The Daley Insight
On August 6, The New York Times released its quarterly
earnings for 2Q2025. Revenue was up 9.6% year-over-year,
net income increased 26.6% in the same period, and digital-only
subscriptions increased by 230,000 over the end of March. The Times now
has 11.8 million digital-only subscribers – twice the combined
total of all three of the other major national news publishers – The
Wall Street Journal, The Washington Post, and USA Today.
Digital advertising revenues increased 18.7% year-over-year while
digital subscription revenues rose by 15.1%. The company has not had
long-term debt on its books since 2015.
The company has been the yardstick for other news outlets in the U.S.
Each quarterly earnings report for The Times feels like we are
playing a broken record. So, we could cut this post short now and move
on … but we won’t.
The paper’s current performance was not pre-ordained. Twenty years
ago, the company had a sprawling empire of 17 regional newspapers,
including The Boston Globe. It also owned 9 television stations
along with 3 radio stations, half of a cable TV outlet, and 17.5% of
the Boston Red Sox. Management was worried that the company was
seriously overextended, and had already started selling off
The Times had
used debt to finance this expansion. At the end of 2008, debt levels
were high at 4.7 times earnings before interest, taxes, depreciation
and amortization (EBIDTA, a useful measure of cash flow generated by a
business), although not enough to endanger the existence of the paper
so long as revenue remained strong. In January 2009, amid the
financial crisis when commercial credit markets were drying up, the
Mexican billionaire Carlos Slim Helú loaned the paper $250 million at
a whopping 14.1% interest along with warrants to purchase stock in
2015 at a low price – guaranteeing him a future profit in the event
the bailout succeeded but leaving The Times even deeper in the
hole.
Two decades ago, The Times was overly reliant on advertising
for cash to service its debt. In 2000, ad revenue constituted 72% of
total revenues for the company: $2.4 billion out of $3.37 billion!
Paying off its debt looked problematic when advertising revenue
dropped sharply, falling 13% in 2008 and a whopping 24.9% in 2009.
The loss of advertising revenue was initially chalked up to the
severity of the 2008-2009 financial crisis, leading management to look
for short term ways to compensate. In March 2009, the
company announced a 10% wage cut and 100 layoffs. The same
month, the paper
sold 21 floors in its 52-story building that it had just
completed two years earlier, raising $225 million. Since print
advertising collapsed in the recession, management also tried to
partially offset print losses with digital gains.
It took the company another few years to realize that they were facing
an existential crisis because the migration of advertising away from
the paper-printed news and other publications toward the internet
platforms was a long-term phenomenon. (Between 2009 and 2013, Google’s
ad revenue doubled while
Facebook’s increased 8-fold!)
During this same period, The Times’ advertising revenue
continued to drop from $1.33 billion to $0.66 billion, a decline of
50% in only four years.
Management at The Times realized that they needed a new
business model to save the company. Righting the ship would set the
stage for a later re-birth.
First, The Times sold off peripheral assets. The process
started before the financial crisis. Between 2006 and 2013, it raised
over a $1.5 billion dollars through the sale of its non-core assets:
-
October 2006: its 50% ownership interest in Discover Times Channel
to Discovery Communications for $100 million
-
January 2007: the Broadcast Media Group (9 TV stations) to Oak
Hill Capital Partners for $575 million
-
April 2007: WQEW-AM to Radio Disney, LLC for $40 million
-
Between 2008 and 2012: it unwound its Red Sox ownership for a
total of roughly $225 million
-
March 2009: The TimesDaily in Florence, AL, for $11.5
million
-
July 2009: WQXR-FM, a New York City radio station, to
Univision and WNYC Radio for $45 million
-
January 2012: 13 papers in its Regional Media Group for $143
million
-
September
2012: About.com to IAC/Interactive Corporation for $300 million
-
October 2013: The Boston Globe and The Telegram &
Gazette in Worcester, MA, for $70 million.
