Competitive landscape
New York Times operates in a highly competitive environment, therefore it becomes essential for investors to comprehend the competitive landscape of the industry. At present its key competitors are The Washington Post Company (NYSE:WPO) and Gannett Co., Inc. (NYSE:GCI). Unlike New York Times, The Washington Post Company (NYSE:WPO) has transformed itself from an exclusive newspaper service to a diversified company, where a large portion of its earnings are generated through the educational division and television broadcasting.
However, during the previous quarter, only its broadcasting segment witnessed growth, while the newspaper publishing division continued to incur losses. Similarly, the educational division also struggled to report any growth in revenues and the rising restructuring cost added more pressure on the company’s earnings. During the previous quarter, the flagship newspaper of the company suffered from a significant decline in circulation and print advertising, as earnings fell by a whopping 85%.
The growing inclination of consumers towards the online media leads me to me believe that media companies that derive maximum revenues through online subscribers will continue to exhibit strong growth. In contrast, companies that are unable to make a smooth transition from print to online media will continue to struggle in this rapidly changing environment.
Relative to New York Times, the revenue growth rate for Gannett Co., Inc. (NYSE:GCI) has been surprisingly stable during the last three years. The revenue growth rate posted by Gannett during the first quarter of fiscal 2013 was the highest amongst its peers.
Furthermore, the company reported one of the highest returns on equity from 2010 until late 2012, which I believe makes it a hot pick in the printed-online media segment. The company has sustained healthy free cash flows in the past and will continues to do so, therefore, I keep a bullish outlook on its stock as we move deeper into 2013.
Even though Gannett operates on marginally lesser margins relative to its peers, which makes its earnings look weaker, it possesses robust fundamentals nonetheless. For the quarter ending in March, the company reported a 54% rise in its net income, while like for like revenues grew 1.6%. Going forward, the company is focused on incrementally developing on its all access content subscription model and digital marketing services, which has facilitated it so far in posting robust growth in earnings.
Foolish bottom line
Lately, New York Times has struggled to report any growth in revenue generated through advertising. However, the company is managing to sustain its profitability through several cost cutting initiatives and steady growth in its digital subscription services.
The new revamped mobile website ensures its approach of “moving with the time” as better monetization of its mobile website will enable the company in sustaining a healthy growth in revenues and earnings through online advertising and digital subscription services.
The article Can New York Times’ New Mobile Website Bolster its Earnings? originally appeared on Fool.com and is written by Ashit Gulati.
Ashit Gulati and Equity Dimensions have no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Ashit is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
