The New York Times Company — 2021 Form 10-K
Business context and reporting period
The Company is a global media business focused on journalism and related digital and print products. It earns most revenue from subscriptions and advertising. This 10-K covers the 52-week fiscal year ended December 26, 2021; it reports annual results, not a standalone fourth-quarter income statement.
At year-end, the Company reported approximately 7.6 million subscribers and 8.8 million paid subscriptions. On February 1, 2022, after the fiscal year-end, it acquired The Athletic for approximately $550 million in cash. The Athletic had about 1.2 million subscribers as of December 31, 2021.
Financial and operating metrics
| Metric | 2021 | Prior comparable period |
|---|---|---|
| Total revenue | $2.075 billion | $1.784 billion in 2020; up 16.3% |
| Subscription revenue | $1.362 billion | $1.195 billion in 2020; up 13.9% |
| Advertising revenue | $497.5 million | $392.4 million in 2020; up 26.8% |
| Operating profit | $268.0 million | $176.3 million in 2020; up 52.1% |
| Net income attributable to Company shareholders | $220.0 million | $100.1 million in 2020 |
| Diluted EPS | $1.31 | $0.60 in 2020 |
| Operating cash flow | $269.1 million | $297.9 million in 2020; down 9.7% |
| Cash, cash equivalents and marketable securities | $1.074 billion | $882.0 million at year-end 2020 |
Subscription revenue was 65.6% of total revenue. Digital-only subscription revenue increased 29.4% to $773.9 million, while print subscription revenue declined 1.5% to $588.2 million. Paid digital-only subscriptions rose 18.9% to approximately 8.0 million; print subscriptions fell 5.9% to approximately 784,000.
Digital advertising revenue rose 35.0% to $308.6 million, while print advertising rose 15.3% to $188.9 million. Advertising remained below 2019: total advertising revenue was down 6.2%, including a 30.1% decline in print advertising.
GAAP operating margin was approximately 12.9%. The Company’s non-GAAP adjusted operating profit was $335.4 million, up 33.8%, and adjusted operating margin was 16.2%, versus 14.1% in 2020. Adjusted diluted EPS was $1.28, compared with $0.97.
Cash used in investing activities was $180.8 million, including $170.0 million in net marketable-security purchases and $34.6 million in capital expenditures. Cash used in financing activities was $54.9 million, principally reflecting $45.3 million in dividends. The Company had no debt outstanding under its $250 million revolving credit facility and reported a 1.70 current-assets-to-current-liabilities ratio.
Material changes versus prior periods
- Revenue and profitability recovered from 2020: revenue increased 16.3% and operating profit increased 52.1%. Revenue was 14.5% above 2019, while operating profit was 52.7% above 2019.
- Digital subscriptions and advertising drove growth. Compared with 2019, digital-only subscription revenue increased 68.1%; print subscription revenue declined 5.6%.
- Operating costs increased 12.2% year over year, including increases in sales and marketing (28.8%) and product development (20.6%), reflecting higher marketing spend, staffing and investment in digital products.
- Operating cash flow decreased despite higher earnings, partly due to lower collections of receivables and lower cash received from prepaid subscriptions.
- 2021 results included a $27.2 million gain on a non-marketable equity investment and a $3.8 million lease-termination charge. 2020 included an $80.6 million pension settlement charge, making reported earnings comparisons less directly comparable.
Outlook, management commentary and risks
Management set a target of at least 15 million total subscribers by year-end 2027, compared with approximately 7.6 million at the end of 2021. It plans continued investment in journalism, products, data and technology, and expects approximately $50 million of capital expenditures in 2022. It expects about $10 million of pension contributions in 2022.
The Athletic acquisition was funded from cash on hand and used approximately $550 million of cash and marketable securities after year-end. Management intends to invest in scaling its subscription and advertising businesses; the acquisition adds integration, execution and profitability risks.
Management cited uncertainty from the continuing effects of COVID-19, including print circulation and live-event pressures, and cautioned that the 2020 digital subscription growth rate should not be expected to recur. Other material risks include competition for subscribers and advertising, dependence on third-party platforms and ad technology, talent and labor negotiations, privacy and cybersecurity, print supply and distribution, litigation, and pension obligations. The estimated multiemployer pension withdrawal liability was approximately $70 million; actual amounts may change as plan assessments are finalized.
The Company’s qualified pension plans had assets approximately $74 million above related obligations, but non-qualified pension obligations were unfunded. Management said cash, securities and operating cash flow were expected to meet financing needs over the next 12 months and beyond. The Board increased the quarterly dividend to $0.09 per share and authorized a new $150 million share repurchase program in February 2022.
Most important facts for investors to verify
- Whether subscriber growth, retention and revenue per subscriber support the 15 million subscriber target, and how the company defines and estimates subscription metrics.
- Whether advertising recovery is sustainable, particularly given print advertising remained materially below 2019 levels.
- The Athletic’s post-acquisition operating losses, integration costs, cash use and progress toward profitability.
- Cash and liquidity after the acquisition, planned 2022 capital expenditures, dividends and share repurchases.
- Potential changes in pension and multiemployer withdrawal obligations, and any material developments in pending legal matters.
- The effect of non-GAAP adjustments and investment gains on comparisons with GAAP earnings; adjusted measures are supplemental, not substitutes for GAAP results.