By 2014, the company mostly consisted of The Times itself,
related websites and mobile apps, live events, and syndication fees,
its “core brand” as Board Chair Arthur Sulzberger, Jr. and CEO Mark
Thompson wrote to
shareholders in 2015. In its “Innovation
Report” of March 2014, management stated that
Our core mission remains producing the world’s best journalism. But
with the endless upheaval in technology, reader habits and the entire
business model, The Times needs to pursue smart new strategies for
growing our audience. The urgency is only growing because digital
media is getting more crowded, better funded and far more innovative.
Second, the company pivoted toward a
circulation-based business model. The newsroom was directed to “take
the lead in getting more readers to spend more time reading more of
our journalism.” The next section looks at how this pivot occurred and
how it saved The Times.
By 2016, the company had paid off all its long-term debt. Carlos Slim
had cashed in his warrants for 15.9 million shares, set at a strike
price of $6.36/share, when the stock was trading at $12.35, earning a
nifty $94 million for Slim on paper. (The Times gained another
$94 for its coffers.) With 17% of non-voting shares, he was the
company’s largest shareholder. Slim would later sell his shares
gradually between 2017 and 2020 and likely earned a profit of
600-700%.
The Subscription Model: Trading Geographic for Functional Diversity
While Keeping the Focus on the Core Brand
The Times took several steps to move towards a subscription model:
-
1Q2011: Began offering digital-only subscriptions
-
4Q2013: Phased out the International Herald Tribune
(originally a joint venture with The Washington Post, but The
Times took full control in 2003)
-
3Q2013: Offered its crossword puzzle as a separate app
-
4Q2016: Purchased Wirecutter, a product review and
recommendation website
-
3Q2017: Launched its cooking expertise as a paid digital
product
-
2Q2018: Launched Spelling Bee, a daily word game
-
1Q2022: Purchased The Athletic, a premier digital
sports site, operating ad-free, that had been poaching the
country’s best sport writers
-
Q2022: Purchased Wordle, the
online word puzzle that had become a cultural hit.
These moves collectively cemented The New York Times brand, and
digital subscriptions boomed (Chart 1).
By the end of June 2025, digital subscription at The New York Times
was not just outpacing other national news outlets. It left them in
the dust. See Chart 2.
Meanwhile, print circulation plummeted in line with what was happening
in the rest of the news industry: dropping from 1.1 million 2000 to
906,100 in 2010 to 374,000 in 2020 and 253,000 in 2024.
Yet, overall subscriptions, and therefore readership, took off, as we
can see in Chart 3.
As The Times added products to sell around its core brand,
subscription revenues turned around, as we can see in Chart 4.
This is an interesting chart. First, subscription revenue started
exceeding advertising revenue as early as 2012. By 2024, subscription
revenue outstripped advertising by a factor 3.5:1. Second, starting
around 2017, subscription revenue started taking off. Overall, it
increased 77.3% during these years with digital subscription revenues
jumping 268.6% and print circulation revenues declining by 22.5%.
Third, during this 8-year period, advertising revenue slowed its
decline and remained almost flat apart from the pandemic year of 2020.
In these years, overall ad revenue fell by 9.4%, but digital
advertising increased 43.6% and print advertising fell 48.7%.
Much as The New York Times diversified geographically in the
1960s through the acquisition of television stations and in the 1980s
through the purchase of regional newspapers and broadcast television,
it embarked on a course of functional diversification in the 2010s. It
focused on what it did well – national and international journalism
along with cooking and crosswords and other games and used its
reputation to backstop a product-review site. These moves kept the
focus on the high quality journalism of The Times and
strengthened its brand.
Keeping the Corporate Raiders at Bay
Another key to The Times’ success was having a governance
structure that helped preclude a hostile takeover. The news industry
has been beset by corporate raiders over the last 40 years. Think
Conrad Black and The Chicago Sun-Times, Sam Zell and Tribune
Publishing, Avista Capital Partners and The Minneapolis
Star-Tribune, Alden Global Capital and MediaNews and Tribune
Publishing. Each powered their acquisitions through debt and
ultimately drove their companies into bankruptcies to shed legacy
pensions and forced creditors into receiving less than all their
investment.
