What the Market Really Thinks About The New York Times

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Despite all the turmoil over a fired female editor and falling revenue, the stock market actually loves shares of The New York Times Company (NYSE: NYT). They have risen 140% in the past five years, against an increase of just over 100% in the S&P.

Times shares did dip some last week, as chairman and publisher Arthur Sulzberger Jr. dumped executive editor Jill Abramson, allegedly over a fight regarding her pay package. Sulzberger denied this was the reason, but the impression has not gone away.

At roughly the same time as the firing, a report, authored in part by the publisher’s son, A.G. Sulzberger, criticized the extent to which the Times had prepared for the digital future. The conclusion was the Times has fallen behind many “new media” in its efforts to engage readers, which could mean a rapid decline from the ranks of America’s top media.

The turmoil can be added to another set of troubles. The annual revenue of The New York Times Company has fallen from $2.4 billion in 2009 to $1.6 billion last year. Granted, the Times has shed some smaller properties over that period. The bottom line is a more important measure, and it has been tiny for the past five years and only $65 million in 2013.

Investors have been heartened by one thing, the paper’s ability to get paid digital subscribers, which just might offset drops in traditional revenue. In the first quarter of the year, revenue at The New York Times Company rose 2.6% to $390.4 million. Net income eroded from $28.1 million in the first quarter of last year to $22.1 million. The outstanding news for investors:

Circulation revenues rose as the Company’s digital subscription initiatives and the 2014 increase in home-delivery prices at The New York Times more than offset a decline in print copies sold. Revenues from the Company’s digital-only subscription packages, e-readers and replica editions were $40.3 million in the first quarter of 2014, up 13.6 percent from the first quarter of 2013.

Print and digital advertising revenues increased 3.7 percent and 2.2 percent, respectively. Digital advertising revenues were $37.8 million compared with $37.0 million in the 2013 first quarter.

While adverting may be dead, the Times subscription business is booming. Online subscriptions at the end of the first quarter were 799,000, or up 39,000 from the fourth quarter of the last year.

While the business side and editorial department of the Times battle over which will control the paper, the company’s numbers are good enough that Wall Street does not appear to care who wins.

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