(Reuters) - The New York Times Co missed estimates for quarterly revenue on Wednesday as a turbulent economy sapped digital subscriber growth and forced businesses to cut back on advertising spending, sending its shares tumbling 6%.
High inflation and rising interest rates have prompted readers to rethink their paid subscriptions, hampering the publisher's strategy of bundling its core news reports with digital content ranging from The Athletic's sports coverage to cooking recipes and games like Wordle.
"Advertising continues to experience near-term, cyclical challenges," said CEO Meredith (NYSE:MDP) Kopit Levien.
The Times expects digital ad revenue to decline by low-to mid-single digits in the current quarter, joining ad-dependent companies such as Snap Inc (NYSE:SNAP) in struggling with tightened marketing budgets across industries.
Digital ad revenue fell nearly 9% to $61.3 million in the January-March period, while total revenue of $560.7 million was below estimates of $571 million, according to Refinitiv data.
Graphic: Digital ad revenue falls to lowest in two years - https://www.reuters.com/graphics/NEWYORKTIMES-RESULTS/gkvlwzwxxpb/chart.png
In a move that could shield it from ad weakness, the publisher said it plans to hike prices for 550,000 digital news and game subscribers in the current quarter, with another 1 million to be notified of increases by 2023-end.
It added 190,000 digital-only subscribers in the first quarter, compared with 240,000 in the prior quarter, bringing its total subscriber base to more than 9.7 million.
Graphic: Digital subscriber growth slows at the Times - https://www.reuters.com/graphics/NEWYORKTIMES-RESULTS/byprldlldpe/chart_eikon.jpg
The company has also been using promotional pricing to attract new subscribers with the goal of moving them to higher-priced, all-access bundles later.
Its subscription revenue grew nearly 7% in the quarter.
"Our bundle strategy is gaining momentum, engagement metrics are strong, pricing initiatives are taking hold and we are slowing cost growth," Levien said.
Adjusted profit of 19 cents per share beat estimates of 17 cents.
Separately, the Times named strategy head William Bardeen as its finance chief, replacing Roland Caputo who had announced his retirement in December.