News Corp and The New York Times Enhance Digital Offerings

According to a report released last month by the Alliance for Audited Media (AAM), The Wall Street Journal retained its position as the leading newspaper in the country with circulation growing 12% over the year to 2.38 million for the six months ended March 2013. The New York Times became the second largest newspaper in the country, with circulation growing 18% to 1.87 million during the same period. Overall, newspaper readership in the country fell 0.7% over the year. But online readership continued to increase, with the number of people reading news online increasing to 19% of total subscribers compared with 14% a year ago.

News Corp’s Financials
Leading newspaper publisher, News Corp’s (NASDAQ:NWS) Q3 revenues grew 14% over the year to $9.54 billion, ahead of the Street’s projections of $9.14 billion. EPS of $0.36 was marginally ahead of the market’s expected earnings of $0.35 per share.

By segment, cable network programming revenues grew 17% over the year to $2.78 billion, driven by an 11% increase in domestic affiliate revenues and a 42% growth in international affiliate revenues. Advertising revenues also grew 2% over the year. Filmed entertainment revenues grew 17% to $2.01 billion and television revenues grew a modest 1% to $1.23 billion. Direct broadcast revenues also grew an impressive 41% to $1.3 billion. Publishing was the only segment to report a decline as revenues fell 4% to $1.94 billion.

NewsCorp’s Sports Expansion
News Corp plans to improve their revenues through launch of a pay TV channel. By August of this year, they will release a national sports network, Fox Sports 1, to compete with ESPN. The channel will be a re-branding of their existing motor-sports network, Speed. The channel will cover sports like Major League Baseball, NASCAR, soccer, and college basketball and football. The company currently charges a mere $0.31 per month subscriber fee, significantly lower than the more than $5 charged by ESPN, and by upgrading Speed, they expect to be able to charge a higher subscription fee.

But recently, the company announced plans to split News Corp into two publicly traded organizations. Their TV, movie, and digital broadcast solutions will be moved to a new organization, 21st Century Fox, while the newspaper and publishing division, which will include the Journal, will be retained within the News Corp entity.

News Corp’s stock is trading at $33.54 with a market capitalization of $79.40 billion. It touched a 52-week high of $34.12 earlier this month.

New York Times’ Financials
New York Times (NYSE:NYT) saw revenues fall 2% over the year to $465.9 million, short of analyst expectations of $469.1 million. EPS of $0.04 was also shy of the Street’s targets of $0.05.

By segment, revenues from advertising fell 11% over the year to $191.1 million. Circulation revenues grew 7% to $241.8 million as they increased their digital subscription base. Digital-only subscriptions grew 45% over the year to 708,000.

New York Times’ Monetization Efforts
AAM reports that the Times has an online readership of more than 1.13 million readers in the country as not all readers are subscribers to the paper. Clearly, the Times has monetization opportunity from their digital readers.

The company is looking at several alternatives to increase online revenues. Having successfully implemented a paywall last year, they are now looking at increasing online revenues by offering lower-priced digital subscriptions and even premium subscriptions. The lower-priced subscription will let offer access to the more important stories for the newspaper. Further insights to specific content and more media rich content will be available through a premium access subscription. The subscription will come with features such as access to Times’ events and the ability to give subscriptions and provide full family access.

The New York Times is also convinced that the growth of digital revenues can be achieved through international expansion. They plan to invest in international sales and marketing efforts to access the international reader base.

Finally, they are working to leverage their brand name into other e-commerce opportunities. Last year, they released their famous crossword as a game on mobile devices. Internal reports have revealed that the release of the game helped them attract more subscribers and also expand their international presence. They plan to continue to invest in similar brand-building e-commerce opportunities and in the development of more intelligent gaming offerings to continue to grow their revenue base.

The stock is trading at $9.74 with a market capitalization of $1.45 billion. It touched a 52-week high of $11.07 in October 2012.