Shares of New York Times (NYT - Get Report) were surging in afternoon trading Wednesday after the publisher boasted the best quarterly digital subscriber growth in its pay model history as it continues to ride the wave of interest in high-quality journalism.
The company soared nearly 13% to finish Wednesday trading at $16.10 per share.
The Times reported diluted earnings of 8 cents per share, up from 5 cents per share in the same period in 2016. Revenue rose by 5.1% to $398.8 million. Analysts had expected 7 cents per share in earnings on $382 million in revenue.
"These [subscriber] numbers, we believe, validate our thesis that there is a large and growing appetite in this country and around the world for journalism of seriousness and depth, and that a growing number of people are prepared to pay for it in digital as well as in print," CEO Mark Thompson said on an earnings call. "They also support our view that quality news is a relationship business."
Despite the intense political climate, Thompson noted that digital subscriptions were accelerating "long before" the 2016 presidential election took over the news cycle. "The acceleration was driven by data-driven adjustments to our pay model and greatly improved execution in our consumer marketing department," he explained.
The company that has been described as "failing" multiple times by President Donald Trump over the past year reported a stunning 308,000 net digital new subscriptions for the first quarter. In addition, paid digital-only subscriptions rose 60% year-over-year and 16% from the last quarter to 2.2 million, and digital-only subscription revenue was up 40% vs. the 2016 first quarter.
While the social media age means a number of people get news from Twitter (TWTR - Get Report) and Facebook (FB - Get Report) , "thoughtful readers" still want to have a go-to platform that they can trust, Thompson said. In addition, advertisers want their ads to be next to content they can trust.
Digital ads now make up 38% of total ad revenue and rose 18.9% year over year to $49.7 million, while revenue from print ads declined by 17.9% to $80.4 million. Thompson noted "continued headwinds" in print advertising but said digital revenue and print consumer revenue were both up year-over-year.
"When I arrived at The Times 4-1/2 years ago, print advertising was such an important part of the company's economics that the idea of growing total revenue in the face of such stiff headwinds would have been unthinkable," he said. "The dynamism of our digital businesses now makes it possible."
The New York Times launched a much-talked about ad campaign this past quarter based on the idea that "The truth is hard." In late April, the company announced the next wave of this campaign would include four ads directed by Darren Aronofsky that show the great lengths Times reporters go to to inform its readers. Aronofsky's films include Black Swan, The Wrestler, Requiem for a Dream and Pi.
"Fact-based, independent journalism is perhaps a more dangerous job now than it has ever has been, and it is also more important now than it has ever been," Times publisher Arthur Sulzberger said in a Wednesday announcement.
The first commercial was released April 21 and features staff photographer Tyler Hicks and his work covering refugees in Lesbos, Greece.
Thompson also emphasized the Times talent bank, noting a number of new hires this quarter, including Wall Street Journal veteran Rebecca Blumenstein as deputy managing editor and Bloomberg Businessweek's Ellen Pollock as business editor, who are both reshaping the Times business and financial coverage. The company has plans to recruit even more talent and will lay those plans out in the current quarter, Thompson said.
The encouraging results from New York Times are in line with the vote of confidence it received from billionaire investor Warren Buffett in February.
"There are only two papers in the United States that I think have an assured future because they have a successful internet model to go with their print model, and that's the Journal and The New York Times," said Buffett, whose current holdings include 31 U.S. newspapers. "And I'm not saying it'll even be easy for them."
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