The Donald Trump Rally In Paid Subscriptions

| About: New York (NYT)
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Paid subscriptions to the New York Times post-election have been surging.

I believe this elevated level of new subscriptions will remain strong.

As the importance of ad revenue has fallen, and circulation revenue has increased, it is a good sign that this is the area that is realizing significant success.

For very many years newspapers were an outstanding business, with an unusual and attractive pricing power. But their competitive strength slowly began to erode back in the 90's. Once the primary source of information across a wide range of interests - sports, politics, finance, job opportunities etc - this is no longer the case.

Modern television and the internet offer far greater immediacy and ease of access, and also offer an immense amount of choices. Profits were once a certainty for even a mediocre newspaper in a major American city. In the 21st century it became a certainty that profits would continue to decline across the industry.

Global spending on newspaper print ads is projected to fall below $50 billion in 2017, after being near $100 billion 10 years ago. This comes as the overall global ad market has been growing at a healthy clip, led by double-digit growth in digital ad spending. Advertisers have been aggressively pushing into online videos especially, leaving behind older display ads, which generated inferior results.

It's a must to deal with and work with the internet now for newspapers, and the digital transformation is well under way. Unfortunately for the individual newspapers digital ad revenues are not currently offsetting the declines from print once received. In 2015 circulation revenues made up over 50% of total revenues at the New York Times (NYSE:NYT), while less than 10 years ago it was only 25%. 2016 may finish with circulation revenues at around 60% of total revenues.

Still, of all seven-day newspapers in the U.S., the NYT has both the largest daily and Sunday circulation which exists. In light of the highly competitive environment, the NYT has put forth a good effort at stabilization, which appears to be happening. The vast majority of non-core assets have been sold off and the balance sheet is strong. Earnings have been positive in recent years and a dividend has been paid since 2013.

Nevertheless, the struggles faced have been no secret to the general public, and head count reductions have often been topics of discussion. The President-elect, Donald Trump, makes the NYT the frequent subject of his criticisms, where he often uses the moniker "The Failing New York Times" as a description. Fairly often the NYT has been the subject of his massively viewed and discussed tweets. Further coverage all over the media was given when lawsuits were threatened against the NYT, and the NYT lawyers issued a scathing response.

All this publicity has been working wonders for the NYT recently, as subscriptions have gone through the roof post-election. In just the very first week post-election there were 41,000 new digital subscriptions, the most in any single week since 2011, when the NYT first released its digital subscription model. The onslaught of new subscriptions continued. From November 8th to November 24th, 132,000 new paid subscriptions to all news products were made, a massive 10x increase over the prior year. The current figures are estimated to be around 170,000 new paid subscriptions since the election. These figures best any other news medium. The result is that in the roughly only 4 weeks since election day the total net paid subscriptions to the NYT has increased by 10%, a massive achievement.

It remains to be seen whether or not this post-election surge continues or fizzles, but I'm optimistic that there should be remaining strength. It seems very likely to me that criticisms from the President-elect against unfavorable coverage will continue, and any time he does so this will draw massive headlines. Both opponents of Donald Trump as well as individuals simply curious about the conflict will be drawn to the paper.

There is also another item working in the NYT's favor - post-election discussion centering on media coverage during this election cycle has been a very hot topic. The abundance of new competitors in various forms of media is often proving unreliable. Facebook (NASDAQ:FB), for example, has been involved in hosting not just news of dubious quality or with factual inaccuracies, but news that is demonstrably fake. As word gets out there could be some flight to more reputable sources like the NYT. No doubt some individuals may have issues with the NYT's own reporting, but the fact remains that it has more Pulitzer Prizes for excellence in journalism than any other news organization - 117 - including well over a dozen in just the last 10 years.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.