The New York Times Doubles Down on Bundle Growth in Q1 Earnings Release

The New York Times announced it had finished the first quarter generating $594 million in revenue, with 72.2% of that tied directly to its growing subscription business. Across the three lines of revenue that it tracks, it reported that:

• Subscription revenue was up 7.9% year-over-year to $429 million.
• Advertising revenue was down 2.4% year-over-year to $103.7 million.
• Other revenue (licensing, Wirecutter affiliate referrals, commercial printing, leasing of floors in company HQ, retail commerce, live events business, student subscription sponsorship program, and books, TV, and film) was up 7.6% to $61.3 million.
  • Looking at just digital Other revenues (digital licensing & Wirecutter affiliate referrals), it generated $35.8 million in Q1 2024, up from $26.1 million in Q1 2023.

These results should come as no real surprise. The New York Times has prioritized its subscription business over everything else, and when it last issued its guidance, it warned that the ad business would likely be down.

The big trend—that continues to become more prominent—is the company’s ardent focus on its bundled products. The two data points worth looking at here are the increase in “bundle and multiproduct” subscribers and the drop in “news-only” subscribers.

Most media companies don’t have this multiproduct offering, which gives The New York Times a unique advantage. Meredith Kpit Levien, CEO of The New York Times, talked about this multiproduct offering on the earnings call:

In subs, I would say the games funnel, so people coming into the App Store and downloading the app or on the web, finding games is very effective entry point for someone just in their relationship with The Times that can be, they come in and we get them to register, that can be we come in and we sell them, a bundled subscription, we offer a bundled subscription or it can be they come in and we sell them game subscription.

And if they buy that game subscription, we have potential to use that harness that direct paying relationship to introduce them to other things. And obviously with games, there’s lots of surface area to do that.

On its own, a games subscription isn’t incredibly profitable for The Times. According to the results (and in the chart below), “Other Single Product” ARPU was only $3.59; this could be games, cooking, Wirecutter, or The Athletic. But where the ARPU starts to seriously improve is when someone with games, recipes, Wirecutter, or any of the other lower-priced offerings also gets a subscription to News.

But even then, it’s not that much more lucrative for The New York Times to get bundle and multiproduct subscribers—at least not right now. There is only a $0.91 delta between news-only and bundle and multiproduct subscriptions. There are a couple of reasons/theories for this:

1. With news-only subscription numbers dropping quarter after quarter, the remaining legacy subscribers are likely already paying a much higher subscription price.
2. The New York Times has been offering very competitive sign-up offers, believing that getting someone to pay and then incrementally increasing the price is how they can generate more revenue.

William Bardeen, CFO at The New York Times, explained #2 on the earnings call:

The general way to think about our promotions is that we bring the vast majority of our bundle subscribers which is the primary offering in on a dollar a week and then step them up over time to higher prices that is driven by a lot of data science that is measuring a variety of inputs into that.

And what we’re looking for as you can imagine at those step up moments is retention and monetization. And as we said last quarter and reiterating this quarter, we’ve been very pleased with what we’re seeing on both of those fronts as we have increasing numbers of bundled subscribers coming in throughout the year.

Because digital subscriptions have a near zero marginal cost, moving people from news-only to a multiproduct offering is very important for The Times’ long-term revenue growth strategy, even if the incremental revenue is small.

One aspect of this bundling strategy was the acquisition of The Athletic, which The Times acquired for $550 million in cash in January 2022. At the time, Levien explained that The Athletic would cut into The Times’ profits over the next three years but would become an important part of the bundle package.

As the above graphic shows, The Times has done a good job growing The Athletic business. While it’s unclear what percentage of these people are bundled subscribers versus a single product, I’d be shocked if it was an insignificant driver to the bundle’s growth.

The Athletic’s revenue grew 33% from Q1 2023 to $37.2 million. Costs increased by 16.8% to $45.9 million. Ultimately, the operating loss shrunk by 23.2% to $8.7 million. While it’s still losing money, The Athletic is getting closer to breakeven, and its drag on The Times shrinks. The company’s total adjusted operating profit hit $76 million in the quarter, up from $54 million a year ago.

For the complete data we track on The New York Times, click here.