The business strategy behind the descent of the New York Times into Trump-hatred

Changes in its business environment have made the fortunes of the New York Times Company dependent on the re-election of President Trump.  And despite the superficial appearance of hostility, the company is behaving appropriately.

The New York Times has abandoned its former business strategy of being the "newspaper of record" in favor of catering to the political passions of those who hate Donald Trump.  The editors' cave-in to Trump-haters by changing a factual headline on its front page to one that disparaged the president on Tuesday is dramatic evidence of this.  The Grey Lady is no longer a provider of even-handed news coverage; it is a cheerleader for Trump-haters.

Photo credit: Jleon (talk).

Yesterday brought financial news from the company that explains the business logic of the change.  The business environment of the New York Times has radically changed, as it has for all publications that rely on advertising revenue.  The proliferation of websites offering eyeballs to advertisers, combined with the huge share of online advertising passing through the hands of Google and Facebook, is starving all publishers of ad revenue.  (This has equally affected American Thinker and everyone else that relies on advertising as a principal source of revenue.)

Yesterday, the New York Times Company released its second-quarter financial results, triggering a steep decline in the price of its stock.  Business Insider reported:

The New York Time Company saw its stock tumble as much as 20% on Wednesday after the newspaper publisher said it expects advertising revenue to shrink by high-single digits in the third quarter. 

The publisher reported second quarter financial results on Wednesday. Here are the key numbers: 

·       Revenue: $436.25 million, compared to $439.25 million estimated by analysts

·       Earnings per share: $0.17, compared to $0.15 estimated by analysts

·       Operating profit: $37.9 million, down from $40 million last year

These modest declines were not the trigger for a huge stock price crash, though after the initial steep decline, the stock recovered over a third of its loss, ending the day's trading down 12.17%.


What's really going on in the company's revenue stream is a decline in overall ad revenue, both from the hard copy and digital versions of its product, as the company acknowledges.

The company said it expects total ad revenue to decline in the high-single digits in the third quarter compared to the same period last year. Digital ad revenue, which is becoming a bigger chunk of the publisher's business, is expected fall by high-single digits as well. 

The only bright spot in the company's income stream comes from digital subscription revenue:

[D]igital-only subscription revenue [is] climbing in the mid-teens. 

The Times also said it added 197,000 digital-only subscribers during the period bringing its total subscriber base to 4.7 million. The publication's goal is to hit 10 million total subscriptions by 2025. 

The reason that people all over the United States are subscribing to the digital New York Times is its steady diet of Trump-hatred, not its news coverage.  The paper's news coverage is heavily tilted toward demonization of the president.  There are many sources for online news, including the websites of many U.K. newspapers.  People subscribe to the New York Times because they quickly run through the monthly limit on free access to its articles and want more reasons to hate Trump.  If they were solely interested in news, they could get it elsewhere.  But the Times provides a satisfying and still prestigious diet of reasons to feel superior to the deplorables who voted for Trump and imposed him on the right-thinking subscribers of the Times.

There is a huge challenge for the company ahead, when in 2021 or 2025 President Trump leaves the Oval Office.  I find it fascinating that the company's projection of a more than doubling of digital subscriptions coincides with a second term for President Trump.

Stephen Cruiser of PJ Media notes that the demonization of the POTUS by the Grey Lady has failed in terms of driving support away from him: "NY Times Finds That All of Its Trump-Bashing Isn't Working as Planned," citing an analytical column in the paper yesterday.  The Times itself writes:

Donald J. Trump doesn't always seem like a candidate focused on expanding his base of support. He may have done so anyway.

The share of Americans who say they have a favorable view of him has increased significantly since the 2016 election.

And over the last few months, some of the highest-quality public opinion polls, though not all, showed the president's job approval rating — a different measure from personal favorability — had inched up to essentially match the highest level of his term.

From a business standpoint, the fortunes of the New York Times Company are closely linked to the electoral prospects of President Donald J. Trump.  If Trump leaves office in 2021, the company will not only fail to increase digital subscriptions, the sole bright spot in its revenue forecasts, but almost certainly lose digital subscribers.  

I think the term for this is a "co-dependent relationship."

But in that event, what will the company do in 2025?  They'd better hope for another charismatic conservative president infuriating urban progressives.

Hat tip: Roger Luchs.