In 1851, Henry Jarvis Raymond and George Jones founded the New-York Daily Times. The paper sold for a penny. By 1857, the company changed its name to The New-York Times. It wasn't until 1896 that it dropped the hyphen. Finally, in 1969, The New York Times (NYSE: NYT) became a publicly traded company.
Contrary to what you may have heard a certain U.S. President claim, the New York Times is hardly failing. In fact, I think it may be one of the next big winners we have over at my premium service, Maximum Profit.
The Case For NYT
The news organization is the third most widely-distributed circulated paper in the United States, behind USA Today and The Wall Street Journal. It's been awarded 125 Pulitzer Prizes, more than any other news organization.
The New York Times has thrived in a world where it's seen many of its peers fail.
For example, The Tribune Company, which owns the Chicago Tribune and, until recently, the Los Angeles Times, filed for bankruptcy in 2008. And it's not alone: Newsroom employment has dropped by more than 20,000 in the past 15 years, and newspaper circulation is at its lowest level since 1940.
The problem is that as the digital age came into its own, many of these news organizations clung to the old ways of doing business, namely printing newspapers and physically distributing them. The New York Times weekday circulation peaked in 1993 at just shy of 1.2 million papers per day. Today, circulation is down by 50%, to fewer than 600,000.
Instead of ignoring the digital trend, The New York Times started focusing on selling electronic subscriptions. The company began experimenting with its "subscription-first" strategy in 2005. It took some time for the company to get it figured out, but it seems to have found the right recipe.
By 2025, the company's goal is to have 10 million subscribers.
Its website, NYTimes.com, which it launched in 1996, had 94 million unique monthly visitors on average in the United States during 2018. Globally, that figure increases to 134 million unique visitors.
Last year, the Times posted revenue of more than $1.7 billion, a 4% increase over 2017. But its digital-only revenue climbed by more than 14% to roughly $709 million. Net income jumped to $125.7 million in 2018, from just $4.3 million in 2017. Meanwhile, cash flow jumped from $86.7 million in 2017 to more than $157 million last year, an 81% year-over-year increase.
Action To Take
With 134 million unique monthly visitors to its website and only 3.4 million paid subscribers, this tells me that the company has plenty of room to grow its subscription count.
It's already proven capable of converting free readers into paid subscribers. As the world continues to grow ever more complex, I think more and more people will look for quality reporting from reputable sources -- and be willing to pay for it. When they do, then The New York Times will be one of the first places they turn, thanks to its storied history and early-mover advantage.
The company is looking to build out its subscription-first strategy with different brands and even a TV show called The Weekly that will launch this year. Should any of these initiatives flop, or it fails to attract new subscribers, shares will likely be impacted.
With that said, I think investors shouldn't overlook this stock just because it's a "newspaper." The company is much more than that, and it could very well prove to be an under-the-radar outperforming stock in the coming years.