New York Times Co (NYT) 2014 Q2 法說會逐字稿

Good morning, ladies and gentlemen.

And welcome to the New York Times Company second-quarter 2014 earnings conference call.

At this time, all lines have been placed on mute to prevent any background noise.

After the presentation, we will conduct a question-and-answer session.

(Operator Instructions)

Please note, this call is being recorded today, Tuesday, July 29 at 10:00 AM Eastern time.

I would now like to turn the meeting over to your host for today's call, Andrea Passalacqua, Director of Investor Relations.

Please go ahead, Ms. Passalacqua.

Thank you.

And welcome to the New York Times Company's second quarter 2014 earnings conference call.

Joining me today to discuss our results are Mark Thompson, President and Chief Executive Officer; Jim Follo, Executive Vice President and Chief Financial Officer; Denise Warren, Executive Vice President, digital products and services, and Meredith Kopit Levien, Executive Vice President of advertising.

Before we begin, I would like to he remind you that management will make forward-looking statements during the course of this call.

And our actual results could differ materially.

Some of the risks and uncertainties that could impact our business are included in our 2013 10-K.

I should also mention that our presentation will include non-GAAP financial measures and we have provided reconciliations to the most comparable GAAP measures in our earnings press release which is available on our website at investors.nytco.com.

With that I will turn the call over to Mark Thompson.

Good morning everyone.

Second quarter was a very busy one for the Company and there's plenty to talk about in the results.

On the consumer side of the business we launched the first of our new digital products.

And they helped us continue to grow our pool of digital-only subscribers.

On the advertising side we continue to make progress on digital advertising, with the second consecutive quarter of growth and real excitement around paid posts, our native advertising product and video.

By contrast and in common, we believe, with the rest of the industry, we saw some loss of momentum in print advertising in the second quarter after a very good start to the year.

We continue to keep a good grip on core costs even though investments in our latest round of products and services meant the profits for the quarter were down year-over-year.

We believe however that investment spending is essential to secure long-term, sustainable growth for the Company.

Let me begin with the digital subscription story.

In terms of numbers, at the end of the second quarter our digital subscriber count was 831,000, an increase of approximately 32,000 during the quarter.

That is some 9,000 or 39% more net new subscribers than we added in the same quarter last year with the new products, including NYT Now, NYT Opinion and Times Premier representing the majority of the growth in the quarter.

We've been pleased by the reaction of both consumers and the industries to the new products.

NYT Now, our new iPhone app curated by New York Times editors that targets on-the-go consumers at a lower price point than our original digital subscription packages, has been particularly well received.

NYT Now which has received real promotional support from Apple including being named one of the best new apps earlier in the quarter, is reaching a younger demographic than our core digital packages.

Demand and early statistics for attempts in the Times Premier, our highest tier subscription package, have also been encouraging.

The roll-out of this new suite of paid products is quite different from the launch three years ago of our original pay gate on the website where we had a huge base of heavily engaged users from day one.

Our new products, in particular the NYT Now and Opinion apps must market to and reach brand-new audiences, stand out on their own and compete in a crowded marketplace.

This effort will take some time and we'll need to build and flex some new marketing muscles.

We've already learned plenty from our experience so far with the new product launches.

While the NYT Now app is a clear and attractive consumer offering we've been much less successful in presenting a clear offer to non-subscribers for lower price access to the times on the web and our existing mobile platforms.

So while we continue to have confidence in now as a new mobile expression of times journalism for a new audience, we need to do more work to refine and effectively market a lower priced offering across our core platforms.

We'll also assess and adjust the other products if necessary as our knowledge of real world usage grows and we'll of course build those learnings into any subsequent new products including our cooking app.

Denise and her team will be launching that in the fall, and it will be initially available for free to build up as large and engaged an audience as possible before we begin to charge.

Within the total 32,000 net new digital subscribers added during the second quarter, the number of new subscribers to the core digital bundle was lower than we've seen and lower than we should be satisfied with.

There were some one-off factors including a large number of individually sold education subscriptions in first quarter that because of the college year did not continue at the same rate as in Q2.

Cannibalization by the new products was also a factor, though direct cannibalization has been less than we had projected.

A more significant problem we believe is that we underestimated the challenge of presenting the new wider range of choices to our users and left some consumers confused as a result.

Obviously we're working hard to pivot and correct that.

In addition, and despite the fact that the overall digital reach of the Times remains substantial, the ongoing secular shift in consumer usage from web to mobile and from home page to ossicle based consumption while not a new phenomenon, was also a factor in the lower number of core net additions because it represents a shift to less effective channels to market to and convert to potential subscribers.

We're addressing this last issue in two ways.

First, by committing to the implementation of our recent innovation report.

A study our news and leaders commissioned to address the rapidly changing digital landscape that highlighted these trends and set out some compelling recommendations on how to build and deepen the engagement of our digital audience.

We've already completed some pilots using new audience development tools and practices, for instance in our digital coverage of the World Cup where we've seen immediate and very encouraging results.

We believe that we can maintain the excellence of our journalism, but bring that journalism to a much wider audience by adopting state-of-the-art audience building techniques both within our beyond our newsroom.

This will yield benefits on both the digital subscription and advertising sides of the business.

Our second response is an aggressive focus on improving subscription and advertising monetization on mobile devices, especially smartphones.

The progress we've made on the presentation of our content in both the Now and Opinion apps must be matched across all of the mobile offerings with improved pathways to subscription and more advertising units supported by better ad tech.

Let me turn then to advertising as a whole.

As I said at the start we saw another good quarter of digital advertising growth with particularly encouraging growth in June.

We're early in the process of rolling out paid posts, our native advertising offering but are very pleased with client demand and the numbers we're seeing for actual reader engagement.

Video, too, is on a good track.

This month we received a total of seven Emmy nominations and it's helping us to grow that advertising revenue stream as well.

Video advertising is on course to nearly double in 2014 although of course it still represents a relatively modest portion of our total digital advertising revenue.

Print advertising had a somewhat tougher time declining nearly 7% year on year in the quarter.

As we've heard it previously, print will continue to face quite challenging year on year comparisons in Q3 and Q4, though against that, I'm really encouraged by the progress Meredith and her team are making in developing and innovating within the print as well as the digital advertising business.

We've invested in the sales operation and new print and digital products and expect to see the benefit over the balance of the year, tempered of course by those tougher comparisons.

In conclusion, we believe that our strategy of increasing our digital revenues by broadening and deepening the engagement of our audience and developing new digital consumer and advertising offerings is the right path to growth for the Company.

In recent months we've shown we have what it takes, outstanding content, great design and tech to deliver innovations both in consumer product and in digital advertising that really capture the imagination of customers.

We know we have more to do in fundamental audience development, in fine tuning and marketing our portfolio, and in seizing the opportunities of mobile.

Because we recognize the sustainable long-term growth for our digital business will take some time to secure.

We will also continue to pay very close attention to our expenses and to the returns on our new investments.

I look forward to updating you along the way but for now I'll turn it over to Jim Follo for a more detailed financial review.

Thanks, Mark, and good morning everyone.

The second quarter marked an important milestone in our effort to scale our audience of paying digital users, as some of our new products hit the market and began to ramp.

While it will take some time for the revenues associated with these new products to reach substantial levels, we are already seeing incremental effects.

Despite this progress, second quarter revenues ended slightly down overall, mainly reflecting weakness in print advertising which more than offset ongoing growth in the digital area of our business.

Expenses were up in the quarter, as planned, as our intense focus on reducing core costs was offset by investments we are making in extra strategic initiatives, as well as higher retirement costs.

The strategic initiative expenses will continue to drive up costs in the second half of the year, although we will be closely monitoring that spending as we evaluate the near term revenue potential for the new products and where to best prioritize our investment spending.

Operating profit before depreciation, amortization, severance, nonoperating retirement costs and special items decreased to $56 million in the quarter, from $71 million in the prior year.

