NYT warns of 'challenging' quarter as ad revenue set to weaken, shares fall
(Reuters) - The New York Times Co (NYSE: NYT) on Wednesday forecast a "fairly challenging" fourth quarter due to a drop in advertising revenue, which the publisher said may fall further due to changes in its ad platform, sending its shares down 9%.
The company said it will no longer allow automated selling of ad space meant for its apps, and the 168-year old newspaper expects to lose digital advertising revenue in "single-digit millions" when it rolls out the new measure in January 2020.
"... this will be more than made up by gains in engagement and a higher propensity by app users, both to subscribe and retain," Chief Executive Officer Mark Thompson said.
The weak advertising forecast overshadowed the increase in digital subscriber numbers that rose 273,000 from the immediately preceding quarter, taking the total tally to about 4 million.
Thompson added that while digital advertising performed slightly better in the third quarter, he expects a "fairly challenging" current quarter.
New York Times said it saw a hike in the volume of news in the third quarter and expects the same to continue till 2020, an election year. It also got a boost from the "Trump bump" - the effect of U.S. President Donald Trump's attacks on the paper as well as the Times' coverage of his administration.
The company's costs rose in the reported quarter as it rolled out 8 new episodes of "The Weekly" television show. Operating costs increased to $401.5 million from $380.8 million.
The newspaper has diversified its offerings with the popular "The Daily" podcast and "The Weekly" show countering the fall in advertising revenue from print. The podcast has more than 2 million people tuning in daily.
Total revenue rose to $428.5 million from $417.3 million, marginally falling short of analysts' average estimate of $429.1 million, according to IBES data from Refinitiv.
Excluding items, the company earned 12 cents per share, above expectations of 10 cents.
(Reporting by Neha Malara in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta)