New York Times Co (NYT) 2017 Q1 法說會逐字稿

Good morning, and welcome to The New York Times Company's First Quarter 2017 Earnings Conference Call.

(Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Harlan Toplitzky, Executive Director of Investor Relations and Financial Planning and Analysis.

Please go ahead.

Thank you, and welcome to The New York Times Company's First Quarter 2017 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 2016 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 will turn the call over to Mark Thompson.

Thanks, Harlan, and good morning, everyone.

Q1 2017 was a very encouraging quarter for The New York Times Company.

Digital revenue was strongly up year-over-year across the board.

Print consumer revenue was also up, as was overall revenue for the company.

And despite continued headwinds in print advertising, adjusted operating profit also grew, albeit modestly.

These numbers, we believe, validate our thesis that there is a large and growing appetite in this country and around the world for journalism of seriousness and depth, and that a growing number of people are prepared to pay for it in digital as well as in print.

They also support our view that quality news is a relationship business.

Social media and other digital platforms can be valuable as a way of enabling users, especially new users, to encounter and then sample high-quality news.

With thoughtful readers, we'll always want to know the provenance of the news: who reported it, who edited it, who was ultimately responsible for its accuracy and fairness.

This is why we believe in building a strong digital destination for news and encouraging our most engaged readers to make us a daily habit.

We also believe that when it comes to advertising, the world's best companies want the same things as thoughtful readers: digital environments where their brands are safe, and they won't find themselves next to dishonest or tawdry content, and where they can associate themselves with journalism of quality and ambition.

In the chaotic landscape of digital advertising, we believe that the guarantee of quality that we apply to our journalism is also a guarantee of safety and value for our advertisers.

So let me turn now to the detail of the results, beginning with our digital consumer business.

In the quarter, we added 308,000 net digital-only new subscriptions, the largest quarterly addition in the history of our pay model.

We have also seen exceptional growth in our digital crossword business, adding 40,000 subscriptions this quarter.

Total subscriptions combining digital news and crossword subs with our print home delivery subscriptions stood at 3.2 million at the end of the quarter.

We saw some moderation in the rate of new subscription adds to our news product towards the end of the quarter and expect that moderation to continue through Q2.

I want to emphasize, though, that our digital subscription business had started to accelerate long before the 2016 presidential election cycle got into its stride.

The acceleration was driven by data-driven adjustments to our pay model and greatly improved execution in our consumer marketing department.

We have more improvements in the works, and we're confident that even after the intensity of the current news environment subsides, this underlying acceleration will continue.

We also saw exceptional growth in digital advertising in Q1 with a 19% year-over-year increase.

Our strategy to pivot the business to focus on smartphone, branded content, innovation and marketing, and creative services is paying off.

Print advertising remained tough with a decline of 18% year-over-year in the quarter, but it's a testimony to just how far our business has already transitioned towards digital, that this steep decline did not stop us from growing our total revenue significantly in the quarter.

When I arrived at The Times 4.5 years ago, print advertising was such an important part of the company's economics that the idea of growing total revenue in the face of such stiff headwinds would have been unthinkable.

The dynamism of our digital businesses now makes it possible.

Costs rose in the quarter largely because of higher marketing expenses, not all of which will repeat in subsequent quarters, and the inclusion of costs from acquired companies.

Despite this increase in costs, the fact that total revenue for the company grew 5% in the quarter enabled it to grow adjusted operating profit slightly as well.

Let me finish with a few words about Times journalism.

During the quarter, we launched the brand advertising campaign based on the proposition that the truth is hard.

It struck a cord not just in America but around the world, and it's been very widely commented on.

Even the President of the United States was kind enough to draw attention to it.

The campaign makes the case for the kind of deeply reported, courageous and serious journalism that The New York Times has always stood for.

That journalism is as strong today as it's ever been.

In recent weeks, it's been recognized with an astonishing crop of awards, including 3 more Pulitzers.

We've also seen some exciting new talent arriving in both our newsroom and in our editorial department.

Our new Deputy Managing Editor Rebecca Blumenstein, and our new Business Editor Ellen Pollock are now working together to reshape how the Times covers business and financial news.