The decline was driven mainly by an $18 million increase in operating expenses, compared with the second quarter of 2013.

Most of which was attributed to our strategic initiative investments.

We reported GAAP operating profit of $16 million in the quarter, compared to $46 million in the same period of 2013.

Circulation revenues increased 1% in the second quarter with our digital subscription revenue stream offsetting print declines.

We saw 19% year-over-year growth in the Company's digital subscriber total, and also benefited from January's home delivery price increases, although revenue from the new rates were outweighed by volume declines, particularly on single copy sales.

In the second quarter, digital only subscription revenues were approximately $42 million, an increase of about 14% from the same quarter in 2013.

As we've mentioned in the past, the 831,000 digital only subscriber total that Mark highlighted includes group subscriptions from corporate and education entities.

Those units saw solid growth in the quarter and contributed substantially to the overall growth in our core packages, although they do come in at lower rate of average revenue per user.

Advertising maintained its momentum on the digital platform in the quarter.

Sustaining its positive growth at more than 3%.

But did not offset the more significant print decline of nearly 7%.

Advertising revenues continue to experience month to month volatility and short-term buying decisions, demonstrated by declines of 7% in April, 2% in May and 3% in June.

As Mark noted, digital advertising saw significant strength in June.

Print national advertising drove the ad declines in the second quarter, despite seeing growth on the digital side.

Retail advertising rose in retail and overall in the quarter, while total classified advertising increased on both platforms.

Other revenues grew nearly 8% in the quarter, driven by higher revenues from our online retail store, conferences and other events, and content licensing.

Rounding out our results, operating expenses before depreciation, amortization, and severance and nonoperating retirement costs increased 4%.

Costs rose 5% on a GAAP basis.

And we reported diluted earnings per share of $0.06.

Diluted earnings per share excluding severance, nonoperating retirement costs and special items was $0.07 in the quarter, compared to $0.13 in the 2013 quarter.

The Company sustained its expense management efforts in Q2 as we found ways to lower core costs while investments associated with our strategic initiatives accelerated.

Costs rose mainly due to higher compensation and benefits expense, as well as increased marketing costs, all associated with our strategic initiatives, in addition to increased retirement costs and investment spending in our advertising department, partially offset by efficiencies in customer care and print distribution.

For the remainder of 2014, we will continue to prioritize investing in the business, but also intend to readdress cost structure issues as we get a better sense of the revenue potential associated with our new digital products and other strategic initiatives.

We continue to closely manage our pension related obligations as well.

To that end, in the first quarter we offered certain former employees who participate in certain non-qualified pension plans the opportunity to receive their pension benefit now as a lump sum payment.

We made related settlement payments of approximately $24 million in the second quarter, from Company cash, reduced pension obligations by $32 million, and record a settlement charge of approximately $9.5 million.

Our retirement costs will continue to be higher in the second half you due primarily to lower expected return on pension assets, which we are increasingly allocating to fixed income and higher retiree medical costs and multi-employer withdrawal expenses, both triggered by the sale of the New England media group.

We expect nonoperating retirement costs in the third and the fourth quarters of approximately $9 million each.

Moving to the balance sheet.

Our strong liquidity position remained largely unchanged in the second quarter.

Our cash and marketable securities balance was roughly constant at approximately $972 million, and our total cash position exceeded total debt and capital lease obligations by approximately $286 million.

Moving on to our outlook.

Third quarter circulation revenues are expected to be flat as the benefit from our digital subscription initiatives, and from the most recent home delivery price increase is likely to be offset by print weakness.

Although at this point in the quarter we he have very low visibility into the month of September, advertising revenues are currently expected to be down in the mid single digits driven by print declines, partially resulting from more challenging year-over-year comparisons.

Digital is expected to maintain positive growth at similar levels to the first half of the year.

And third quarter operating costs and adjusted operating costs are expected to increase in a low- to mid-single digits, as investments around the Company's strategic initiatives are now in full force.

With that, we'd be happy to open up for questions.

(Operator Instructions)

Your first question comes from the line of William Bird with FBR Capital Markets.

