Newspapers from Detroit to New Orleans have cut their delivery schedules to three or four days a week to save production costs. Their publishers reason that people will read their content on the Internet because these readers already go online for most of their news. And the cost to print papers is high and not economical on the days when papers traditionally have little advertising.
Because of the habits of people who read the New York Times (NYSE: NYT), it may be among the papers that most logically should turn to the Web as a means to lower production costs while retaining readers.
The New York Times digital operations already have by far the largest online audience of any newspaper company. Comscore puts that figure at 71.8 million unique visitors, as measured in April. That number is 40 times greater than the circulations of its biggest properties — the New York Times and the Boston Globe. It is strong evidence that Times readers already turn to the Web to get their news.
The Times paper operations continue to stagnate and suffer profit erosion. Revenue at the company’s New Media Group — its newspaper — rose 1.3% in the first quarter to $475.4 million. But operating profit fell 10.8% to $23.1 million. The figures were as good as they were primarily due to online activity. Arthur Sulzberger Jr., the chairman and chief executive officer, said:
Paid subscriptions to all of the Company’s digital packages, e-readers and replica editions totaled approximately 472,000 as of March 18, 2012. This confirms once again the validity of our digital strategy, which has provided a successful model for the industry. Our readers have embraced digital subscriptions and we expect to build on this strong start as we embark on our second year of digital paid subscriptions.
He also forecast improvement in online circulation revenue for the current quarter.
The Times has about one million paid paper subscribers, so digital has become a formidable portion of revenue. The cost to print paper copies is tremendous. That is not true with the online product.
The Times has, by observation, little advertising in two or three of its daily print papers published on weekdays. The revenue of the newspaper group for the first quarter proves that some of the papers printed in the seven-day cycle lose money. The Times may be able to solve that problem through the elimination of a print product two or three days.
Papers like those in Detroit and New Orleans do not have robust online audiences like the Times does. They have to gamble that their readers will turn to Internet versions of their papers as they reduce their print schedules. The Times already has a very large loyal reader base online. The risks it faces if it cuts it print schedule are relatively small.
Douglas A. McIntyre