(Reuters) - The New York Times Co (NYT.N) reported a better-than-expected rise in quarterly profit as a jump in digital circulation revenue helped offset higher operating costs at the newspaper publisher.
The company, which has been grappling with declining print ad sales, marked 2016 as the “investment year” for raising the bar on digital investments, with plans to invest more than $50 million over the next three years to cement its presence outside the United States.
On an adjusted basis, the company earned 6 cents per share from continuing operations in the third quarter, beating the average analyst estimate of 4 cents, according to Thomson Reuters I/B/E/S.
Digital ad revenue rose 21.4 percent from a year earlier, after two quarters of declines. Digital ads account for 35.5 percent of total ad revenue, up from 27 percent a year earlier.
While digital advertising accounts for more of the company’s bottom line, print advertising continues to decline. This quarter, ad revenue from print declined 18.5 percent from a year ago, accounting for only 22 percent of total revenue, said Chief Executive Officer Mark Thompson during the earnings call Wednesday morning.
“We’re talking about a company which once had a reliance of, maybe, 80 percent of revenue on print advertising,” said Thompson.
The gains in digital advertising revenue primarily came from what Meredith Kopit Levien, chief revenue officer, described as their “growth” businesses: mobile, branded content, virtual reality and other forms of video. These somewhat offset declines in traditional digital display.
For the second straight quarter, these new forms of digital advertising outpaced traditional display, or so-called legacy businesses, but Levien added that it was “meaningfully larger” this quarter. “That is a very positive trend and sort of suggests that the strategy is working,” she said.
Thompson said in July that digital ad sales would improve in the second half of the year, offsetting any decline in print ad sales.
Circulation revenue from the company’s digital-only subscriptions rose 16.4 percent.
Operating costs rose 3.2 percent to $345.5 million, as the company ramped up its digital business.
Net profit attributable to the company fell 95.7 percent to $406,000, or break-even per share, hit mainly by restructuring charges related to headcount reductions.
Revenue fell 1 percent to $363.6 million, below analysts’ average estimate of $365 million.
Shares of The New York Times rose 0.5 percent to $10.95 on the New York Stock Exchange.
Reporting by Aishwarya Venugopal in Bengaluru and Tim Baysinger in New York; Editing by Maju Samuel and David Gregorio