NY Times Financials- Digital giveth and taketh

The NY Times Company third quarter financial report for 2013 suggests a mixed result from the rise of their digital paywall operations.
   First, the good news - overall revenues are up, fed by circulation increases.  Third quarter subscription revenues from all digital sources (paywalls, apps, etc.) were up 29% from a year ago, although digital circulation revenues contribute just slightly more than 10% of total revenues. 
  The not so good news comes from looking a bit deeper.  Despite adding $10 million in digital paywall revenues, total revenues were up only $6 million.  The press release did not break out print circulation revenues separately, yet the overall numbers suggest that the increased prices for print subscriptions imposed earlier this year aren't enough to fully compensate for continuing declines in print circulation.  The continued decline in print readership is also reflected in the 1.6% decline in print advertising.  What is surprising is that digital advertising revenues at the Times also fell - and at a faster rate (3.4%) despite digital circulation increases.  The release tries to attribute this to "secular trends" - but digital advertising revenues (overall) showed 18% gains in the first half of this year.  Granted, the fastest gains were in areas other than traditional display ads.  A more credible analysis is that the Times is not getting its share of a growing online advertising market, most likely because it's not pursuing more lucrative online advertising options (and the paywall does make some of those difficult, if not impossible, to implement), and the overall readership loses resulting from the paywall restrictions. 

  In the short term, the NY Times is maintaining revenues growth through expanding its digital circulation and circulation revenues.  The problem is that digital circulation gains will be increasingly less likely to keep pace with declining print circulation and advertising revenues.  That the Times is also showing declines in digital advertising revenues will exacerbate the central problem of the Times' continued focus on a traditional print daily newspaper business model.  Which is that the digital side is just not big enough to continue to make up the losses from a significantly more expensive print operation.
  The NY Times Co., by selling off most of its assets outside its core news operations, has managed to stave off the huge losses experienced by many of its peer brethren, at least for now.  But it is likely to have to eventually face the serious question of whether its current business model (and particularly its really high administrative overhead) will sustain operations over the long term.

Source -  The New York Times Company Reports 2013 Third-Quarter Results,  New York Times Companypress release