The New York Times Company (NYSE:NYT) is banking on diverse revenue streams, strategic initiatives and portfolio restructuring for growth. However, these signs of optimism are clouded by intense competition and sluggish advertising revenues, the primary causes of concerns for the company.
Hidden Catalysts
The New York Times Company has been building up diverse revenue streams, which include a pay-and-read model for NYTimes.com and the International New York Times to make it less susceptible to the economic conditions. Additionally, the company is adapting to the changing face of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its portfolio.
In an effort to neutralize declining revenues and shrinking market share, publishers are scrambling to slash costs. The New York Times Company has been realigning its cost structure and streamlining its operations to increase efficiencies.
Other publishing companies such as New Media Investment Group Inc. (NYSE:NEWM) , Gannett Co., Inc. (NYSE:GCI) and The McClatchy Company (NYSE:MNI) are also trying to adapt to different revenue generating ways.
The New York Times is enhancing its reach among the digital audience through Facebook (NASDAQ:FB)'s Instant Articles and the Starbucks (NASDAQ:SBUX) mobile app, via which Starbucks’ loyalty members will be able to access top news and selected articles for free.
Hurdles to Cross
Advertising remains a significant source of revenues for the company, which in turn depends upon the health of the economy. Total advertising revenue during the second quarter of 2016 dropped 11.7%. Print advertising revenues plunged 14.1% in the quarter. The company hinted that total advertising revenue in the third quarter may decline in mid-single digits compared with the prior-year period.
The New York Times Company faces stiff competition for advertising and circulation from other newspapers, magazines, websites, television, radio, and other forms of media in terms of audience reach and demographics, price, service along with advertising results. Consequently, there is a fear of market share loss, and this may adversely affect its top- and bottom-line performance.
Taking the pros and cons into consideration, The New York Times Company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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NY TIMES A (NYT): Free Stock Analysis Report
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