Virus scare hits New York Times ad sales, drags down publishers
New York Times Co. warned that advertising bookings are slowing down as coronavirus makes companies more cautious, a message that sent publishing-industry stocks sliding on Monday.
Ad sales will drop by a rate in the mid-teens this quarter, with digital advertising down 10%, Chief Executive Officer Mark Thompson said. Subscriber growth has held steady, as has subscription revenue, which the company has leaned on more heavily in recent years as the print advertising market shrinks.
New York Times shares fell as much as 4.8% to $35.68. Other newspaper and magazine companies also declined: Gannett, the largest U.S. newspaper company, dropped as much as 9.5%, Tribune Publishing slipped 4%, and magazine publisher Meredith fell 6.5%. The S&P 500, by contrast, was up 2.4% as of 1:16 p.m. in New York.
The warning from The Times signals that businesses are taking steps to rein in spending because of anxiety over how the spread of the coronavirus will affect consumer behavior. As of last week, about 220 companies in the S&P 500 index had raised concerns about the virus affecting results, including Apple and Microsoft.
The coronavirus is likely to reduce ad buying, but not all media companies will be affected equally, according to Brian Wieser, global president of business intelligence at the advertising giant GroupM.
Wieser said supply-chain issues in China related to the virus "will disproportionately impact global media owners whose ad revenues depend on Chinese manufacturers."
While the advertising impact from a potential recession is hard to anticipate, "it is highly likely that the impact will be negative, with growth in some countries softening, others going flat and others declining," Wieser said Monday in a note to clients.
TV companies could do better, he said, because people will be staying home more, while outdoor advertising firms could fare worse because fewer people will see their billboards.
The upcoming Olympics are another question mark. Many advertisers create large ad campaigns around the Games, which are scheduled for July and August in Tokyo.
"It will be particularly critical for those marketers to establish potential backup plans in the event the Olympics do not occur," Wieser said.
