Concept
Ratio Used
2018
2017
Profitability
Return On Equity(ROE)
0.12
0.01
Efficiency
Total Asset Turnover (TAT)
0.80
0.80
Liquidity
Current Ratio (CR)
1.33
1.80
Leverage
Debt Equity Ratio (D/E)
0.24
0.28
ROE = Net Income/Equity
TAT=Revenues/Assets
CR=Current Assets /Current Liabilities
D/E=Long Term Debt/Equity
Has the organization been successful in achieving its objectives
Mark Thompson wrote a two-page note to the shareholders after the release of the annual report in 2018. The statement was about what should be done to better the company’s performance in 2019. In the statement, there were also objectives set for the company to achieve in 2025.
The NYT company produced more than $709 million in digital revenue in 2018, and this pace suggests that the NYT will meet its laid goal of $800 million in revenue by the end of 2020. Also, it shows that the company is progressively performing better. This revenue performance has prompted the company to set another objective. That is, to grow its business subscription to more than 10 million subscriptions by 2025. Mark Thompson, the chief executive, announced this. NYT has more than 3.3 million paying subscribers for this company’s digital products (The New York Times Company 2018 Annual Report, 2019).
The online subscription revenue gained nearly 18 per cent to reach $400 million in 2018, which increased throughout the year 2019. Again, digital advertising, which has been performing better, rose by 8.6 per cent. Toward the year 2019, digital subscription experienced a slower pace, as a result of marketing efforts such as introductory discounts for online access. Those offers attract new readers who bring in less revenue — but the company expects many of them to become full subscribers over time. This means that the New York Times should regulate online access discounting. As a part of its goals, in 2019, the New York Times Company managed to attract 1 million new digital subscribers making the total number of subscribers be 5 million. This is the highest annual growth since the introduction of the digital model in 2011.
Although its print advertising fell compared with last year, the New York Times hit another revenue milestone. For the first time in the fourth quarter, digital advertising surpassed print advertising. The revenue gains will help NYT company to invest in journalism and also to uphold the traditional journalistic values. The company is on its way to accomplishing that objective concerning the quality of journalism that appeals to the world’s leading advertisers as well as its subscribers. This is seen in its move to increase the number of journalists rather than cutting it off. According to the company, it will continually invest in the newsroom to offer high-quality journalism. (The New York Times Company 2018 Annual Report, 2019).
In 2018, Mr Thompson made a statement stating that in 2019 the company will further its investment in marketing, product, and journalism. This has enabled the company to increase its subscriptions in 2019 toward its ten million targets. Financially, the company has reported a positive result when the newspapers across the country have experienced a hollowing out.
From my own opinion and the 2019 performance, the company has successfully achieved some of its objectives, if not all. The company announced a pay rise of 25% in the dividend paid to shareholders. Also, investors now own this company’s stock have to receive 5 cents per share every quarter. This is enough evidence to show that the New York Times is reporting positive performance (The New York Times Company 2018 Annual Report, 2019).
New York Times is growing, keeping in mind that 16% of its digital subscribers live outside the United States. NYT has utilized such opportunities to meet its revenue and subscribers target. Also, in 2019 NYT made a very significant move of buying back the New York Times Building. The explanation above is enough evidence to show that the organization has been partly successful in achieving its objectives.
Two of Porter’s five forces critical to NYT
The two significant forces among the five would be-threat of entry and rivalry among the existing competitors (Michaux, Cadiat & Probert, 2015). The new listing in the publishing industry brings other new ways of doing things and innovation that puts the New York Times Company under pressure. This pressure is a result of low price strategies, provision of new value propositions to customers, and reduced costs. Thus, the New York Times has to build an efficient mechanism to guard its competitive edge. To manage this force, NYT should innovate new and unique services and products. New products will bring not only new subscribers to the fold but also offer old subscribers a reason to pay for the NYT Company’s products (Michaux, Cadiat & Probert, 2015). Again, the company should build economies of scale to reduce the set cost per unit. Focusing on research and development through spending and building capacities still can cope with this threat. New entrants are unlikely to enter a dynamic industry where there is regular defining of standards by already established players. This significantly reduces the opportunity of extraordinary profits for the new entrants, thus discouraging new players (Michaux, Cadiat & Probert, 2015).
The second force which NYT should focus on is the rivalry among the existing competitors. It means that NYT should move to deal with the growing competition. If the competition among the existing firms is intense in an industry, it will lower prices, thus reducing the overall profitability (Michaux, Cadiat & Probert, 2015). NYT Company operates in the competitive publishing industry, and this competition affects the overall profitability of the company. To manage this force, NYT should focus on building a sustainable differentiation through understanding what its customers want and set up a value statement that grabs their attention. Also, the company should understand the market’s segments (Michaux, Cadiat & Probert, 2015). By building a scale, NYT can compete better with its competitors. Mark Thompson, in his 2018 statement he mentioned about partnership. Indeed, the company should also focus on collaborating with competitors. Such a move will increase the market size rather than competing for a small market.
By analyzing the two competitive forces, NYT strategists should figure out what affects the profitability of the company in the newspaper industry, identify trends and respond to utilize the emerging opportunities. Also, the managers should shape those two forces to favour them. Further, the application of Porter Forces in a real-world perspective helps the company to wisely make decisions (Michaux, Cadiat & Probert, 2015). Thus, the New York Times can determine the company attractiveness, assess the influence of the two forces on competitors and their firm, and make an efficient exit or entry decisions.
The two segments that affect the newspaper industry which NYT should focus on
In the general environment that affects the newspaper industry, the NYT should concentrate on these two segments. According to Onwuliri (2019), the technology factor is one of the section that touches the newspaper industry most. The NYT has done a lot to develop the internet news in such a way that anyone who accesses the report by the New York Times must pay for it. The software will be prepared to ensure that the NYT does not lose its information to the public through the World Wide Web without pay. This is part of the technology sector (Onwuliri, 2019). Through the technological segment, the NYT should eliminate paper news. Everything in NYT should be digitized, starting from the advertisements to the report that is printed in newspapers.
Moreover, the company should do away with individual journalists or reduce them and come up with programmed machines with human intelligence to do the work. This will impact the company positively by lowering the operation cost of employees(Onwuliri, 2019). New York continued to try and became a fully digitalized company since initially, it mostly depended on the newspaper services. The introduction of digital forms in the organization like the use of mobile phones and other digital services in advertisement and delivery of information has been a significant advancement in the New York Times. The transition from the use of newspapers to digital ways occurred at a relatively quick pace, which made the company try as much as possible to cope up with the technology.
The second segment that NYT should focus on is competition. The newspaper industry also faces a lot of competition, which has forced them to start re-focusing their competitive strategies in entirely different areas(Onwuliri, 2019). NYT is focusing on partnerships in large-scale with the world’s leading brands to cope with such competition. Although the papers have been showing a vast improvement in innovations, the industry has not been active in radical changes. Moreover, the New York Times faces the same challenges in competition. The company which was established many years ago now faces competition from modern businesses that have advanced in performances. NYT should strategize through which they can maintain their subscribers(Onwuliri, 2019). It involves, charging its subscribers moderately or the same amount as their competitors. The customers have low switching costs, which will make them move to any other option of their choice(Onwuliri, 2019). The New York Times can control this by having unique products, which their competitors cannot be able to provide.
A good mission statement for NYT in 2020
In 2020 the New York Times should be guided by a mission statement ” To advance and strengthen newspaper industry through offering high-quality journalism.”
Two ways in which NYT and a paid TV channel like HBO have the same problem and how their issues are different from each other
From the study conducted in 2015, it is evident that there is changing TV viewership habits among the youth that will affect media companies. Low income is one of the problems that will affect both NYT and paid TV channels like HBO (Steel & Marsh, 2015). Those millennials with children tend to have more responsibilities, which they will prioritize in place of broadband adoption and streaming video services. Again, there is geography as the second issue. In rural areas and small towns, digital services offered by the New York Times and paid TV channels are unavailable (Steel & Marsh, 2015). This is a significant problem faced by these two firms since even those who can afford to pay for the services in these areas they will still lack them. One way in which their problems are different is that in all ages among the millennials, priority is given to the cable giving an upper hand to the paid TV channels (Steel & Marsh, 2015). But in the youngest millennials, time spent on smartphones is significantly increasing. This time is based on entertainment such as videos, games. Among the youth, between 18 and 25 televisions have lost out finally since they spend the bulk of their time on computers, smartphones, and tablets watching shows./
References
Michaux, S., Cadiat, A.-C., Probert, C., & 50minutes.com,. (2015). Porter’s five forces.
Onwuliri, E. (2019). A Look at the Major Challenges Facing the Newspaper Today – Zambrut. Retrieved 8 March 2020, from https://zambrut.com/major-newspaper/
The New York Times Company. (2019). The New York Times Company 2018 Annual Report [Ebook]. New York, N.Y. 10018. Retrieved from http://s1.q4cdn.com6149269/files/doc_financials/annual/2018/updated/2018-Annual-Report- (1).pdf
Steel, E., & Marsh, B. (2015). Millennials and Cutting the Cord. Retrieved 8 March 2020, from https://www.nytimes.com/interactive/2015/10/03/business/media/changing-media-consumpt ion-Millenials-cord-cutters.html