While coronavirus has battered most news media groups, a handful of premium publishers are holding their ground through the tempest.
Backed by a subscription model built over the past decade, the New York Times and Wall Street Journal have so far decided against the mass lay-offs and pay cuts that have wracked the majority of their peers, and are even still looking to hire.
“Bluntly: I was optimistic when we had half a million subscriptions. We now have 10 times that and I’m still optimistic,” Mark Thompson, chief executive of the New York Times Company, told the Financial Times.
Will Lewis, another Briton who earlier this month stepped down as chief executive of Dow Jones, the publisher of the WSJ, told the FT that the group was “on a tear” and enjoying an uplift in subscribers that “shows no signs of abating”.
What some executives dubbed the “Trump bump” — a jump in paying readership after the last US election — has been surpassed by the “corona curve” as subscriptions to century-old publishers such as the NYT, WSJ, Washington Post and the FT rose during the pandemic.
But whether this base of paying customers will be enough to see them through the crisis unscathed remains an open question, as do the broader implications of a brutal recession on a news industry already diminished by decades of job losses.
“If you did not fix your house while the sun was shining it’s almost too late now. Even before Covid there was profound disruption impacting the industry,” said Mr Lewis, referring to a shift towards digital-first models and paywalls. “All that we thought would happen in five to 10 years is happening in five to 10 months.”
Subscription revenues are increasingly important to many publishers but few if any have the scale to fully withstand a shock like coronavirus. The FT, which has more than 1.1m paying readers and pioneered paywalls in 2002, has cut some costs to cope with the hit to advertising and conferences. The Atlantic slashed a fifth of its staff despite attracting 90,000 subscribers since March.
Mr Lewis declined to say whether Dow Jones had reached a tipping point where it could thrive on subscriptions alone, even as advertising suffers. But he said the division was “blessed” to generate three-quarters of its revenue through subscriptions, a significant proportion of which comes from professional data services.
The NYT last year made 60 per cent of its $1.8bn in total revenues from subscriptions, compared with 29 per cent generated by advertising. That split is similar to other publishers but the group has long opted to lean into the difficulties facing the sector.
“Our thesis is you have to invest in the product to have a chance in the digital media business. Reed Hastings [of Netflix] believes in that. Bob Iger [of Disney] believes in that. I don’t understand why so few other people in our industry believe these things are scalable,” said Mr Thompson.
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In the first quarter, the NYT added 587,000 online subscribers — the largest haul since it began charging readers for website access a decade ago.
Total revenues in the three months to March rose only 1 per cent to $444m, weighed by a 15 per cent drop in advertising sales. However, shares in the group have climbed more than 20 per cent this year, outperforming the 8 per cent fall in the S&P 500.
While parts of Rupert Murdoch’s News Corp business are struggling financially, the Dow Jones division has fared relatively well with the WSJ reaching 3m subscribers for the first time in April, including 2.2m digital only. Revenue at Dow Jones grew 5 per cent in the first three months of the year, compared with sales declines of 14 per cent at News Corp Australia and 9 per cent at News UK.
Although Mr Thompson expects ad revenues to drop more than 50 per cent in the second quarter, the newsroom will be spared from lay-offs. While there is no NYT “coronavirus bonus”, as has been awarded to journalists at financial information and news provider Bloomberg, Mr Thompson expects the number of editorial staff to grow this year.
The NYT is advertising 44 newsroom roles on its website. The Dow Jones group, meanwhile, is seeking to fill about 20 positions, including some journalist roles.
Some cost cuts are likely to be unavoidable given the slump in luxury advertising. But their situation stands in stark contrast to the drastic steps other publishers have been forced to take just to stay afloat. Tens of thousands of journalists have lost their jobs or been furloughed in the past few months. This month alone more than 600 staff were laid off at Condé Nast, Vice, BuzzFeed, Quartz, The Atlantic and The Economist.
Publishers who rely heavily on ads have been the hardest hit. With tech behemoths Google and Facebook scooping up an ever-increasing share of digital ad spending, there is fresh scrutiny on their role in the media ecosystem. Nancy Dubuc, chief executive of Vice, complained that they hold publishers in a “chokehold” that poses a “great threat to journalism”.
Governments in Australia and France have recently made moves towards requiring big tech platforms to pay news publishers for content. But Mr Thompson warns of the dangers of relying on this money.
“Superficially, it’s appealing as a solution. These people are making tons of money from the internet [so] why don’t we take some of their money and give it to those who are suffering?” he said.
But he is “quite nervous” about how it would work in practice. “I’m not sure how you guarantee editorial independence, or decide who gets what money,” he said, cautioning that some newspapers are owned by “hard-nosed commercial players”, such as private equity.
Robert Thomson, chief executive of News Corp, once compared payments from tech platforms to “petty patronage”. But the group’s view has shifted. “What has been most heartening . . . platforms now see a value [in news content] and are prepared to pay for it — not enough in my mind — but are prepared to pay meaningful amounts,” said Mr Lewis.
Some in publishing, including the NYT’s media columnist Ben Smith, have questioned whether the NYT has swallowed up the industry, poaching talent with higher salaries and scooping up subscribers.
Mr Thompson rejects this notion, describing it as “very strange defeatism”.
“Once someone has Netflix, do they never consider [paying for] Disney+ or Hulu?” he said. “I don’t believe there is any hard evidence that this is winner-takes-all.”
But the newsroom itself may look quite different after the pandemic. Mr Thompson said he would be “very surprised” if everyone came back to the office as normal, even once the lockdown ends.
He recently visited the NYT skyscraper by bike to prepare for the earnings call. Cycling through the empty newsroom he observed the eerie sight of tightly packed, but vacant cubicles, “like stalls in a milking parlour”.
For his part, Mr Lewis is now back home in London looking for a new challenge, and facing down accusations over his role in the Murdoch response to the phone hacking scandal.
The former editor of the Daily Telegraph is one of a shortlist of four for the BBC director-general post — Mr Thompson’s old job before he moved to the NYT.