Your line is open.

Good morning.

You mentioned some disappointment in the number of core subs added.

Was wondering if you could just discuss how many core NYTimes.com subs were added.

Thank you.

Bill, it's Denise.

As you know, we're managing the business as a portfolio, and so at this point, we're going to refrain from providing details by product.

We think in light of our approach, it really makes the most sense to continue to report a single paid digital subscriber metric, as well as continue to report on the digital subscription revenue.

I will say, just to reiterate a few of the comments that Mark made in his remarks, that just in general, as we said, the growth in the portfolio came from the new products, as well as came from in the core business, several of our promotional sales, our Memorial Day sale, our July 4th sale.

In addition, we did see growth, as we have seen in prior quarters, in what I'll call our B2B business, our corporate and education, seat and site license business, where the weakness was in the portfolio, was as Mark had mentioned first of all.

We do typically, in the second quarter, see a seasonality in the B2C education copies, as the school year winds down.

So that impacts the portfolio.

As well, we saw lower starts due to the secular usage shifts from web to mobile, and as well, we did see some minimal cannibalization of new core starts to the new products.

To your point, just, I'm sure you heard me say this, that although we don't break the number down precisely, we said the new products constituted a majority of the growth in Q2.

Thank you.

And just was wondering if you could elaborate, just on some of your general thoughts on the pace of digital subscriber additions, likely in Q3.

And I guess some of the things you might be able to do to try to improve the pace of digital subscriber additions?

Thank you.

Sure, the pace that we expect to he see in Q3 is similar to what we see in Q2.

And in terms of retooling our work, we think we have three things that we need to really work on and get right.

The first is we really need to get the right offer to the core audience on our web and core mobile properties.

Our initial offer, which was access to top stories as part of the NYT Now offering, didn't quite resonate the way that we had hoped, and so we're in the midst of testing a number of alternatives.

The second thing we have to get right is our ability to target.

We need more precision to determine which is the right customer for the right offer.

And this we're honing through AB tests and our data science capabilities.

And then finally, of course, we need to continue to optimize all of these things within the broader portfolio.

We clearly want to see acceleration, but it's worth saying that we're currently tracking in 2014 in the first two quarters, higher than the net adds for the first half of 2013.

So we're seeing a higher number of adds so far this year, than last year.

And just a final question on digital subs.

Could you talk about international, some of the efforts you're making there, to try to improve the offering?

So we did see growth in international subscriptions, albeit at a lower rate than we have seen in prior quarters.

We really expect to see the performance here improve, when we launch the in-currency billing later on this year.

That's really the critical key initiative, that we believe is going to accelerate growth in the international marketplace.

And that will be in the second half?

We're shooting for October to begin the roll-out.

Great.

Thank you very much.

Your next question comes from the line of John Janedis with Jefferies.

Your line is open.

Thank you.

Maybe just a follow up to Bill's question.

Are you seeing any change in subscriber acquisition cost or churn, and how does the churn of corporate and education subs compare to the rest of the sub base?

I guess you spoke to the education, but maybe on corporates.

I don't really have specifics to -- and I don't want to mislead you.

I would really like to get back to you on the specifics on the churn on the corporate.

My sense is that it churns at a much lower rate than individual subscribers, but I would love to check that statistic, and get back to you.

And with some seasonality.

Right.

With a profile of subscribing and unsubscribing.

In education.

Not in the corporate, but in the education space.

I would say also that is a relatively new program, so the history we have around those programs on retention and churn is somewhat limited.

Okay.

And maybe just a related question.

Just on the guidance for circulation for the quarter, does it imply still double-digit digital circ revenue growth, or is the slowing across both the print and digital subs?

Slightly lower on the digital and a little bit lower on the print as well.

The fact that print is still 75%, 80% of total circ revenue has a meaningful impact on that number.

Again, the growth in the first, second quarter was 1.4.

Doesn't take a whole lot in terms of dollars to put you in the flattish area.

Okay.

Thanks.

One last question for you on the strategic investment, have you now passed the peak increase in spend year-over-year, and are you still on track then to hit that prior number of the $30 million increase year-over-year?

I'd say we are.

I think what you'll see in the third quarter is something similar to the second quarter, and that's embedded in our guidance.

We said low to mid single digits.

Once you get into the fourth quarter, fourth quarter last year was a pretty full quarter of spending.

So I would say, expense growth moderating to disappearing, essentially, in the fourth quarter, absent any other changes, plus or minus.

By Q4 we're more or less at the run rate.

Essentially at the run rate, if you look at internal forecasts, we're not expecting any meaningful cost growth at all in the fourth quarter.

Thank you very much.

Your next question comes from the line of Doug Arthur with Evercore Partners.

Your line is open.

Thanks.

Three questions.

Two on numbers.

Jim, in terms of the breakdown in severance and pension adjustments, into the costs in the quarter, is it mostly an adjustment to SG&A, or is some of that taken out of production costs?

That's question one.

Question two, it looks like to get to $0.07 on the adjusted operating profit, you have got to use a 50% tax rate.

Why is that so high?

And then a broader question for Denise.

Can you just speak more broadly to the challenges of marketing NYT Now to the Apple universe, and what are the plans to expand it beyond that eventually?

Thanks.

Let me start, and then I'll let Denise finish.

On the severance side, I would not put it -- it's not, I wouldn't say, solely related to G&A.

It gets spread.

I don't want to say much more than that.

But I would -- there's certainly a production element to it, and a G&A element to it.

On the tax rate side, tax rate tends to be, as you know, pretty volatile, because of the pretax income number and the size of it, certain discrete items have more of an impact on the tax rate in any one quarter.

We still hold that our incremental rate on every dollar of earnings beyond -- every incremental dollar of earnings is still in the 42% range.

But in this quarter, we have some distortion based upon some discrete items that bring it to 50.

On marketing NYT Now, we've actually been very pleased with what we've seen, and the support that we've received from Apple.

They did name the app, for instance, one of the best new apps, in the months that we launched it.

I think really the marketing challenges in the Apple ecosystem are creating awareness.

There are I think over 1 million apps in the App Store, so making sure that your product is actually seen is part of the battle.

When you get that kind of support from Apple it really helps.

Clearly one of the things we're trying to do is get people to download the app, so really it's about creating awareness inside the ecosystem, first and foremost.

Then, of course, secondarily, it's about creating conversion.

In response to the question about potential other opportunities for expansion, clearly we're exploring the Android marketplace.

That would be the next most logical place for us to expand this particular offering.

And it's true, isn't it, Denise, that in a sense, with NYT Now we've got both the opportunity but also the challenge of a new audience.

The app seems to be reaching --

A younger.

People who had not previously been subscribers.

The good news about that is potentially opening up a new audience.

The tough think to say is that we're going to need, and are already beginning to explore different marketing tactics to try to reach those.

Thanks.

Your next question comes from the line of Craig Huber with Huber Research Partners.

Your line is open.

Yes.

Hi.

A few questions.

I guess the first one is a housekeeping question.

For your daily and Sunday print circulation volume, what was that percent change year-over-year, please?

Weekday was down 5.7%, and Sunday was down 3.5%.

And then just a little more clarity here on the costs.

This investment spending you are doing this year, it sounds like that's in the run rate of your costs as you go into 2015 later this year, is that true?

I would not expect meaningful growth in the initiative spending in 2015.

What you've spent this year, that's an ongoing expense, you're saying, right?

Largely.

There's not much in the way of one-time non-recurring.

We have a lot of marketing, but as we've seen with our original pay initiatives around digital, marketing's an ongoing effort, and will continue.

Can you talk a little bit further, if you would, please, about why you think your print advertising performed worse in the second quarter versus the first, putting aside the year-over-year comparison.

What's July looking like, please?

Thank you.

Happy to talk about that.

I think in general, print overall in the market, there are secular forces that are leading it to decline, and by contrast, we saw nice continued uptick in our digital business.

Category-wise, there were places where we saw what I'd call a wholesale shift.

