New York Times Co (NYT) 2014 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the New York Times Company Q3 2014 earnings conference call.

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

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

(Operator Instructions)

Please note that this call is being recorded today, Thursday, October 30, at 11 a.m.

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 third quarter 2014 earnings conference call.

On the call today are Mark Thompson, President and Chief Executive Officer; Jim Follo, Executive Vice President and Chief Financial Officer; and Meredith Kopit Levien, Executive Vice President of Advertising.

Before we begin, I would like to 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.

Our presentation will also 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.

Thanks, Andrea, and good morning, everyone.

The third quarter was an encouraging one.

Digital advertising grew strongly enough to offset a tough June and July on the print side and lead total advertising broadly flat.

On the digital subscription side we added 44,000 new customers.

That's a 20% year-over-year increase and the best orderly results in two years.

We are on course to add more net new digital subscribers in 2014 than we did in 2013.

As a result, total revenue was up just under 1%.

Operating costs rose principally because of costs associated with previously disclosed workforce reductions and expenses related to our strategic initiatives, though the effect of these rises was moderated by efficiencies in other parts of the company, and the workforce reductions will of course help us manage our costs in the medium term.

Adjusted operating profit was $40 million in the third quarter compared to $45 million in the same quarter last year.

We are pleased with our progress in advertising.

Although we do not expect every future quarter to show a strong year-over-year digital advertising growth as this one, Q3 was up nearly 17% compared to Q3 2013.

We do believe that we have the right strategy and the right talent to deliver sustainable future success.

Take paid posts on advertising products.

We only introduced paid post in January but end the year with more than 30 clients.

We also saw continued growth in video and on the smartphone platform to other areas of strategic focus.

Print advertising rallied in September after two slow summer months and finished the quarter much better than we had anticipated, though as you'll hear from Jim in a few minutes, the outlook continues to be volatile and prediction is genuinely difficult.

Over the quarter as a whole, print decline 5% year-over-year, a fall almost entirely offset by that 17% year-over-year growth in digital advertising.

Circulation revenue was also better than initially expected, as the combination of this year's increase in home delivery prices and continued growth in the number of digital subscribers more than offset a decline in print copies sold and resulted in an overall increase in circulation revenues of 1.3%.

Although much of our focus is on the development of our digital business, you'll also see us innovating and investing in the physical New York Times.

We recently introduced a new eight-page panoramic advertising unit for the main newspaper which is a first in the United States.

Take a look at how [Christie's] used it in yesterday's newspaper.

And we're directing new investment of the main New York Times Magazine where we have a brilliant new editor and big plans for 2015.

Let me now turn a detail to the digital product story.

As I said, we added approximately 44,000 net new digital subscribers in the quarter for a total new count of 875,000.

Much of the growth came from new subscriptions to our core packages.

There was a much higher proportion of these than in the previous quarter, most notably because of an encouraging number of new subscribers in the consumer education and international segments.

Now, we gave an update on our new products a few weeks ago and as we said then, we are encouraged by the core that NYT now has struck with younger users, many of them who are new to the Times.

We're going to focus on it as smartphone only app while we continue to test other lower price subscription offerings on the web and on our core mobile apps.

We also noted that Times Premier had got off to a strong start and we're focusing now more resources on improving the range and richness of the content available to premier subscribers that were drawn from our most committed readers.

NYT Opinion also attracted some passionate loyalists, but some four months after launch we concluded that it just wasn't attracting the kind of new audience it would need to be truly scalable, so we decided to sunset the app, but we will continue to sell access to the opinion section of the website as a separate offer.

Finally, our cooking product which showcases the unrivaled recipe database and outstanding food journalism of the times got off to a really excellent start in the third quarter.

The iPad app and website only launched in mid September but already we've seen nearly 2 million uniques in the month of October.

We already have advertising on the site, but we want to develop awareness and use before taking the next steps on consumer monetization.

Cooking has successfully built on many of our learnings with our other new products this year.

It's evidence of the approach we're taking to digital product development.

Grounded in the Times is great strengths in journalism and design, but increasingly user centric and data driven on a shame of experimental unwilling to adapt.

The Times is much to be proud of in its digital story, not least in its launch of what is probably the world's most successful news-based digital pay model.

I concluded that the full achievement of our ambitions requires further organizational change, and in particular, further injections of specialist digital expertise.

We've already seen some significant reason promotions of our news room, especially in the areas of audience development and digital strategy.

Two days ago I announced some changes on the business side of the company.

The current digital products and services division will be replaced by two new divisions, a marketing division led by the first CMO in the history of the New York Times, and the new digital division led by chief digital officer, both of whom will report to me.

Denise Warren has made the decision not to occupy either of these positions and will therefore leave the New York Times Company after a remarkable 26-year career and many great achievements, not the least of which is the central role she played in the roll out of that groundbreaking pay model in 2011.

We wish her every success in the next chapter of her career.

I believe that the changes we're making will help us scale our business successfully, but we're determined not to lose momentum in the process and put appropriate interim arrangements in place with immediate effect.

I look forward to updating you on these organizational changes and the wider track of our business as we go forward but, for now, I'll turn it over to Jim Follo for a more detailed financial review.

Thank you, Mark, and good morning everyone.

In the third quarter, we logged strong digital growth on both the advertising and consumer sides of our business and made further progress in our work to ensure that we maintain that strength.

Despite print declines for both our main revenue streams, the overarching digital strength prevailed leading to third-quarter revenues that were up slightly overall.

Expenses rose in the quarter as a focus on reducing core costs was offset by severance expense related to some workforce reductions as well as investments we are making in our strategic initiatives.

Going forward, the strategic initiative expenses should flatten out in the fourth quarter as we are now cycling the ramp-up of spending in Q4 2013.

Severance expense should declined sequentially in the fourth quarter, as well.

We'll also continue to monitor our investment spending as we learn more about the near term revenue potential for our new products.

Operating profit before depreciation, amortization, severance, nonoperating retirement costs, and special items, decreased to $40 million in the quarter from $45 million in the prior year.

The decline was driven mainly by $8 million or 3% increase in adjusted operating costs, most of which is attributable to our strategic investment -- initiative investments.

We reported GAAP operating loss of approximately $9 million in the quarter driven by a $21 million severance expense compared with an operating profit of $13 million in the same period of 2013.

Circulation revenues increased 1% in the third quarter with digital subscription revenue stream more than offsetting print revenue declines.

On the print side, we benefited from January's home delivery price increases, although higher revenue from new rates were outweighed by overall volume declines.

In the third quarter, digital-only subscription revenues were approximately $43 million, an increase of 13% in the same period in 2013.

Advertising accelerated its momentum on the digital platform in the quarter and almost completely offset the print decline.

Digital advertising continues to see a boost from paid posts, which is our version of brand content and many of those units are being created by newly formed custom content studio.

Staffing of this in-house branded content group is part of the investments we have recently made in the advertising department, and the team continues to grow as demand for paid posts remains strong.

Moving on, overall advertising revenues continue to exhibit month to month volatility and reflect short-term buying decisions, demonstrated by declines of 1% in July, 7% in August, which were followed by growth of 5% in September, driven by a print rally late in the quarter.

Other revenues grew 3% in the quarter driven by higher revenues of online retail store and content licensing.

Expense management efforts remain a top priority in the quarter as we took additional steps to lower core costs while maintaining the investments associated with our strategic initiatives.

Early in the fourth quarter, we announced a cost-cutting plan that involves headcount reductions across the Company.

We are confident we can achieve those targeted reductions without affecting our world-class journalism and believe that the plan reflects our commitment to strengthening our operating efficiencies while safeguarding our long-term profitability.

These reduction initiatives should allow us to maintain or slightly lower our costs in 2015 relative to 2014 levels while also investing in certain areas of growth.

Costs were up 9% on a GAAP basis, capturing the severance expense I just referenced, and we reported diluted loss per share of $0.08.

Diluted earnings per share excluding severance, nonoperating retirement costs, and special items was $0.03 in the quarter compared to $0.01 in the prior year.

Costs also rose due to higher compensation and benefit expenses associated with our strategic initiatives in addition to increased retirement costs partially offset by efficiencies and print distribution and customer care.

Our nonoperating retirement costs increased by more than $3 million in the quarter, and retirement costs will continue to be higher in the fourth quarter due primarily to lower expected returns on plan assets, which are increasingly allocated to fixed income, to higher retiree medical costs and multi employer withdrawal expenses, both triggered by the sale of the New England Media Group.

We expect nonoperating retirement cost and the fourth quarter of approximately $9 million.

Moving to the balance sheet.

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

Our cash and marketable securities balance was $966 million, and our total cash position exceeded total debt and capital lease obligations by approximately $296 million.

During the third quarter, we repurchased approximately $18 million principal amount of our 6-5/8% senior notes due in 2016.

While our cash balance remains substantial in the third quarter, we are still in the early stages of a multi-year transformation as we outlined today and in recent earnings call.

So, our plans for that cash remain unchanged and we expect to maintain a conservative balance sheet for the foreseeable future.

Moving to our outlook.

Fourth quarter circulation revenues are expected to increase at a rate similar to the third quarter trend, driven by the benefit from our digital subscription initiatives and the most recent home delivery price increase despite continued challenges, particularly for newsstand volume.

We expect the total number of net new digital subscriber additions in the fourth quarter to be roughly in the mid-30,000s, which is in line with a number of additions we saw in Q4 2013, largely due to the seasonal nature of the consumer education business which benefited us in Q3.

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 remain positive growth in the high single digits.

Our advertising forecast embeds October performance which is our largest advertising month of the quarter and actually of the whole year.

Due in part to the comparisons we've mentioned, print advertising revenue in October is expected to decline approximately 10%, while digital advertising is expected to increase approximately 15%, resulting in total advertising revenue for the month being down approximately 5%.

Other revenues are expected to grow more than 10% in the fourth quarter, driven mainly by seasonality in our conferences and e-commerce businesses.

Fourth quarter operating costs and adjusted operating cost are expected to be roughly flat as we begin to cycle the ramp of investments around the Company's strategic initiatives.

There are a couple items I wanted to point out as we think about 2015, as they'll likely be very different from 2014.

We expect depreciation and amortization to decline to about $60 million to $65 million for the full year 2015 as we are sun setting a major enterprise software system.

We also expect interest expense to be lower, in the range of $40 million to $45 million for the year as we intend to repay with existing cash balances, our 5% senior notes at maturity March.

And with that, we'd be happy to take your questions.

(Operator Instructions)

Alexia Quadrani with JPMorgan.

Two questions, if I may.

The first one is a follow-up on your commentary about the advertising outlook for the fourth quarter.

You gave some good color in terms of the comps and how October is trending, but is there anything else we can sort of look into why you're seeing such volatility from September to October?

Is there certain categories that are not really came in September that surprised on the upside that maybe are not re-appearing in October?

I guess any more color you could give would be very helpful.

Meredith, perhaps you want to take Alexia's question.

Sure.

I think we're actually expecting to see a lot of the same trends from a category perspective continue from the third quarter to the fourth quarter.

We had some particularly strong comps last year in the energy sector and also in the studio entertainment sector in print that we don't expect to see repeating.

So, that's led to some of our guidance.

And on the positive side, the categories that performed very strongly in the third quarter in both print and digital we expect to perform strongly in the fourth quarter.

So, luxury, advocacy, and financial were all very strong in print in Q3 and we expect they will be strong again in Q4.

And the rebound you're seeing in the digital advertising which has now been a few quarters you've seen some healthier performance in digital advertising.

Is it the less competitive nature of the exchanges or is it just you guys just executing better and therefore the seeing the benefits of that?

I think it's a combination of things and certainly part of it is sales execution.

I'm happy to say I think that the biggest drivers though are the launch and sort of positive growth in the pay post businesses as Mark alluded to.

We'll finish the year with more than 30 partners and we're coming up on renewing a number of the early partners which is very good, and we expect that to continue.

We've also seen nice growth in mobile, particularly mobile smartphone and in video.

And we are optimistic about that for the coming year.

And you asked about the exchanges.

I will say we're taking a lot of positive steps in the programmatic space.

It's still a small part of our business, but we've done quite a bit of work this year on our technology stack and also on opening up new demand pools for automated buying and selling.

So, we expect that to become a more meaningful part of the business in the coming year.

And just a last follow up on your commentary about the digital sub growth.

Is there big pricing differential between the consumer education through international subscribers versus your historic sort of core subscribers?

There is.

The individually sold to education tends to be at about $7.50 basic rate relative to the lowest rate that we offer in our three basic package of $15, so there is.

I think some of the success we saw in the third quarter in the international markets I think first was just a more concentrated focus on that opportunity, but also I think we've experimented with some pricing.

So, I think broadly international will come at a slightly lower ARPU.

We still think it's a healthy ARPU and a healthy market for us.

Thank you very much.

Alexia, it's Mark, here.

If I can just one point back to print advertising.

It's really just to say that when we talk about volatility and the difficulty with prediction, I think the first quarter illustrates the challenge we've got about accurate prediction.

We had really two quite tough months in July and August followed by a remarkable turnaround in September.

So, the warning we give about volatility and difficulty of prediction is very real and we're seeing really quite abrupt and unpredictable switches which could be negative but also as they were in September can be very strongly positive as well.

So, you can see a bounce back in November and December, but October unfortunately is a bigger -- (multiple speakers).

We give you a mid case prediction.

Our visibility even into the latter part of November and our visibility into December is actually very low.

So, the out turn could differ significantly from our prediction.

It did in the third quarter.

When we went on the earnings call for Q2 and gave our prediction it was are genuine mid-case prediction.

We couldn't foresee that September would turn out to be so different.

Okay.

That's very helpful.

Thank you.

Bill Bird with FBR.

On the digital advertising side, I was wondering if you could talk about how well you monetize advertising in mobile versus desktop?

And then on digital subscriptions, was just curious if you're doing anything new in terms of promotional activities or otherwise that might help to explain this recent uplift?

Thank you.

I'll take the mobile question.

Hi, Bill.

We are starting to feel more optimistic about mobile advertising.

We have done a number of things to sort of face the market more effectively with an offering in mobile advertising.

So, our branded content product was meant for mobile world.

We've also launched a number of new mobile ad units.

We're experimenting with those units and the number of them that run on each page and how they get presented, we launched a new ad format called [Tap] NYT which is a full-screen, self-propelled tapable story.

So, I would say mobile is still small for us.

I think we just crossed the -- it's more than 10% of the digital business, but we still have a gap between consumer usage and advertising usage, and we were eager to keep putting innovative product in the marketplace to move those two things much more close together, and we feel pretty optimistic about it right now.

Jim, do you want to just touch on the issue of the mix of promotions on the digital subscription side?

Yes.

I think behind your question, Bill, is what kind of growth Q2 performance to Q3 performance we had a much stronger quarter.

We regularly said that kind of the individual paid to education is a seasonal business.

We actually add the same number of subscribers, digital subscribers, around the education sector as we did in the first quarter.

A big part of it is simply seasonal, not that we've changed promotions around that part of the business.

As I said earlier, I think we knowledge in the international markets, we will have to take a different tact around promotion.

We've been a little bit more aggressive in lengthening out promotional periods in those market and we will continue to test what we think is the most effective programs in those markets.

I would add one other thing as well and this is more of a fourth quarter and into next year, we will be introducing also foreign currency and we just rolled that out in the UK just recently.

And we have euros and some other currencies at the beginning of December, don't we?

That's right.

And then we'll roll out Canada probably in the early part of 2015.

So, we'll continue to experiment in the international markets, but we're still getting some good, healthy ARPU's on those customers as well, but we're going to have to continue to experiment in those markets.

Those are new markets for us.

And just a follow-on for Meredith.

Meredith, could you remind us what your mobile usage looks like?

You mentioned a little over 10% of advertising, but how does the usage compare?

Sure.

Well, when I got here little more than a year ago it was about one-third of all of our digital usage and now it's more than half and climbing quickly.

So, user sessions in a day's time.

Great.

Thanks.

Craig Huber with Huber Research Partners.

Can you address in the relatively large severance charge you guys took in the quarter?

What was the impact for your editorial staff, your flagship newspaper?

Was it like 7%, 8% I've read elsewhere?

Well, let me say couple things work first.

As an estimate, we're in the process of going through a voluntary program and it has been reported that the target is somewhere around 100 -- about 1300 staff.

So, I think that addresses your issue.

Craig, it's also worth adding that we expect targeted investment to continue and we expect some hiring in the newsroom.

We are investing in The New York Times Magazine.

We're investing in audience development, we expect to invest further in the mobile platforms in the newsroom.

So, I think the net-net numbers in terms of the adjustment in the headcount in the newsroom are largely well south of that.

And as Jim said in his remarks, great care has been taken by Dean Baquet, our Executive Editor, and his team to make sure we do reductions in such a way and we only accept those volunteers (inaudible) where we can be satisfied they're not going to in any way lessen the quality of the journalism in the news report of the New York Times.

And then also if I could just ask.

Can you just talk a little bit further if you would, I know you've already hit on this, but the monthly volatility in your ad revenue, what do think was so unique in the month of September, why it was so strong relative to two months before what you said October did, please?

Sure.

I'm happy to take that.

It's interesting.

If you look back at the second half of last year, it's not that much different in terms of extreme volatility, particularly in the print business.

September is unusual because it's a very big month and it's also luxury -- not our largest category of advertising and we had a really, really strong month for luxury in September.

So, a big part of the come back was around that.

There was also quite a bit going on in terms of dramatic world events in September which I would say that combined with strong sales execution on our advocacy team led to quite a bit of late breaking business in September.

And I think that will continue to explain some of the volatility.

Unfortunately, Craig, when we talk about volatility what we mean is unpredictable and to some extent inexplicable variation.

Talk about it usefully.

And two just quick housekeeping questions if I could, please.

For your print newspaper, what was the daily and Sunday print circulation volume year over year percent change?

And then also on the newsprint side, what's the percent change for average price versus usage, please?

On the print circulation, our daily circulation was down 5.2% in Q3 year-over-year and Sunday was down 3.5%.

On raw materials, prices have largely been flat.

We've had a slight decline, but not a material decline and that's largely based upon volume.

Within that volume issue, however, I would say newsprint, the paper down and extra issue of T and more pages in T is doing quite well, so there's a bit of a mix of usage in there which is suppressed, historically a higher decline on volume.

Thank you.

John Janedis with Jefferies.

This is for Mark and Meredith.

You spoke to the 30 or so paid post clients.

Are they typically existing printer digital clients?

Are they clustered around maybe a certain category or vertical?

And how different is the buy in terms of length or the time of the buy?

All good questions.

I'm happy to say, as Mark said, we'll finish the year somewhere north of 30 partners in paid post, and I'm happy to say they are in virtually every category.

So, we started in enterprise tech and I imagine that will continue to be a big growth area for us, but we've seen a paid post from almost every major sector we play in and quite pleasantly we've had a number of luxury paid posts.

In terms of our data, the same advertisers that are otherwise running with us, the answer is broadly yes, though I will say paid posts have helped us to win some new pieces of business that we might not otherwise have gotten and in the case where it is an advertiser who is already spending with the New York Times, often they are adding to what they're spending in adding paid post program.

I think you also asked about links.

Most of the programs are sort of based on either an individual storyline or a package of stories.

So, they tend to run across a quarter or a bit longer.

And as I mentioned in the first question I answered, we are coming up on a number of renewals and I'm happy to see that a number of the partners are coming back and saying I'm ready for my next story or series of stories.

Our clients for paid posts are clients who are -- who have got something significant and sometimes complex to convey.

They are after innovation, particularly multimedia innovation in content.

They're very interested in the amplification of these PCs through social.

So, primary appearance on our digital assets, amplification, and I have to say I think so far the list of clients is a dream list, really.

Exactly the kind of broad mixture of prestigious, large, ambitious players that you want to see with a new business.

We're very excited about attracting this business.

That's right.

And we're working very, very hard to keep the quality of the storytelling as high as possible and to Mark's point kind of using all of the multimedia asset that the Times has at its disposal to tell a great story.

Got it.

Thanks.

And then just going back to the subscribers, I think back in 2012 you spoke to the benefit from the election on digital subs.

Are you seeing anything similar this year?

I know it's obviously not presidential, but any kind of trend you can go back to 2012 and speak to?

As of right now, we're not predicting a huge bump around that.

I think what we will see though, as we often see, is around the holidays doing some special promotions as we did last year.

We expect to do that again this year.

And I think it will be a key event for us in the fourth quarter.

Alright.

Thanks.

One last one.

Just back to advertising for a second.

I know it's early.

You made the comment the fourth quarter is so different from 3Q in that the comp gets a lot easier versus harder, but is there any kind of early read on retail going into the holidays?

It's a good question.

I will say in general our luxury business has performed quite well on both platforms thus far in the second half of the year and we continue to feel pretty optimistic about that, and a lot of our retail business is in fact luxury business.

In general, the sort of broader retail business continues to be strong, although the nature of what our largest true retail partners are doing with us is changing.

Within luxury I think it would be fair to say that we are seeing strength in the US and some weakness in the international newspaper.

Yes, that's actually --

Which we associated with the economic -- the current economic tribulations in the euro zone and some relative softening and demand in Asia as well.

Yes.

Right.

So tied to world events, but we're kind of recouping whatever we're missing in Europe and Asia.

It's coming (inaudible).

That's right.

Thanks so much.

Doug Arthur with Evercore Partners.

Two questions.

Going back to the ARPU question.

You added -- your digital ads were up about 20% year-over-year.

Your total base 75 is up 20%.

Your revenues are running up 13% and obviously you talked about the education, international, price differences.

Are we -- as you go into new markets, get more clear on how you're going to do the lower price product on a web platform, are we likely to see that gap grow over time between sub ads and revenues or do think you'll hit a balance at some point?

That's question one.

I'll take a shot at that.

Look, ARPUs are down year over year.

I think that's the nature of the business we are in.

We have lower priced products.

We've entered new markets.

As I said, education does come into ARPU that is lower than basic rate.

ARPUs year over year are not down dramatically.

I would say ARPUs are down, they're still [above], by the way, our average basic $15 bundle.

So, you could do the math around what we've given, but you'll end up with an ARPU of plus $15.

That number I would say year over year is down maybe 5%.

That's not a tremendous change, but I think there could be some downward move.

I think that will largely depend upon where we come out with these new products and how successful we are attacking this lower priced opportunity which we still think exists and we're working hard to refine our strategy around lower price.

Okay.

The second question is a technical question.

Jim, if you look at the severance and the post -- the pension cost in the quarter, how do you adjust between production cost and SG&A on those two numbers?

Can you kind of weight that?

On severance it's entirely in the SG&A line.

On the retirement costs, it's harder to do.

It follows salary and it depends on where it is.

I just don't have that information.

Severance is all on that one line.

Okay.

Thanks.

Kannan Venkateshwar from Barclays.

Just a couple of questions.

The first is on -- obviously there's been a big focus on investments over the course of this year a new products and so on, but bulk of your digital growth on the circulation side is still coming from core.

So at what point do you expect that to start changing?

Secondly, when you think about [big box], I think one of the comments, Meredith, you made earlier was these promotions tend to run over a quarter and so on.

So as these become a bigger proportion of your digital advertising, should we expect more stability when it comes to your digital advertising stream?

Thanks.

I'll go first.

It's a good question and I would say broadly the answer is yes.

So, although we are still, I caution everybody we are still in very early days in the branded content business.

I think the whole market is an early days in the branded content business.

We are, as I said earlier, beginning to see a number of our partners renew.

Carry on their story into the next phase, the next iteration, and the long game we are playing is to become sort of a regular place for a partner to initiate really interesting value-added storytelling where the brand is a sub plot and there's some very interesting storyline or plot that makes sense to share on and beyond the New York Times.

And that is ultimately meant to be a more sustainable thing.

Let me have a high level go at the first question.

I want to say first of all that we're very happy to see continued growth in our core.

And the fact the core will play a large part, new products are in the mix as well.

Core is going to play a large part in a subscriber count for 2014 which we believe will be more net new ads as I said than in 2013 I think is a cause for confidence rather than the opposite.

Our focus, both at NYT now on the Apple iOS platform and on cooking more generally both iPad and web.

