24/7 Wall St.

The profit and sales growth model at the New York Times is different from all other dailies across the country. Its management believes it will be able to charge enough for content online to offset drops in print revenue and occasional modest growth rates in digital advertising. Unfortunately, Wall Street has not warmed to the model any more than it has to the largely advertising and print circulation based one employed by nearly every other company in the industry. Shares of New York Times Co. (NYSE: NYT) have traded at or near their 52-week low recently.

The stock price dropped below $11 Thursday, against a 52-week high of $14.27. The drop was due in part to gravity as rumors that a merger deal between the Gannett Co. Inc. (NYSE: GCI) and Tronc Inc. (NASDAQ: TRNC) had fallen apart because financiers had walked away. Other news reports said that was not true. Weak earnings from Gannett did not help, no matter what. The Tronc share priced dropped 28% to $12.27 Thursday. Gannett’s fell 17% to $8.21. Any further negotiations will be complex. Rumor was that the offer for Tronc was at $18.50 a share.

Of all the dailies in America, the New York Times stands the best chance to make a great deal of money charging for content. Its editorial product is widely regarded as the best in the country, by far. The success is already obvious. At the end of the second quarter, the company had approximately 1.4 million digital-only subscriptions. That number was up 67,000 from the end of the previous quarter. Although it is a crude way to look at one of the largest challenges the company has, investors worry the growth will slow, or even plateau.

Certainly, the balance of the revenue streams from the New York Times puts a huge burden on digital subscriptions. In the most recently reported quarter:

Second-quarter print advertising revenue decreased 14.1 percent while digital advertising revenue decreased 6.8 percent Digital advertising revenue was $45.0 million, or 34.3 percent of total Company advertising revenues, compared with $48.3 million, or 32.5 percent, in the second quarter of 2015.The decrease in print advertising revenues resulted primarily from a decline in display advertising. The decrease in digital advertising revenues primarily reflected a decrease in traditional website display advertising, partially offset by increases in revenue from our mobile platform, our programmatic buying channels and branded content.

The New York Times’ Gordian knot is that if it does not maintain a large newsroom to keep the highest quality paper in the country, it cannot increase online subscriptions. In the meantime, it has to cut newsroom jobs in an attempt to stay profitable. No wonder the stock trades so low.