A New Business Model for Old Media

It used to be that there were few things more wonderful than owning a dominant newspaper franchise.  The bigger the market the better, but the business model worked in both big cities and small towns.

Here are the results for the New York Times from 1995 through today:

Revenues and earnings are both lower than they were at the start of 1995.  That dip down in net income in 2006 was a recognition of the impairment of goodwill and other intangible assets.  There was a lot of impairment going on.

The bottom panel shows that the stock was able to keep up with a strong market in the late nineties and really tack on the relative performance during the following bear market.  Then the bottom dropped out.

We all know why, but this is stunning nonetheless:

It starts a few years earlier than the first chart, showing that during the initial decade of the internet age, revenue continued to grow and the business model stayed intact.  Then, unrelenting decline.  From the peak, the drop was more than 91%.

In 2011, Page One was released.  The acclaimed documentary about the Times showed the transformation of the industry through the travails of the paper and through the views of its media reporters, including the legendary David Carr.  (Highly recommended.)

But eventually things started to improve.  Buried by the scope of the stock decline in the first chart in this posting is the fact that NYT has outperformed the market by 40% during the last four years.  It had been 100%, but the stock has been weak on a relative basis since March.

The firm has managed to stabilize its business model:

It has stayed profitable the last several years — and look at that subscriber growth!  Granted, they are mostly digital subscribers, but still.  The “Old Gray Lady” has put on some new clothes.

President Trump used to talk about “the failing New York Times,” but it has been anything but that, finding its footing in a difficult environment.

The decline of print journalism has implications for society as a whole, and the landscape remains bleak, with many newspapers just trying to hang on.  And Alden Global is gutting the newsrooms of the many papers it has bought, wringing as much cash flow as possible out of the firms before they die.  There are a few signs of hope, including some benevolent owners taking over storied franchises, new nonprofit models cropping up, and inspiring stories like that of the Storm Lake Times.

In 2009, The Atlantic published an article, “End Times,” with this subhead:  “Can America’s paper of record survive the death of newsprint?  Can journalism?”  So far, the answer to the first question is “yes.”