In particular, in growing impact awareness and usage we have some advertising already on both NYT Now and on cooking.

So, we already seeing monetization from both and we've got NYT Now and Premier subscriptions.

I think it's fair to say that we see significant subscription revenues as taking some time.

We want to do -- this is not unfamiliar in the digital space, we want to focus on getting these products out there, widely use, widely valued rather than trying to move swiftly to a big focus on subscription revenue.

We're pretty happy with the fact that we've got these new products in flight.

We took a tough decision, I think the right decision in NYT's opinion, but the others in flight and growing that audience and growing awareness.

Meanwhile, we have a set of core offers which are, themselves, continuing to grow.

Do you want to add to that, Jim?

Well said.

I don't.

One followup.

Earlier in the year I think you had mentioned video as an opportunity.

We've not heard much about that over the last couple of quarters.

I just wanted to get some update on what's happening on that front.

It depends on what we're doing.

There tends to be quite a lot of talk about on these calls.

I'm very excited about what's happening in video, the attractive consumption, the improved diversity and quality of the offering and, again, we've been seeing some very nice positive deltas in terms of selling video advertising.

Meredith why don't you talk?

I would agree with that.

We had a big move this week in the expansion of our video player placement presence on the home page which we think will make a meaningful difference.

So, we continue to see stream growth and we are continuing to grow the number of shows that are both interesting to consumers and also commercially relevant for sponsorship.

We feel -- as Mark said, it's a small base, but we're optimistic about the future growth prospects.

Taken together smartphone, tablet, and video, it's now becoming a very significant part of our digital advertising.

Taken together, it's a significant reason why we turned what was a revenue stream which was in slight decline into a revenue stream which is now growing pretty healthily.

Thank you.

Your last question from Edward Atorino with Benchmark.

Sort of an odd question.

If you look at the decline in trend and the gain in digital, is it the same people?

Are you getting any new -- measure whether it's new audience or the people that print and just go to digital, and so your audience is maybe not growing much?

I think it's a really interesting question.

It's worth remembering, Edward, that the overall digital audience is a vast, vast audience, 60 million people probably touch us one way or another every month in America and around the world on digital platform.

So, we have a very, very, very big digital, much of which is -- some of which is very engaged, much of which are relatively light users.

Our print users -- many, many of them, the majority of them authenticate for digital and use digital as well.

There's no question that some of our new products, NYT Now and cooking are both examples, are definitely reaching people who are not currently regular users of the Times.

Many of the subscribers of NYT Now are people who never subscribed to the Times before.

Certainly, one of the benefits of having a broader portfolio of products is you can reach out beyond your heartland audiences.

We're certainly internationally -- we said we're pleased with progress on international digital subscriptions.

Again, we are gaining people who've never paid for the Times before.

In simple terms, the overall launch of the pay model means that notwithstanding, some declines on the print side, we have more paying customers than we ever had before.

So, we are growing our paying customers.

We have an enormous digital audience.

We are finding new audiences, although it may be possible that some print subscribers who cease to read the physical newspaper don't become digital subscribers.

Our general experiences, once people become engaged with and come to rely on the New York Times, they've got the habit for life.

The TV people talk in terms of audience, have you ever tried to measure your audience, if there is such a thing?

Well, what we currently do, and you've seen some AAM numbers, headline numbers for the last half year came out early this week, is we have a number of different, as it were, platform-specific managers.

ComScore for example in digital.

We don't have, that I'm aware of, a sophisticated multi-platform metric.

We don't have a single master metric.

Though we're very focused on questions like engagement defined by session time and we do track very closely how many minutes a day a print reader spends on average, different kinds of reader.

The same with web, the same with smartphones and so forth.

So, we do track engagement and we do -- although there is no industry standard I'm aware of for this, we do also try and track usage from platform to platform exactly on the lines of your first question prompted.

Your ad rates are based on circulation both digital and print, not audience, I guess?

Broadly, yes.

Thank you.

As there are no further questions, I will turn the call back to the presenters for closing remarks.

Thank you for joining us this morning and we look forward talking to you again next quarter.

This concludes today's conference call.

You may now disconnect.