The New York Times Company did the world of journalism a big favor today by finally disclosing the exact revenues of its digital business.

IT’S OFFICIAL: We Never Need To Worry About The Future Of Journalism Again!

HENRY BLODGET AUG. 1, 2013, 6:15 PM 10,620 24

The New York Times Company did the world of journalism a big favor today. The company finally disclosed the exact revenues of its digital business. The numbers were impressive. And they made clear that no one ever needs to fret about the future of journalism again. Specifically, the New York Times reported that the revenue of its digital business is now about $360 million a year. That’s composed of about $200 million of advertising revenue, which is basically flat, and another $150 million of digital subscription revenue, which is growing nicely. Assuming the digital subscription revenue continues to grow as the company rolls out new subscription products, which it will start to do next April, the New York Times Company should soon have a $400 million digital business. Why does that mean we never have to worry about the future of journalism again? Because a $400 million digital business is a healthy business, one that will support a large, talented newsroom. Even if the New York Times’ print paper, which still generates most of the company’s overall revenue of about $2 billion a year, were to shut down tomorrow, the company would still be able to fund an excellent newsroom.Specifically…

If one assumes that a digital news business should produce at least a bit of profit–say, a 15%-20% operating profit margin–the economics of the New York Times’ digital business could look like this:

REVENUE: $400 million
NEWSROOM EXPENSES: $130 million (33% of revenue)
TECH, SALES, and MANAGEMENT EXPENSES: $200 million (50% of revenue)

OPERATING PROFIT: $70 million 

$400 million of revenue and $70 million of operating profit… that’s a nice business!

And, importantly, it’s a nice business that can comfortably fund $130 million in annual newsgathering and production expenses.

A $130 million annual newsroom budget could produce a hell of a lot of super high-quality digital journalism. It could support many international news bureaus, for example. And extensive national and political coverage. And war coverage. And deep investigative reporting. And video. And photography.

Specifically, a $130 million annual newsroom budget could fund a newsroom of ~850 writers, editors, producers, videographers, and photographers who make an average of $150,000 a year all-in (salary, bonus, benefits, office, and T&E costs).

850 journalists!

That’s a wonderful future.

And the New York Times digital news business, of course, will be only one of many successful digital news businesses around the world.

So the future of journalism is very bright indeed.

But wait. You’re pointing out that the New York Times currently has a newsroom of 1,100 journalists?

Yes, that’s true. The New York Times’s digital news business will not support a newsroom the size of the New York Times’ current newsroom. As the New York Times’ print edition continues to shrink, therefore (and it’s shrinking at an alarming rate), the New York Times will have to continue trimming the size of its current newsroom.

This chart is two years old. But the trends are continuing…

But we knew that already. We have known for years that the New York Times digital business would not support the economic infrastructure of its shrinking print business. (SEE: “Digital Journalism Secrets Revealed!“)

If you work for the New York Times print edition, and you’re worried about your future, this realization is obviously unsettling (the print ship is sinking, and there aren’t enough digital lifeboats). But the good news is there will be plenty of other places to work. Bloomberg and Reuters, for example. Or the digital operations of TV news companies, which are still rolling in cash. And lots of digital news startups.

But the future of the New York Times print edition is a very different thing than the future of journalism, or, for that matter, the future of the New York Times.

The future of the New York Times print edition–and some of the current New York Times newsroom budget–looks dim.

But the future of journalism looks excellent.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: