New York Times Co (NYT) 2015 Q1 法說會逐字稿

Good morning, my name is Michelle, and I will be your conference operator today.

At this time, I would like to welcome everyone to the New York Times Company Q1 2015 conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

I would now like to turn the call over to Ms. Andrea Passalacqua.

Please go ahead.

Thank you.

And welcome to the New York Times Company's first quarter 2015 earnings conference call.

On the call today we have Mark Thompson, President and Chief Executive Officer; Jim Follo, Executive Vice President and Chief Financial Officer; and Meredith Kopit Levien, Executive Vice President and Chief Revenue Officer.

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 2014 10-K.

In addition, 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'll turn the call over the Mark Thompson.

The start of 2015 saw us continue to make real progress in our digital business, with double digit year-over-year growth in the first quarter in both digital subscriptions and digital advertising.

Print had a more mixed quarter, with the headwinds in advertising we saw in the latter part of 2014 continuing through the quarter.

Successful cost management contributed to a 5% increase in the Company's adjusted operating profits, and adjusted earnings per share of $0.11, compared to $0.07 in prior year.

Let me begin with digital subscriptions.

We added 47,000 net digital subscribers in the quarter, more than any quarter in the past two years, which is particularly pleasing, given that our pay model has now reached its fourth anniversary.

That quarterly increase brings us to a total of 957,000 paid digital subscribers.

The strong digital consumer growth in the quarter was attributable to improved retention, higher traffic to our digital assets, and the seasonality of education subscriptions.

The higher traffic is evidence of the effect of the program to develop our audience we began to execute in the second half of 2014.

The early result of this program has been very encouraging.

US digital traffic, for instance, in the form of un-duplicated unique users across all devices, was up 22% year-over-year in the first quarter, to an average of $59 million monthly users.

We're convinced there is scope to increase our digital audience much further, without diluting the exceptional levels of engagement which we attract.

The results have helped boost both our digital subscription and digital advertising businesses.

So let me turn now to digital advertising, where we also saw continued momentum in the quarter, with year on year growth of just under 11%.

Mobile, Paid Posts, to video and programmatic all contributed to that growth.

I also want to add a comment about ad viewability, the industry-wide effort underway to ensure that advertisers only pay for impressions that have actually been viewed by users.

We support viewability, and in common with other publishers, we're in the process of optimizing our website to meet the new standard.

While we'll see some reduction in overall ad impressions as we cycle through the change, viewability plays to the Times' fundamental strength and engagement.

Any short-term impact on revenue will depend on how the market responds, and we'll know more about that in the few months' time.

But in the long run, we expect viewability to help rather than hinder our digital advertising growth story.

Now, let's consider the print side of our business.

As I said at the start, the print advertising headwinds we saw in the second half of 2014 continued into the quarter.

Overall print was down 11% year-over-year, which when blended with the gains in digital advertising, led to an overall advertising decline of 6%.

That 11% number includes steeper falls in advertising for our international newspaper, as well as some foreign currency effects.

I should also note the print advertising in last year's first quarter was up 4%, due in part to the one-off boost provided by the Super Bowl in New Jersey, and also by a particularly strong Oscar race.

The year-over-year comparisons become less onerous as we go through the year.

There was a decline in print circulation revenue of 2.4% in the quarter, as reduced volume more than offset the positive effect of our January price rise.

Nonetheless, we're focusing our efforts on print circulation retention, and believe there is much to be done to better retain our current subscribers.

The strong digital subscription story meant that overall circulation revenue grew in the quarter by just under 1%.

Since our last earnings call, we've made two important leadership appointments.

Kinsey Wilson has added the role of EVP Products and Technology to his current duties heading up Digital in our newsroom.

Kinsey is now leading the work on the development of our digital portfolio.

Indeed, we've already announced that next month, we'll be converting NYT Now into a free product.

We want to continue to use Now to reach younger audiences, and to pilot new ways of delivering compelling news on smartphone.

We'll have more to say on the broader portfolio over the next few months.

