What\u2019s Happening:\r\n\r\nThe Economist released its 2019 annual report (operating on a fiscal year that ends March 31). Overall, the report shows that revenue hit a record high for the media brand, though it only grew by 1.3%. The Economist remains on stable ground financially, with areas of concern being slowed revenue growth in spite of the record high total, and an operating margin that fell for the third year in a row (down 3% for 2019).\r\n\r\n\r\n\r\nWhy it Matters:\r\n\r\nAs one of the oldest news publishers around, in business since 1843, the financial health of The Economist can provide insight for other publishers. The annual report illuminates what may or may not be working for the company as it continually shifts in the changing digital landscape.\r\n\r\nDigging Deeper:\r\n\r\nSome of the key data from the report include:\r\n\r\n \tRevenue for the fiscal year 2019 hit a record high of \u00a3333 million, up \u00a34M from last year and compared to \u00a3278 million revenue in 2015.\r\n \tOperating profit, however, is way down \u2014 \u00a331 million in 2019, compared to \u00a338M in 2018 and down from \u00a347M in 2015. The primary cause for this decrease is troubling: an increased marketing budget to \u00a356M-plus did not translate to as many new paying subscribers as predicted.\r\n \tWhile total paying subscribers increased by 13,000 to 1,123,000 and subscription revenue increased by 3%, this was not enough to offset the 14% increase in marketing expense.\r\n \tThe Economist report gives several factors affecting the lower-than-expected subscriber numbers: news and subscription fatigue, lower social media traffic, and fewer conversions of trial users to paid subscribers. One of the main reasons subscribers do not renew is that they find the amount of content overwhelming.\r\n \tRetention remains The Economist\u2019s top strategic priority, and the report reflects some focus on that goal: average lifetime value was up 21% in 2018. However, the 2019 report notes a change in the subscriber renewal process that does not state explicitly if this resulted in increased churn rates but suggests it.\r\n \tOne interesting area to watch will be the recent price increase, its first in three years after research indicated that The Economist audience perceived the magazine to be more valuable. Seeing what happens with churn and new subscriptions after this increase will be telling.\r\n \tThe Economist\u2019s reliance on revenue from digital platforms such as Google and Facebook has diminished considerably, now constituting only 17% of revenue.\r\n\r\nThe Bottom Line:\r\n\r\nPaul Deighton, chairman of The Economist, said that these marketing and technology expenditures are long-term investments, and the resulting profit decrease expected. \u201cIn the context of a continuing difficult environment for business\u2014and media business in particular\u2014this was no surprise,\u201d Deighton wrote in the report.\r\n\r\nThe Economist, like most publishers today, has many fronts on which to do battle for increased subscriptions and retention. Addressing news fatigue and information overload is key, and the company is attempting to address that with streamlined apps and newsletters to make content more streamlined and accessible. It is also increasing social media reach, particularly in areas such as Instagram Stories, and launching ancillary products and platforms such as YouTube series and podcasts.