For example, technology advertising was very weak in print, but very strong in digital.

So we're really starting to see some fundamental shifts in the market.

One thing I would add to that is I don't think the market has dramatically shifted.

We had a good first quarter.

We had a less good second quarter.

I don't think we feel like there's a fundamental shift that's just accelerated pace in the second quarter.

That being said, there's certainly secular forces at work here.

That's right.

It's never precisely the same from quarter to quarter and sometimes the campaigns run, and sometimes they don't.

All of it plays together.

That's right.

In ways that are often hard to predict.

For July are you seeing many differences here in July?

I'm sorry?

Are you seeing many differences in your print advertising here in July so far?

I think we're off to a relatively slow start in print in July but a lot of how the third quarter goes will be written in September, and our outlook in September is pretty murky at this point.

Murky, meaning we can't see it rather than --

Not gloomy.

But I would add to that, I'd say print is off to a bit of a slow start in July but the opposite, the complete opposite, we're strong double-digit growth in --

In digital.

In digital.

We saw that same performance in June as well.

I would say also July's a very small month.

And a particularly small month in print.

In print.

Less so.

Not a great indicator of how the quarter will go.

We will have to see how it plays out in September.

As it was, last year, you'll recall last year, September was -- the third quarter was a little back-end loaded.

September performed.

Our experience, certainly in the 20 months or so I've been here, our experience is it's very, very hard to predict trend.

Last December, we seem to be seeing a deceleration, which was followed by Q1, where we actually saw print advertising growth year-over-year.

I've learned it's a mugs game to try and predict too much.

And as both Meredith and Jim have said, a loss of Q3 will be determined in September.

I would say also, we put a lot of additional resources and money behind the advertising department, and Meredith's organization.

I think that takes time to make its way in.

So we'll have to see how that plays out, as well.

Sorry to ask this again, but is there anything else specific you could point to about the differences in print advertising performance in the second quarter, versus what you saw in the first quarter?

Is there anything else besides just normal volatility here?

I would say that this is relatively expected volatility, versus something materially different that we're concerned about.

Look, we also had some -- we said we had some things that really broke well in our favor in the first quarter.

We had live film entertainment and the strong Oscar season worked to our benefit.

There was another couple other categories.

In the first quarter, we had a Super Bowl in our city.

So if you look at the categories and you actually see the difference from quarter to quarter, it tells you the story of categories in and out of print.

An example might be in Q1, as you said, it was a pretty strong Oscar season, with quite a few contenders which were the movies which naturally fit with the New York Times audience.

The summer, the industry has seen quite a tough summer for the studios, with lots of movies opening and closing quite quickly, and therefore not attracting multiple opportunities for print advertising.

And also, movies of a kind which perhaps are less suited to the New York Times audience.

So that's one category which shifted very clearly from Q1 to Q2.

All that overlays the fact that comps did get meaningfully more difficult in the second quarter.

First quarter last year, we had negative 13 on print.

Second quarter last year, we had like negative 6. They play a factor, but it's not the only factor in what drives the results.

Great.

Thank you.

Your next question comes from the line of Alexia Quadrani with JPMorgan.

Your line is open.

Thank you.

Just a couple of questions.

There's a lot of moving pieces right now.

Obviously, you're rolling out these new products and you're making some changes to them, as you're seeing the impact, good or bad.

I guess, from the outside, from the investment community, what's really a good time period we should expect for you to get the kinks out and the transition period to be over?

Is it a couple quarters?

Is it a year?

How should we see it?

Because we are doing stuff here, where we're on our own, we're doing things which nobody has tried in our industry.

It would be difficult to be precise about how long it's going to take to optimize.

But certainly, I would say that over the coming quarters, you said two to four, but over the coming quarters, we hope to progressively optimize the portfolio, learn some of the marketing lessons we've got to do, and to continue to grow digital subscriptions.

I think that everything we've seen so far suggests that packaging the right way, marketing the right way, we can find -- continue to find new subscribers for the digital flavors of the New York Times.

But there is, as several callers have said this, there's some complexity in the offering we're making to the public, and we need to do the work to get that right.

And the packaging the right way, which you have it as a hurdle for the most recent quarter, is that something that's maybe a quicker fix?

Alexia, I'm sorry, can you take another step at the question.

When you say packaging the right way, meaning?

I think you highlighted a bunch of headwinds that hurt the digital sub number in the quarter, and one which was, it was confusing, I think, to the consumers, in terms of how you presented the different products.

I would assume that's probably an easier thing to fix, right?

That's something that might not be a drag.

You might think it is.

But we've got to really get, as I said in response to the question, all three things right.

We've got to get the right offer.

We've got to make sure it's targeting the right customer, and we need to be continually optimizing.

As Mark pointed out, it is quite complex, but we do have some experiments that we're spinning up right now, to hone in on getting the offers right, and we'll be really hacking away at that over the next couple of weeks and months.

As we said, the central challenge, we think we've got a great product in NYT now.

We need to plan out its future as a mobile app-based product.

The puzzle, the marketing puzzle that we're engaged in solving is exactly what a lower priced offering should consist of on the web, and our core mobile platforms.

Exactly how do we configure that, and how do we market it and that's what we're working on right now.

And just the last follow-up question, is the deceleration of circ growth in the third quarter versus what you've seen in the first half, that is purely this noise on the digital front, or is there some weakening expected in print as well?

A little bit of weakening in print.

I wouldn't overstate it, but again, when print circulation is 75% of the number, small changes in the percentage growth or decline will have outsize effect on the overall number.

It's a little bit of both.

It should be said, we're looking quite hard as what we can do to support print circulation.

We don't forget print is a really important part of our business, and he's not on the call, but Roland Caputo, Head of print products and services is looking hard at marketing solutions to strengthen the current quarter of print circulation.

Okay.

Thank you very much.

Your next question comes from the line of Kannan Venkateshwar with Barclays Capital.

Your line is open.

Thank you.

Just a couple of questions.

The first is on the digital side, when we look at the total addressable market, now with all the newer products that you have, is the market bigger than what you started off with the original plan when you had digital?

Or is it roughly the same market in your view?

And secondly, when we look at price increases, historically, when you did not have a digital product versus now when you have multiple digital products, has the elasticity changed on the print side to the price increases that you're seeing right now?

The way I think about this, at current, is from a period where the Company was thinking about how it converted an existing group of engaged users, digital users to subscribers, I think we have got greater ambitions about reaching out and finding new audiences, and new addressable markets, and the international expansion is an example of that.

Obviously, that brings in its wake, as I said in relation to NYT Now, new marketing challenges, where you can rely less on the -- as it were, the existing consumption of existing users, and have to reach out via in some cases new marketing channels to find and engage new consumers, and that he relates very much to the whole topic of audience engagement, and the ways in which you can use tools and practices or engagement to strengthen usage, and therefore drive subscriptions.

I think the basic answer to the question is, we do believe that there are -- there is a bigger potential addressable market, than perhaps we thought some years ago.

I would think that especially with NYT Now reaching a much younger audience than we've ever reached before with any of our products, we're very, very encouraged that we might be able to make inroads in particular in that segment of the marketplace, and that wasn't what we had necessarily contemplated at the outset.

So just to give one specific detail as to why, I think I would point to NYT Now.

And on the elasticity point, it's worth saying that I think take-up and retention of premier suggests something about elasticity.

It's complicated because premier is digital enhancements, which are also available to print subscribers.

But premier suggests that across the portfolio, both print and digital, there is some pricing elasticity.

Having said that, we have primarily been focused on trying to grow the total number of digital subscribers.

Obviously we think about price and price increases all the time.

But our biggest focus at the moment has been trying to grow the number of subscribers.

Thank you.

Thank you.

There are no further questions at this time.

I will now turn the call back over to Ms. Passalacqua.

Thank you for joining us today, and we look forward to talking to you again next quarter.

Thank you.

This concludes today's conference call.

You may now disconnect.