The New York Times was
able to forestall such behavior through its governance structure. The
New York Times Company is a public company, listed on the New York
Stock Exchange since 1997. (It had previously been listed on the
American Stock Exchange.) Those shares that are traded on the NYSE are
Class A shares. Class B shares are not registered for public trading
but are owned by members of the Ochs-Sulzberger family through the
family trust. Class A shareholders can vote on 4 of 13 directors and
receive dividends. Class B shareholders vote on the other 9 directors,
effectively ensuring control of the company. According to the 2025
proxy statement, the purpose of the trust is “to maintain
the editorial independence and the integrity of The New York Times and
to perpetuate it ‘as an independent newspaper, entirely fearless, free
of ulterior influence and unselfishly devoted to the public welfare.’”
Dual-class stock allows the company to focus on the long term and not
be enticed by short-term cash opportunities. While many theories of
good corporate governance might find dual class structures as a
violation of shareholder rights, the history of recent corporate
raiding suggests that they can be valuable in support of long-term
purpose. One notable example shows how The Times was able to
protect itself in ways that other public companies could not.
In 2007-2009, The Times fended off Phillip Falcone, head of
Harbinger Capital Partners, who accumulated
nearly 20% of Class A shares and promised a proxy fight to
abolish the dual-class structure. The company
gave Harbinger two board seats in 2008 to avoid a proxy
fight. Yet, the hedge fund bought Times shares at a high point
before the financial crisis and before the run on newspaper
advertising. Harbinger suffered serious paper losses. More
importantly, an SEC investigation into Falcone’s management of
LightSquared – a telecom company promising low-cost broadband that
would be throttled by the FCC because of interference with GPS signals
– forced Harbinger to liquidate its Times’ shares by 2011. (Click here and here.)
Falcone would later be forced to settle with the SEC over fraud
charges through fines and a ban from the securities industry.
LightSquared also went bankrupt. The Times’ dual-class
shareholder structure insulated it from activist control, even when
the company was financially vulnerable. The injection of $250 million
from Carlos Slim helped.
The only way for Falcone to have succeeded would have been to peel off
family members, looking for quick profits. Here the Ochs-Sulzberger
family has succeeded where other family news dynasties did not. I am
thinking of the Bancroft family which owned Dow Jones (which, in turn,
owned The Wall Street Journal) and the Chandler family which owned The
Los Angeles Times. In the case of the former, Rupert Murdoch and
News Corp were able to peel
off family members to undermine the dual-class structure.
The Chandlers relinquished control of the Times Mirror Company in
2000, agreeing to sell to Tribune Publishing. Disunity
within the Chandler family had one set of heirs accusing
the other of financial mismanagement and wanting to cash out.
The Ochs-Sulzberger family has also had disagreements, typically
between those who want more money from the company – via either higher
dividends or a complete cashout – and those who upheld a more civic
tradition and who embraced the mission of the family trust. However,
the trust owns the shares, not individual family members. Because the
shares were held by the trust, a majority of heirs would be needed to
dissolve that trust. This forced family members into internal
dialogue.
When Carlos Slim loaned The Times $250 million, he did not
insist on governance changes, a breakup of the company, or management
control. Rather, as a value investor, his goal was to make a profit and help
the paper. Mission accomplished. It was also likely the company would
have rejected his assistance if he had insisted on governance changes
that would have left The Times more vulnerable to a hostile
takeover. For an excellent analysis, see Rick
Edmonds’ discussion of the Slim bailout for Poynter.
What Are the Lessons for Local News?
A case could be made that The New York Times is unique and does
not resemble local news outlets. Yes, it is unique. Every company is
unique. Yes, it has a national footprint. But that should not detract
from understanding how it went from troubled news outlet to superstar
status. Yes, it has a legacy of editorial independence and high
quality that few news outlets have replicated. But editorial
excellence can be built if recruitment is done wisely and newsroom
staff is compensated respectfully. Yes, it had iconic assets in its
crossword puzzle and its culinary writing. I am not sure these can be
copied, although other activities, distinctive to the region, could be
developed. Yet, those are not the only reasons for The Times’
success.
