|07 August, 2019

Top Trump beneficiary gets it from the other end

Few companies have so directly benefitted from Trump’s tumultuous first term in office as the Times

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 5, 2019.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 5, 2019.

REUTERS/Brendan McDermid

NEW YORK - Lieutenant Colonel Bill Kilgore concludes his “Apocalypse Now” soliloquy about the smell of napalm in the morning wistfully: “Someday this war’s gonna end.” The remark suggests the officer played by Robert Duvall is enjoying the conflict in Vietnam. Despite some recent friendly fire, New York Times NYT.N commander-in-chief Mark Thompson could be forgiven for feeling similarly about his newspaper’s combat with U.S. President Donald Trump.

Few companies have so directly benefitted from Trump’s tumultuous first term in office as the Times. Thanks to a boom in digital-subscription sales linked to the paper’s aggressive coverage of the administration’s many foibles, its shares have outperformed those of nearly every company investors pegged as those likely to suffer or benefit from a Trump presidency. From around $11 at the time of his election, Times stock has soared to more than $35.

That trumped the runup in Wall Street firms, such as Goldman Sachs and Morgan Stanley, whose bottom lines were fattened by tax cuts. Times shares even dusted those of Facebook, the bête noire of all traditional publishers. As of Tuesday, the Manhattan-based company’s $5 billion market value was greater than the combined worth of America’s two biggest for-profit prison operators, whose fortunes were meant to soar under a law-and-order presidency.

This background helps in interpreting a set of lousy second-quarter results, and a kerfuffle this week over a poorly conceived front-page headline. The Times added 197,000 net new digital-only subscriptions - bringing total subscribers to 4.7 million, nearly halfway to its 2025 goal of 10 million. A shortfall in revenue, though, and a warning of greater challenges ahead, took nearly 20% off the Times share price on Wednesday.

That came days after amending a headline related to the president’s response to two mass shootings over the weekend failed to stop a barrage of criticism, much of it from Trump’s Democratic opponents, and calls on social media to cancel subscriptions. The top-line miss had nothing to do with the headline skirmish, whose impact would appear in this quarter.

But they are not unrelated. The risk for the Times is that any whiff of normalizing its coverage of the president might damage the brand that has fueled its subscription drive since 2016. One dopey headline is survivable, so long as the war shows no sign of ending.

CONTEXT NEWS

- The New York Times missed Wall Street estimates for revenue on Aug. 7 and signaled weakness in digital advertising for the rest of the year, sending its shares down more than 15%.

- "We expect the second half of 2019 to be somewhat more challenging for digital advertising than the first half, with this year's revenue coming against our large gains in the third and fourth quarters of 2018," Chief Executive Officer Mark Thompson said in a statement.

- The outlook overshadowed a better-than-expected second-quarter profit, which was helped by higher digital subscribers amid a drop in revenue from print advertising.

- The Times said it added 197,000 digital-only subscribers in the quarter.

(Editing by Antony Currie and Amanda Gomez) ((rob.cox@thomsonreuters.com; Reuters Messaging: rob.cox.thomsonreuters.com@reuters.net))

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