Recent evidence from Bloomberg and the New York Times suggests that media companies are facing moderating subscription growth and continued weakness in advertising.
Bloomberg Media CEO Justin Smith stated in an interview that Bloomberg.com added 63,000 new subscriptions in March, an increase of 178% over January and February levels. However, he said that subscriptions in May were only 75% above January and February levels.
Last week, Axios reported that the New York Times (NYSE:NYT) laid off 68 people, mostly on its advertising team. In an internal memo to employees, CEO Mark Thompson and COO Meredith Levien stated that the cuts were driven by the collapse of advertising due to the pandemic, but also “reflect long-term trends in our business and are fully consistent with the company’s strategy.”
NYT predicted weakness in its ad business in its Q1 earnings call, when it stated that “we are expecting a pronounced downturn in advertising for at least the next quarter and likely beyond”, and provided Q2 guidance that “overall advertising revenues are expected to decrease approximately 50% to 55% compared to the second quarter of 2019 and digital advertising revenues are expected to decrease approximately 40% to 45%.”
The NYT’s layoffs suggest there has been no improvement to this outlook.
For a list of stocks exposed to advertising, see It’s ugly in advertising – Barron’s.