Kinsey has already had a massive and entirely positive impact on the Times in his first few months, and I'm delighted he's going to have this clear overview of all of our digital operations.

Just a couple of weeks ago, I also announced that Meredith Kopit Levien, our EVP of Advertising, will be taking on the expanded role of Chief Revenue Officer, meaning that her responsibilities will now include leading the marketing functions, as well as advertising.

Meredith has had a dramatic impact on advertising, gathering a great team around her, backing innovation, building new products and business lines.

And I'm convinced she can bring similar flair and focus to the vital work of branding consumer marketing at the Times.

I also believe that our new leadership team will allow us to move further and faster in developing the business.

Let me finish by noting that the journalism of the New York Times, on which everything else depends, continues to be recognized as amongst the very best in the world.

Last week, the Times won no fewer than three Pulitzers, more than any other news organization.

But now to give you more detail on the financial picture, let me hand over to Jim Follo.

Thanks, Mark, and good morning, everyone.

As Mark highlighted, 2015 got off to a good start, as we maintain our progress on both the digital advertising and digital subscription sides of our business.

There is of course, still much to accomplish in 2015, though.

In the first quarter, for instance, the momentum across digital could not offset overall print declines, leading to overall revenues ending down.

Operating expenses decreased in the first quarter by nearly $16 million overall, driven by print distribution efficiencies.

Our focus on reducing costs remains our top -- a top priority, but we do not expect future quarters to see the same level of expense declines as we saw in Q1.

Nonetheless, cost reduction initiatives we recently implemented across the Company should allow us to maintain lower costs in 2015, relative to 2014 levels.

Adjusted operating profit rose 5% in the quarter, to $59 million.

We reported GAAP operating loss of approximately $11 million, driven by a $40 million pension settlement charge in this year's first quarter, as well as a $5 million multi-employer [withdrawal] charge, compared with an operating profit of $22 million in the same period of 2014.

Circulation revenues increased approximately 1%, with our digital subscription revenue stream more than offsetting print declines.

We benefited from January's home delivery price increases, although higher revenue from the new rates was outweighed by overall volume declines.

In the first quarter, digital-only subscription revenues were approximately $46 million, an increase of 14% from the same quarter in 2014.

Advertising maintained its progress on the digital platform in the quarter, finishing up 11%, and mitigating the print loss of 11%.

Digital advertising continued to see a boost from mobile, Paid Posts, video and programmatic, but overall advertising revenue still declined about 6% in the quarter.

Advertising revenues continued to exhibit month to month volatility.

Combined print and digital advertising declined 10% in January, which is when we saw the bulk of the Super Bowl and Oscar related strength in last year's first quarter.

And 3% and 5% in February and March, respectively.

Print advertising revenue was down during all three months, while digital was consistently strong.

And lastly, on the revenue side, our revenues grew 6% -- our other revenues grew 6% in the quarter, driven by higher revenues from our conference business, as well as from rental income.

Expense management efforts remained front and center in Q1, as we continue to lower core costs, while devoting resources to key investments.

Costs were down 4% on a GAAP basis in the quarter, and we reported diluted loss per share of $0.09, driven by the two pension charges.

Cost declined mainly due to print distribution efficiencies, as well as declines in depreciation and amortization, raw materials and outside printing expenses.

Adjusted dilutings per share was $0.11 in the first quarter, compared to $0.07 in the prior year.

Our non-operating retirement costs were flat in the quarter, at $8.9 million.

Retirement costs are expected to generally flatten out in 2015.

We expect non-operating retirement costs in the second quarter to be approximately $9 million, versus $8.3 million in Q2 of 2014, due to higher multi-employer pension withdrawal costs.

In Q4 of 2014, we completed the rental of an additional floor of our headquarters building, which makes up approximately 31,000 square feet.

We began recording the associated rental income in the first quarter, which partially drove the increase in other revenues in the quarter.

Moving on to the balance sheet, our liquidity position was further bolstered in the first quarter.

Our cash and marketable securities balance was $848 million, and our total cash position exceeded total debt and capital lease obligations by approximately $420 million.

Late in the first quarter, we repaid, at maturity, the remaining $224 million principal amount of our 5% senior notes.

While interest expense was lower in the quarter, partially as a result of this repayment, the full benefit will begin to be realized in Q2, when interest expense should decline by approximately $3 million.

At the beginning of the first quarter, as part of a warrant exercise, we announced the intention to make share repurchases of approximately $101 million, equal to the proceeds received from the warrant transaction.

We believe a re-purchase program is the best use of cash in this instance, since it will largely neutralize the transaction's impact on our diluted share counts.

To that end, the Company has repurchased approximately 547,000 Class A shares for approximately $7.3 million to date as of yesterday.

Regarding the pension settlement charge we took in the quarter, in Q4, the Company offered participants in various defined benefit plans the option to immediately receive a lump sum payment, or to immediately begin receiving reduced monthly annuities.

We made a settlement distribution of approximately $96 million on that offer in the first quarter, all of which came from pension assets.

This is what's driving the $40 million special charge that you'll see in today's results.

The effect of this offer was to reduce the overall size and inherent risk of our plans, as well as to modestly improve our funded status.

We also booked a $5 million charge for a partial withdrawal obligation, under a multi-employer pension plan in the quarter.

Moving to our outlook, second-quarter circulation revenues are expected to increase at a rate similar to the first-quarter trend, driven by the benefit from our digital subscription revenue growth, and January's home delivery price increase, despite continued challenges on the print side.

We expect that the total number of net digital subscriber additions, in a seasonality slow second quarter, to be approximately 30,000, partially driven by the conversion of NYT Now to a free product, and the associated loss in paid digital subscriptions.

Advertising revenues are currently expected to be down in the mid single digits, driven by print declines, wile the digital trend is expected to be consistent with the first-quarter growth.

Other revenues are expected to increase in the low single digits, as there are no special -- no conferences planned in the second quarter.

And second-quarter operating costs and adjusted operating costs are suspected to decline in the low single digits, as we get the benefit of the late 2014 cost reduction initiatives.

And with that, we'd be happy to open it up for questions.

(Operator Instructions)

Alexia Quadrani from JPMorgan.

Thank you.

I have two questions.

First is, I think in your opening remarks, you talked about, there's much to be done to retain, I think, print subscribers.

I was hoping that you could elaborate on what those plans are, and how they may work?

And then the second question is just really on the cost side.

You guys continue to do such an impressive job reducing your costs, specifically on the print distribution efficiencies you're finding, can those continue?

And maybe some color you can give us on the outlook for the raw material costs?

And whether they're meant to continue to decline?

I'll ask Jim to address those.

If I can just say, Alexia, good morning by the way, just to say firstly that we think there's scope in both areas.

That we think that there is more we can do to -- on the print retention side.

Including, by the way, enhancements to the print offering.

I think the brilliantly launched New York Times Magazine, the new men's style section will be example of actually fundamental work, innovating and strengthening the product.

But there's also work we can do, we believe, inside our current system, direct marketing operation, to improve print retention.

And as Jim will say in more detail, we also want the scope to continue to work on the cost side.

But let me hand over to Jim.

Look, we continue to be aggressive on things, not just on the print distribution side.

But print distribution is obviously still a big component of our cost structure.

We think there is more work to be done there.

We have got the right people in place who do it, and are quite good at it.

And so we expect it gets more difficult, but we do expect to be able to continue to find more ways to be more efficient in our print operations.

And that will be -- that's just necessary, and that's the way we think about that.

On the newsprint side, newsprint prices continue to come down, so we benefited, both from a price and a volume perspective.

Units are down modestly, but price continues to move in our favor.

And hard to say, I mean, there's quite a bit of capacity in the market.

And as long as there's an over-capacity in the market, we think prices will continue to be under pressure.

And we'll get the benefit of that.

Thank you.

If I could squeeze in one more, on the digital sub growth, which continues to surprise us on the upside.

I don't know if you have a number you can share, but longer term, do you guys have an internal number of how big that can get?

That continues to be -- have this impressive growth many years after it's launched?

I think that's a really difficult question to answer.

What I can say is that I think what is so encouraging, the actual raw number, 47,000 net sub, so it gives a very encouraging number.

But I think the quality of the subscribers continues to encourage us.

We are having some success in reducing churn on the digital side, that's in the number.

And we're very encouraged by the loyalty of our digital subscribers, particularly once they get to the one-year maturity in their subscriptions.

That all of -- there are lots of underlying positive indications in that.

We've got Kinsey Wilson now on the case, working with us, and Meredith will be in her new Chief Revenue Officer role, also working on whether there are further ways of improving and tweaking the complete portfolio of offers and products on the digital product side.

But we continue to be very bullish.

We're four years in, and we're continuing to see good, steady, strong growth.

Thank you very much.

Your next question comes from Craig Huber from Huber Research Partners.

Yes, hi, I've got a few questions.

My first one, as you think about the second quarter, the outlook for advertising here, I'm curious, how did the month of April shape up for you here?

Was it similar to January's down 10%?

Or the February/March, down 3% to 5%, I think you said?

Meredith?

I'm happy to take that one.

Hi, Craig.

I would say, as Jim suggested, in print, generally, feels like we'll be pretty consistent with the first quarter, although January was particularly bad.

I don't know that we'll see that again.

And in digital, we're off to a brisk start.

Very positive start.

Very positive start.

With comps getting a little tougher as we get into the quarter.

Yes.

So I'm sorry, is that to say that the month of April -- we're basically at the end of the month now -- is that down similar to down 3% to 5% you saw in February and March?

We've had a decent month of April, largely driven by a really strong digital month.

Yes.

But again, the comps get more difficult in the back part of the quarter.

That's what gives us -- gives rise to the kind of mid single digit down combined.

Yes.

Yes.

And the comps, as they were through the rest of the quarter, and through the rest of the year, the comps go both ways.

The print comps -- (multiple speakers) -- digital comps tend to get tougher, because (multiple speakers) the lack of [pass] of the 2014, when we started seeing really strong digital growth.

But if you look at April comps last year, they were the toughest of the quarter, by a meaningful amount.

Yes.

Okay.

And then on the print circulation volume side, I believe the first quarter, daily was down -- I'm sorry, the fourth quarter, down 6.7%, and Sunday was down 4.5%.

What were those numbers for the first quarter year-over-year, please?

The number for daily, in the first quarter, we have about 6.8% down, and Sunday, 5.2% down.

The only thing I would say about that is, we will expect those trends to improve on a number of -- for a number of reasons, as we go throughout the year.

And we changed some of our marketing efforts, and we moved away from some lower retaining copies toward the second half of last year.

So once we get into the second half of the year, we would expect some of those trends to begin to moderate.

So we're feeling some of the effect of that.

It's also -- it's fair to say, in that overall print circulation decline for Q1 of 2.4%, there's some currency affecting that number, as well.

I would say about one-quarter of that would be currency related.

Yes.

And that will also moderate, as we go to the back half of the year, as the euro is declining throughout all of last year.

So we'll see some moderation on that, as well.

So we looked at the back half year to see more positive trends in the print circulation side.

And the currency effects, also, have a, as it were, a positive effect on the cost side.

On the cost side.

So you can't see them as a profitability [problem].

And then Jim, another housekeeping question, please.

What was the basic shares outstanding at the end of the quarter, please?

End of the quarter?

I have only the average, which obviously will be higher at the end of the quarter.

We're at 163,000 that number should go higher, because the warrant exercised and took place not --wasn't outstanding for the full quarter.

So they should tick up a little bit, off of the 163,000 as we go into next quarter.

But then you'll have to factor in whatever the activity around share buybacks are.

Okay.

One last question, please.

Your cash on the balance sheet -- your net cash on the balance sheet, obviously, you've been getting a lot of pressure from investors.

