The New York Times Company — 2020 Form 10-K
Reporting period: Fiscal year ended December 27, 2020 (52 weeks). The fourth quarter was 13 weeks. This is an annual filing, not a standalone quarterly report; quarterly figures below are from the filing’s unaudited quarterly table. Unless noted, amounts are U.S. dollars.
Business context
The Company is a global media business with one reportable segment. It earns revenue principally from digital and print subscriptions and advertising, alongside licensing, Wirecutter, commercial printing, events, and other businesses. Management describes its strategy as subscription-first, supported by investment in journalism, digital products, technology, and data. CEO Meredith Kopit Levien took office in September 2020.
Financial performance and liquidity
| Metric | FY 2020 | FY 2019 | Change |
|---|---|---|---|
| Revenue | $1.784 billion | $1.812 billion | (1.6%) |
| Subscription revenue | $1.195 billion | $1.084 billion | +10.3% |
| Advertising revenue | $392.4 million | $530.7 million | (26.1%) |
| Other revenue | $195.9 million | $197.7 million | (0.9%) |
| Operating profit | $176.3 million | $175.6 million | +0.4% |
| Operating margin | 9.9% | 9.7% | +0.2 percentage points |
| Net income attributable to NYT common stockholders | $100.1 million | $140.0 million | (28.5%) |
| Diluted EPS | $0.60 | $0.83 | (27.7%) |
| Adjusted diluted EPS (non-GAAP) | $0.97 | $0.92 | +5.4% |
Subscriptions supplied approximately 67% of FY 2020 revenue and advertising approximately 22%. Digital-only paid subscriptions reached 6.69 million, up 52.2%; total paid subscriptions were 7.523 million, up 43.3%. Digital-only subscription revenue rose 29.9%, while print subscription revenue fell 4.2%. Management attributed the exceptional digital growth partly to the pandemic-era news environment and does not expect its 2020 growth rate to continue.
Fourth quarter: Revenue was $509.4 million versus $508.4 million in Q4 2019; operating profit was $80.5 million versus $78.0 million. Net income attributable to common stockholders was $10.0 million versus $68.2 million, and diluted EPS was $0.06 versus $0.41. Q4 2020 included an $80.6 million pension settlement charge.
Cash flow and balance sheet: Cash from operating activities was $297.9 million, up from $189.9 million. Investing activities used $199.1 million, primarily reflecting net marketable-security purchases, capital expenditures, and acquisitions; financing activities used $45.0 million, mainly dividends and stock-based compensation tax withholding. Cash, cash equivalents, and marketable securities totaled $882.0 million at year-end, compared with $683.9 million a year earlier. The Company had no debt outstanding and no borrowings under its $250 million revolving credit facility. The current ratio was 1.72, versus 1.64.
Material changes and unusual items
- Advertising revenue fell sharply, particularly print advertising, which declined 39.4%; digital advertising declined 12.2%. Management linked the decrease to pandemic-related advertiser spending reductions and longer-term print-market trends.
- Operating costs declined 1.7% to $1.607 billion. Lower sales and marketing and cost-of-revenue expenses were partly offset by higher product-development and general and administrative costs.
- Reported FY 2020 earnings included an $80.6 million pension settlement charge related to transferring certain retiree obligations to an insurer. The transaction reduced qualified pension obligations by approximately $236 million. Adjusted EPS is a non-GAAP measure and excludes this and other specified items.
- Other notable items included a $10.1 million gain on a non-marketable equity investment and a $5.0 million gain from a distribution related to the liquidation of Madison Paper Industries.
- The Company acquired Audm and Serial Productions in 2020. Serial consideration included $9.3 million of contingent consideration at acquisition; $8.4 million remained recorded at year-end.
- The Company changed its income-statement expense captions in 2020 and recast prior periods for comparability. Management said the reclassification did not change operating income, total operating costs, net income, or cash flows.
Outlook, risks, and contingencies
Management provided no specific numerical revenue or earnings guidance. It expects to continue investing in journalism, product development, technology, and marketing, while using cost discipline to support long-term profitable growth. Management said cash, securities, and operating cash flow should be sufficient for financing needs over the next 12 months. The Board approved a quarterly dividend of $0.07 per share in February 2021 and said it expected comparable cash dividends, subject to relevant factors.
- Management expects pandemic-related economic conditions to continue to pressure advertising and live-events revenue; some advertising revenue may not return to pre-pandemic levels. Print single-copy and bulk sales also face pandemic-related pressure and secular decline.
- Management cautioned that 2020 digital subscription growth may moderate, as the year’s growth reflected unusual traffic and potentially shifted forward future subscriber additions. Retention, pricing, cancellations, and discretionary consumer spending remain important risks.
- Pension exposure is material and sensitive to discount rates, investment returns, and actuarial assumptions. Qualified plan assets exceeded obligations by $36 million at year-end, while non-qualified plans were unfunded by approximately $260 million and multiemployer withdrawal liabilities were approximately $76 million. Expected 2021 qualified-plan contributions were approximately $10 million.
- About 40% of employees were union-represented; five collective bargaining agreements covering approximately 30% of employees were due to expire within one year. Labor negotiations and multiemployer pension plan funding may affect costs and operations.
- Other disclosed risks include intense competition, reliance on technology and third-party platforms, cybersecurity and privacy exposure, international operating risks, and potential impacts from litigation. Management said pending legal matters could affect an individual reporting period, but did not expect their resolution to materially affect financial position based on information then available.
Important facts for investors to verify
- Whether digital subscription additions, renewal rates, and pricing can remain strong as pandemic-driven news demand recedes.
- Whether advertising revenue—especially print and event-related revenue—recovers, and how quickly digital advertising can offset print declines.
- The recurring earnings impact of pension costs, the assumptions underlying pension valuations, and potential multiemployer plan withdrawal assessments.
- The conversion of operating cash flow into sustainable cash generation after investment, acquisitions, dividends, and pension funding.
- The terms and performance conditions associated with Serial Productions’ contingent consideration, and the integration and returns from the 2020 acquisitions.
- The filing’s risk disclosures and subsequent developments concerning litigation, labor agreements, and the pandemic’s continuing effects.