This is what I took from The New York Times story that other
news outlets can emulate:
1. High quality journalism. The chains made the mistake that
they could fill its pages with regional stories, obtained as cheaply
as possible, generated by its hubs, and wire service material, rather
than by focusing on the quality that wins subscribers. With the
internet and easy availability of national and international content,
that is a failing strategy. The chains should dissolve themselves – I
do feel somewhat bad for shareholders, including me who bought 100
Gannett shares a few years ago – and fund individual local news
outlets. The hubs can facilitate the transition by offering collective
back off support.
2. Build the core brand. No one applauds Lee Enterprises, the
name of the parent corporation that owns and supports separately
branded local news publishers. They celebrate The Buffalo News or The
St. Louis Post Dispatch for their quality journalism. Local papers
need to pat themselves on the back – not for saving democracy although
they help that process – but for providing the local information that
is what the members of their local communities actually want, and
which is otherwise hard to find.
3. Accelerate digital transition. Building an internet presence
required hiring a high-tech workforce capable of servicing the
transition taking years for The Times with many dead ends and
failed experiments. “First movers” have the advantage of a head start
on competition. “Second movers” have the advantage of learning from
the first movers with, hopefully, fewer mistakes along the way. But it
requires an investment commitment, undeterred by short-term profit
expectations.
4. Focus on the long-term. Local outlets need patience to allow
for experimentation on membership models, newsletters, and the mix of
breaking news and long-form investigative journalism.
5. Provide a governance structure that enables long-termism.
The Ochs-Sulzberger family avoided the internal conflicts faced by
other news dynasties. Similar trust structures, explicitly pledged to
provide information for the community, could be used to that
individual investors do not sell out to groups – hedge funds, vulture
investors, corporate raiders of any stripe – that would prioritize
cash extraction over quality journalism. This is not an issue of
nonprofit vs. for-profit. Rather, it is a commitment to the long term
and, ultimately, to the community.
6. Build multiple revenue streams. I have been beating this
drum for a while now, but diversification is critical for financial
stability. We need to learn from the many experiments being carried
out now in communities across the U.S. The Times transitioned
from geographic to functional diversification. There are many ways
this could take place.
a. Newsletters. They deliver focused information to the reader,
and they can contain local paid advertising. They can help build email
distribution lists that will be useful for fund-raising and events.
Outlets could offer special or early-access newsletters to paid
member. I counted 83 possible newsletters from my The New York
Times account.
b. Merchandise. Branded goods. People love mugs, thermoses,
tote bags, especially if tied to a worthy cause. Click here for The
New York Times store.
c. Events. This is a way for news outlets to brings journalists
and readers together to explore topics of interest. Adweek recently
reported that The Atlantic makes 25% of its
commercial revenue from events. In 2019, Digiday ran an excellent
article on how The Atlantic approaches the events business.
Click here for The
New York Times events.
d. Licensing. Although local news outlets are in the business
of disseminating local stories, they can sell content to larger
outlets. Mirror
Indy, for instance, sells content to the Gannett-owned Indianapolis
Star as well as other Indiana news outlets. Click here for The
New York Times licensing webpage.
e. Business-to-Business (B2B) Services. There
are some spectacularly success ventures in selling data analytics –
Bloomberg and Dow Jones are just two examples. The Economist
Intelligence Unit is another example of consultancies spun off from
news publications. Local businesses could use the data analytics
developed by the journalism profession. They could also benefit from
the eyes and ears of local reporters. I do not believe The Times sells
its services as a separate venture, but it might consider doing so.
f. Memberships. This refocus of subscription rights gives
readers an ownership in the process of delivering news. Membership
benefits are multiple: they bring the newsroom in touch with readers,
they can lead to events, and they can offer discounts on merchandise.
Memberships build trust with the community. Members can share and
promote local stories. Again, The Times does not offer memberships per
se, although it does offer tiers of subscriptions (e.g., “All Access
Family”) but memberships offer local news outlets still another
mechanism for engagement.
As I wrote in Article
7, local publishers “need to be creative and to give the
news organizations the space to experiment with ways to fill a wider
variety of their readers’ and their communities’ needs…. Local
newspapers are small businesses. They need to act like it.”
Local news outlets – both legacy and startups – can learn from the
recovery and success of The New York Times by planning for the
long term, protecting themselves from short-term profit-taking, and
developing alternative revenue sources.
© 2025 Tony Daley
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