I'm sure it's going to intensify here, going forward, to do something with that cash, rather than just let it sit there.

What is your long-term expectation of what you are going to do with that?

Just preparing for a rainy day here, when we get back into a full-fledged recession?

We're in a early stages of a share buyback.

We've committed to about a $100 million buyback.

We're very early stages.

We didn't really start executing on that until late into the quarter.

So some of that cash we expect to be putting against share buyback.

We feel, at the dividend level, the amount of cash that we're generating, that we're paying out in dividends, feels about right, given where we're at.

Pension obligations is not an insignificant issue for us, although we don't think we'll be putting cash against that.

We have to be mindful, and we can't ignore that.

That's not near the net debt number, but we have to be mindful of that.

We'll continue to explore the best use of it.

But as of right now, we feel like maintaining our fairly conservative balance sheet posture feels about right.

But we are --

One thing I would add, as well, is that in the recent weeks, we've got -- I've got into place now the leadership team that I want for this Company.

We've got a new leader of digital, a new leader of revenue, marketing and advertising.

And we will be looking hard at whether opportunities used to invest, both organically and what we're doing already.

But potentially, also, in new business lines.

So I think -- I also think of this being a period, as we think about how we grow our Company, where we will be looking, of course, judiciously, but looking for ways of investing in growth.

Great.

Thank you.

Your next question comes from Bill Bird from FBR.

Good morning.

On paying digital subs, how many will you lose on the conversion to free at NYT Now?

And I was wondering, on digital advertising, if you would just talk a little bit about each of the growth areas?

Mobile, Paid Posts, video, and how you see them developing?

Thank you.

Sure.

Yes, we -- the expectation, when we move to pay, is that we'll be able to convert at least some portion of our subscribers to paying customers, to our core App.

So we don't think that we'll lose the full count.

But we do think that there's probably 4,000 or 5,000 units that will likely come out of our subscriber count.

So that 30,000 number I gave, I would think that we would be -- on a gross basis, would be some, maybe, 5,000 or higher than that?

If it wasn't for that effect, actually, we would be in line with (multiple speakers) -- ahead of the 2014 number.

Yes, but we'll have to see how many we can convert.

But I don't think there's going a big swing on that issue alone.

It's -- we stopped promoting, heavily, that product.

Yes.

Over the summer, until we felt like we got the product and the marketing right.

So there's not that much pressure on that -- (multiple speakers).

As we said before, there's some seasonality in the digital ad numbers we've seen, certainly saw, clearly, in 2013 and 2014 in Q2, partly because of, it's a lesser quarter education, due to, typically, it being somewhat lower than Q1.

But I think our number, given the fact that Now is going free is, it supports the idea of continued bullish growth in the subscriber count.

And probably means that we hit the million number, of 1 million digital-only subscribers, probably at some point in Q3.

And I think you asked about digital advertising.

Four main areas of growth --really actually five -- so Paid Posts continues to be a big part of the growth story.

And I would still say we're just getting started there.

We've made a big expansion of the team, here in the US, to actually build the brand and content work.

And so we expect that to continue to grow nicely.

We're also making an investment in building an international content studio, so we think that will have a nice impact, going forward.

Mobile has been a growth area, I want to say in the 40% range, up over first quarter of last year.

And we are also -- that's also an area that we expect to continue to grow, and have a lot of optimism around.

One of the reasons mobile grew in the quarter is, we've done a lot of, I think, good work to change, and in many cases add placements, in very careful ways, with an eye toward user experience, and that's gone well.

Programmatic grew nicely in the first quarter.

And what I'll say there is, that is mostly coming in the form of preferred and private deals, where we're opening up specific demand pools.

So a particular marketer is buying us in a more automated way.

And then video, which is also still a relatively small business for us, video is growing, and growing nicely.

And the one other things I'll say is, we're still seeing in digital advertising -- and I think we've got some more running room here -- just the benefit of improved sales execution.

And I'm curious, on video, are you doing any offsite syndicated video?

And do you have any aspirations of doing that?

Yes, and yes.

