Teaching Examples


$200 million a year at NY Times online
July 12, 2006, 12:44 pm
Filed under: Uncategorized

Arthur O. Sulzberger, Jr., publisher of The New York Times, quoted some profit numbers for the online operation (via Donna Bogatin at ZDNet, June 27, 2006):

The New York Times employs 1,200 people in its newsroom and supports a $200 million annual “news gathering” budget. Sulzberger immediately added, as digital has brought in $200 million in annual revenue, interactive can support our news gathering function.

Ali [Rafat Ali of paidContent.org] then asked about TimesSelect, launched last year. Sulzberger indicated “Select” represents $6 million in subscription revenue, with 500,000 registered users. Sulzberger noted, however, that 98% of The New York Times daily content is available at no charge online. Sulzberger intimated, however, that possible fees for premium Boston Globe online content are being evaluated.

It’s good to hear that the online side brought in $200 million in annual revenue (I wonder if that was in fiscal 2005? Not clear) — but it’s not revenue that pays the bills — it’s profit. (I used to cover company financials, back in the early days of the personal computer revolution.)

If the online brought in $200 million, we need to know what the expenses were at the online. Their journalists aren’t working for free, and servers cost money too.

Related post: Covering the facts about Web losses

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6 Comments so far
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Eh? Isn’t profit what’s left of the revenue after the bills have been paid?

Comment by Anonymous

So, the Web can pick up the news tab once sales, tech, ops and marketing start working for free.

Comment by Stephen Rynkiewicz

Yes, profit is what’s left after the bills have been paid. So if a staff of paid professionals is producing $200 million in revenue, it is not supporting the $200 million tab for another part of the company. Some large portion of the $200 million has already been spent to support the first operation. Do the math.

Comment by Mindy McAdams

if a staff of paid professionals is producing $200 million in revenue, it is not supporting the $200 million tab for another part of the company.

Yes, but NYTimes.com is not an independent entity. It shares its sales, tech, ops, marketing and the rest of it with an established print product.

Sure, the web site adds some new costs, but these are miniscule compared to printing presses and newspaper distribution networks.

Covering an editorial budget that can sustain 1,200 journalists from only a web site is not to be sneered at. Given all the economies of scale and shared costs of a multimedia news organisation, an online division doesn’t have to be “profitable” in the sense that it could theoretically be spun off to stand alone. It just has to bring in more new revenue than new costs.

That £200m editorial cost-center existed long before the web site was started and I doubt running the site costs more than the £200m in brings in.

That said, the Times’ numbers seem to suggest that web-only profitablity is only a matter of time. And that’s the real story here, isn’t it?

Comment by Anonymous

“Anonymous” wrote: “… the Times’ numbers seem to suggest that web-only profitablity is only a matter of time. And that’s the real story here, isn’t it?” It’s a very good point, and I don’t disagree. But I’m always interested to see that the expenses of the online side are not broken out. We hear about revenues, not profits. Until I know how much it costs to run the online, I’m not going to feel huge excitement about its revenues.

I am very glad to hear they’re hauling in that much ka-ching. Now maybe some of those print dinosaurs will stop telling us we’ll never make any money with online.

Comment by Mindy McAdams

I agree – what is the breakdown of costs for online. While the fees for servers may be miniscule in comparison to a press, what percentage of the online revenue is being paid back to the print revenue side of things for content? I believe that is still how many news operations work – online compensates print (or broadcast in certain circumstances) for their content and vice versa…so what is that fee and how does that play into this debate.

Comment by Anonymous




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