NYT banks on its brand with price increase
The New York Times will raise its newsstand price from $1.25 to $1.50 beginning August 18. The company is also raising subscription prices by 4.5%.
Catherine Mathis, SVP of corporate communications for New York Times Co., cited the continued rise of production costs, particularly newsprint, as one of the reasons for the rate increase. Times executives are banking on the brand's strength and reader valuation to maintain audience numbers through the price increase.
“We've been constantly increasing the things we offer to our readers, both online and in print over the last several years,” Mathis noted. “We relaunched T magazine and reformatted the paper to make the index easier to read, so we've made improvement to the product. We also sent letters to our subscribers in June about the value they derive from their subscriptions.”
The average weekday print circulation for the paper is 1,048,109. Mathis said that in the past, when the paper has raised its rates, copy losses have been much less than anticipated.
“It will be interesting to see the results of the price increase,” she added. “We have a lot of loyal subscribers — more than 800,000 — who have subscribed for two years or more that are really core.”
The pricing announcement came during a second quarter earnings conference call this week, wherein the New York Times Co. reported that total revenues had decreased 6%, from $788.9 million to $741.9 million. Advertising revenues, which fell 10.6%, were mostly to blame for the drop, as circulation revenues rose 2.5%.
“I think what we saw in the quarter was the effect of the economic slowdown as well as secular changes occurring in the industry,” Mathis said. “We came in actually a little bit ahead of where the Wall Street consensus estimates were, and did better on costs than some were expecting. Conversely, revenue was somewhat softer, so the net effect of revenue being softer than Wall Street expected but cost performance being better made our earnings per share a little better than anticipated.”
The company's improved cost performance can be linked to its outsourcing efforts and some recently completed consolidation projects.