So we are doing some now, and we definitely have aspirations of doing substantially more there.

I think we've made -- we had our video NewFront this week.

We've made really good progress on the quality of our video production, the number of productions.

And now the real work is, how do we achieve substantial stream growth?

And we are working on that.

And just one final question.

How large is mobile, as a proportion of your digital ad revenues?

I think we just -- Andrea can correct me -- but we've just crossed so it's more than 10%?

And we expect that number to keep going up.

And it's a big area of focus for us in advertising, right now, as it is on the consumer side of the business.

Great.

Thank you.

The percentage is substantially higher on the consumer side.

Yes, particularly this last quarter.

Yes.

Your next question comes from Doug Arthur, from Huber Research.

Yes, thank you.

Mark, two questions.

The decision to go free on New York Times Now, I guess question one is, why do you think it did not work as a paid model?

And then secondarily, what do you hoping to gain by making it free?

I would assume, on the digital ad side.

And then second question, you're combining marketing and advertising under Meredith.

What does that mean?

What do you see is the benefit of that?

Okay.

Great.

Those are two really good questions.

Firstly, with Now, I think that where we're we've got to with Now is thinking that it will reach a broader audience, and build a broader audience, free than it could as a subscription product.

And I think there's a lesson.

When we introduced Cooking later -- or rather a few months after Now last year -- learning from Now, we decided the right thing to do with Cooking was to try and build that audience right away, before turning to the question of monetization.

So the first thing, straightforwardly, is we think Now is great.

It's been very influential.

People who use it love it.

But we wanted to get out to more people.

Making it free will help it do that.

And absolutely, a bigger audience means that we can think about building advertising revenue from it.

I don't rule out other forms of revenue from Now in due course, but it means people can really get out there, use it and get to know it.

And as for Meredith, I believe that in all sorts of ways, it makes sense to think of our two revenue streams, advertising and consumer revenue, together.

There are many things we need to do around the way we think about our content management systems, about the way in which both advertising and direct marketing messages flow into the news feed, particularly on smartphone, where it makes sense to think about the two together.

Creative services, we are beginning to have a significant and very exciting business in actually making advertising content in our T Brand studio, for our Paid Posts.

We have a big creative service operation inside our marketing functions, thinking of those together.

And I think also, as we think about new products, and think about what's the best way of optimizing monetization, I think having one leader thinking about the two together makes sense.

But also, I want to say something more straightforward, which is Meredith's made a fantastic success, in turning around and strengthening our advertising operation.

And I'm very much hoping she'll do the same in marketing.

So those are the reasons.

Great.

Thank you.

Question comes from the Kannan Venkateshwar from Barclays.

Thank you.

(technical difficulty) Is this better?

Better.

So just a couple of questions.

First on the trends, in terms of your print versus digital, now that digital has been around for the last few quarters.

Just wanted to understand what the underlying trends looks like versus print on churn?

Or is -- and then on -- how many of your print subscribers moved over to digital?

What kind of consumption patterns there are between mobile, tablet, desktop and so on?

If you can just help us with that, that will be very useful.

This is a gigantic topic, Kannan.

I'm not sure we can do complete justice to your question right now.

But headline -- one or two headlines, is I mentioned loyalty, digital subscriber loyalty, particularly after a year's subscription, and on up.

Our digital subscribers are slightly more loyal than our print subscribers.

We are seeing a -- it's a very complicated picture, in terms of print to digital subscription.

But I think without wanting to disclose detailed numbers, I would say that we are seeing a movement, week by week, from print to digital, and one of the movements in subscription.

It is relatively small numbers, small percentage numbers at the moment.

The numbers are, as it were, slowly, slowly growing.

We believe that the print subscription offer remains relevant to many, many households, and it's -- the print product remains a great product.

Obviously, we would much rather, if a print subscriber wants to no longer receive the physical New York Times, we would much rather they converted to become a digital subscriber than to churn out of our ecosystem altogether.

But we also don't want to, as it were, unnecessarily hurry that process.

