to a retail-driven focus.
Huawei responds to Android ban
Fresh off the sledgehammer blow of having its Android license revoked by Google in response to US government demands, Huawei has issued its first, limited response, which leaves more questions open than it answers. In a statement emailed to The Verge, Huawei underscores its contributions to the growth of Android globally — which most recently saw the company’s Android phone sales growing by double digits while every other leading smartphone vendor was shrinking or stagnant — and reassures current owners of Huawei and (subsidiary brand) Honor phones that they will continue to receive security updates and after-sales service. That promise also covers phones that are already shipped and in stock at stores globally, but no additional promises are made beyond that.
“Huawei has made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefitted both users and the industry.
Huawei will continue to provide security updates and after-sales services to all existing Huawei and Honor smartphone and tablet products, covering those that have been sold and that are still in stock globally.
We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally.”
Google has already said that owners of Huawei phones will retain their access to the Play Store and continue being able to update their apps. The big thing that’s being written out of their future, however, are further Android OS updates from Google. To get those back, Huawei phone owners and fans will have to hope for a resolution in the US-China trade dispute, which has been the trigger for Huawei’s current blacklisting by the US government.
For its part, Huawei has been making preparations for an eventuality of losing access to software from US companies like Google and Microsoft, and it has been developing an in-house operating system alternative to Android. That may be what the company hints at in the final paragraph of its statement when it says it will “continue to build a safe and sustainable software ecosystem.” Sustainable being the key word.
Lilium Flies Full-Scale Prototype Of Powerful Electric Air Taxi
Lilium has gotten off the ground. The German air taxi startup has completed a hover test of a full-scale prototype of its ambitious electric aircraft, which is powered by tilting ducted fans designed to allow it to take off and land vertically while cruising with the efficiency and speed of a winged aircraft.
Lilium says its aircraft will be capable of carrying four passengers and their luggage plus a pilot 300 kilometers (186 miles), roughly the distance from New York to Boston, at a speed of 300 kilometers per hour, farther and faster than most of the scores of other electric air taxi startups.
The Munich-based company envisions knitting regions together more tightly with a transportation service it plans to run itself, enabling quick, affordable on-demand travel between major cities and ones that currently aren’t connected by airlines.
“How far can you get in an hour? We want to fundamentally change that for everybody,” Remo Gerber, Lilium’s chief commercial officer, told Forbes.
Lilium has raised $101 million in venture capital, making it one of the best-funded air taxi startups. However, it’s going to need a whole lot more money to execute its vision say analysts who rate the aircraft’s design as ambitious, but its business model even more so.
One thing Lilium seems to have in spades: raw power. The company, co-founded by four German engineering students in 2015, has developed a proprietary electric engine with just a single moving part that drives a small ducted fan. The aircraft has 36 of the engines mounted over the main wing and a forward canard that the companys says generate 2,000 horsepower—a “massive” amount, says Philip Ansell, an aerospace engineering professor at the University of Illinois at Urbana-Champaign who’s working on distributed electric propulsion systems. By comparison, a four-seat Robinson R44 helicopter has 245 horsepower.
Lilium may need all those horses to get off the ground with its envisioned passenger payload and a heavy rack of batteries, says Ansell—batteries have an energy density about 40 times lower than jet fuel, giving electric aircraft a poor power to weight ratio. Once the aircraft transitions to forward flight, the lift generated by its wings will allow it to use less than 10% of its horsepower, the company says. The aircraft will control its position in the air by varying power engine by engine, allowing the designers to dispense with a tail and steering flaps.
Lilium isn’t disclosing the aircraft’s weight or battery specs, making it hard to evaluate the company’s payload and range claims, which Ansell says are on the high end of what he considers possible.
Whether the aircraft is really a jet, as Lilium brands it, is debatable, but it lends a sexier image than the propulsion systems of its VTOL competitors, most of which are using propellers. Propellers can achieve faster speeds at the tip due to their greater length, generating more lift on takeoff, but one upside to Lilium’s smaller enclosed fans is lower noise. Gerber says the aircraft will be four to five times quieter than a helicopter, and won’t be audible to people on the ground when it’s flying at 1,000 feet. That will help the company’s chances of getting approval to operate in urban areas, where helicopters’ operations have been severely restricted due to their loudness.
The company plans to launch service in 2025, and it envisions taking advantage of existing heliports and helicopter flight corridors to start. Gerber says the company aims to offer intercity service for a price on par with airline airfares plus the cost of airport taxi service, which its passengers won’t have to pay since Lilium will fly from city center to city center.
Its pricing claims raise eyebrows among aviation analysts. An electric aircraft with fewer moving parts may have lower operating costs than a similarly sized conventional plane, but Richard Aboulafia of Teal Group says it’s a head-scratcher how a piloted aircraft with four passengers could match the economies of scale of a 150-seat airliner with two pilots. All urban air mobility startups have the same problem, he says: “It’s not clear how they’re significantly less expensive than helicopters,” which are beyond the budget of the average traveler.
That Lilium aims to operate its own transport service rather than sell its aircraft to others significantly increases the amount of capital it will need and delays the day when it might turn a profit, says Ernie Arvai of the consultancy AirInsight. Arvai estimates Lilium will need in the range of a half-billion dollars to get through certification to production of its fleet, and without an open market for its vehicles, it will have a harder time getting financing for them. Developing a network of landing pads and terminals for its transport service will cost even more.
“If you’re going to build and operate the planes yourself, that’s a high-risk strategy in my view,” Arvai says.
To this point Lilium has raised funds from an array of tech investors, including China’s Tencent and Atomico, the venture capital fund of the billionaire Skype co-founder Niklas Zennstrom.
Lilium flight-tested a two-seater version of the design in 2017, which validated its ability to shift from vertical to forward flight. Next up, Gerber says Lilium will build a final version of the aircraft that it will take through further flight testing to safety certification and production.
The company is working on autonomous control systems for the aircraft, but Gerber says its business model doesn’t depend on going pilotless.
Tesla slices prices on Models S and X as its stock plunges
‘New Coke,’ infamous 1985 failed formula, resurrected for ‘Stranger Things’ partnership
Taxi drivers should be exempt from NYC congestion pricing, council members say
Entertainment12 months ago
Entertainment9 months ago
The New York Times best-seller list
Entertainment1 year ago
Transportation Alternatives bike month sponsored by Kiwi Energy
MTA News1 year ago
MTA’s first female head of NYC subway
Business strategies11 months ago
How to Handle Negative Customer Feedback
MTA News11 months ago
Access-a-Ride needs access to bus lanes
MTA News1 year ago
The winners of МТА Genius Transit Challenge
Entertainment1 year ago
Street closures for the Five Boro Bike Tour