One of Meredith's challenges is going to be to, in a sense, think through and manage that process of transition, in a way that generates the most cash for us over the long-term, and most future-proofs the business.

And we're thinking very carefully about that.

In terms of different platforms, it won't be a surprise to hear that we're seeing dramatically more use of mobile platforms, in particular smartphone, than would have been true a few years ago.

Though it's also true that smart -- although smartphone is heavily used by subscribers, much of the increased traffic to smartphone is from somewhat lighter users.

So a majority of our visits are to mobile rather than desktop.

But if you look at time spent, desktop -- and particularly the amount of time spent by very heavy use subscribers, a lot of it's still on desktop.

So we're seeing a transition.

I believe that we're beginning to solve the issues around monetization on smartphone, with superior ad units.

Video will play a part in that, Paid Posts will play a part in that.

We also believe that we're doing a better job, in terms of convincing subscribers that it makes a lot of sense to have subscriptions, even if they are smartphone heavy users.

So that's not a complete answer, but I've touched some of your points, anyway.

Yes.

Sure.

That's very helpful.

Thank you.

Comes from John Jenedis from Jefferies, your line is open.

All right.

Thanks.

Good morning.

Couple of questions.

First, there's been a lot of talk in the marketplace about pressure on pre-prints, and some changes from the consumer electronics and [re-tab] articles.

Can you tell us what you're seeing, and just a reminder of what percent of ad revenue the category represents?

And by pre-prints, I assume you mean -- what we call FSIs, or freestanding inserts?

Right.

I do think that that's a category that is under a fair amount of secular pressure.

It is not a big category for us.

And so while it's -- it is under pressure, it's not having a huge impact.

Because it's -- again, it's a small minority of our print advertising business.

We're actually looking at that number now.

It's like 2% or 3% of our advertising.

Yes.

It's a relatively small number.

It's a very small part of the business.

So we -- most of our print advertising is still coming from major national advertisers.

And we have a fair amount of optimism there, particularly around the new products that we've launched for those advertisers.

Yes.

Like the magazine, like even T, which was redesigned a couple years ago, but to great success, and men's style.

And actually, I think it's worth adding that, without no names [like Pactril], that we believe that measuring column inches, and studying our competitors, that we're doing significantly better.

Yes.

In our national print advertising business.

Yes.

Than our competitors are.

Yes, and I'll say one more thing, just on the pre-prints, or the FSIs specifically.

It is a business that we're putting some thought into, so making sure that we have it staffed the right way, and that we're optimizing our execution, is something that we have spent some time on.

So we're committed to getting every last dollar that's there, into the Times, from FSIs.

Okay, that's helpful.

And then just, Jim, I just wanted to clarify what you said on costs.

Because I think, in your remarks, you said future quarters wouldn't have as much savings, and then said that, I think, 2Q costs would be down low singles?

And so I wanted to clarify.

Were you referring to the 4% GAAP number from Q1?

And is the view now that the full year will be down modestly?

I think the way it will play out is, I think you'll see good performance in Q2, where some of the things we benefit in Q1 might be one-time in the quarter.

I think what we'll see in the Q2 is, some of the marketing spend around some of the new product launches that took placed last year, which won't exist this year, will suggest that we'll have some pretty good performance in Q2.

I think the back half of the year will be less aggressive than the first half of the year.

But still, I expect costs will largely be down, back half of the year, as well, but probably more modest in the first half.

Okay, and maybe one quickie on advertising.

I just wanted to clarify.

We haven't discussed this for a while, I think.

But just in terms of the Easter shift -- because it sounds like April seems somewhat in line to March.

But was there -- is there, more or less, like a tougher comp, because Easter had a positive impact on March and a negative one in April?

Or is it de minimis.

I think it's pretty de minimis.

I don't think that had a material impact.

Okay.

Thanks so much.

I have no further questions in queue.

I'll turn the call back over to the presenters for closing remarks.

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

Good bye, everyone.

Thank you.

Thank you everyone, this concludes today's conference call.

You may now disconnect.