T Magazine has a new editor, Hanya Yanagihara, who will plot the future direction of one of the world's preeminent star magazines.

And our editorial page editor, James Bennet, recently brought the Pulitzer prize-winning columnist, Bret Stephens, to our Op-Ed pages.

We're now in rapid transition from a celebrated past as a great American newspaper to a future of even greater potential as a subscription-first, mobile-first news provider for thoughtful audiences everywhere.

One of the things that gives us most confidence as we execute this transition is our access to talent, both the world-class talent we already have and the exceptional talent we can attract into the company, talent like Rebecca, Ellen, Hanya and Bret and other new colleagues in every part of The Times.

We are fully committed to the investment needed to maintain outstanding frontline reporting.

Indeed, as I noted in our last earnings call, we've actually boosted the newsroom budget at some -- in some critical areas.

But my colleague Dean Baquet has also made it clear that our newsroom needs to adapt and develop if we're to seize the opportunity in front of us.

The recent 2020 report set out some important recommendations for change, including the need to approach the task of editing our news report in a new way.

You can expect to hear more about that and of our plans to recruit further new journalistic expertise and talent over the course of the present quarter.

In February, we introduced The Daily, a new audio report that's already had more than 27 million downloads and streams and is on track to surpass 100 million in its first year.

The Daily is a new way to encounter Times journalism and to get a behind-the-scenes flavor of what Times journalists do.

Its freshness of style and the warmth and brilliance of its host, Michael Barbaro, have already made it an unmissable pleasure for its large and growing audience.

Whether in audio, virtual and augmented reality, in digital products like our new offering for Snapchat, or in ad formats, innovation is helping us to find new users and drive new revenue streams.

But now let me turn it over to Jim for a more detailed financial review.

Thank you, Mark, and good morning, everyone.

As Mark said, the first quarter results reflect solid growth.

Adjusted diluted earnings per share was $0.11 in the first quarter compared to $0.10 in the prior year.

We recorded GAAP operating profit of approximately $29 million compared to an operating profit of $28 million in the same period of 2016.

Overall revenues were up 5% in the quarter as strong consumer, both print and digital as well as digital advertising revenues, more than offset continued weakness in print advertising.

Total consumer revenues increased by 11% in the quarter, with digital-only subscription revenue continuing to grow strongly, up 40% to $76 million.

Both our core news and crossword product revenues grew at this rate in the quarter.

From the print circulation side, revenues were nearly 2 percentage points higher as home delivery revenues more than offset a decline in revenue from single copy sales.

Home delivery revenues increased in the quarter compared to the prior year as home delivery price increase in early 2007 more than offset volume declines.

Total circulation declined by 4 points -- total daily circulation declined by 4.7% in the quarter compared to the prior year, while Sunday circulation was flat.

As was the case last quarter, ARPU continued to decline in the first quarter, largely due to the sharp increase in net subscription additions, most of which start on the promotional discount relative to the size of our total subscriber base.

As we have experienced a significant increase in net subscription additions over the past 3 quarters, we expect ARPU to continue to decline before stabilizing when new subscriptions step up to full price.

As I said on last quarter's call, predicting the number of net additional digital subscriptions has become increasingly difficult, and we are discontinuing forward guidance on this metric.

We will continue to provide customary revenue guidance.

As Mark mentioned, over the course of the last several weeks, we have experienced a slowdown in the rate of net additions to our news product relative to our experience over the past 2 quarters.

While we do not expect second quarter additions to continue at a similar rate to the last 2 quarters, we do expect them to grow at a healthy rate relative to last year's second quarter.

I'll also remind you that the second quarter is generally a slow quarter for digital subscription growth.

We continue to focus on retention to our -- of our subscribers.

To date, we have seen nothing to suggest that the large number of new subscribers is retaining differently from historical retention levels.

In the first quarter, we launched a program that allows individuals to sponsor student subscriptions to our digital news products.

Revenue recognized in the quarter from this program, while small, is reflected in other revenues and does not impact our digital subscription count.

Moving onto advertising.

We report our third consecutive quarter of double-digit growth in digital, while challenges in print remain.

The growth in digital advertising was driven by programmatic, mobile and our marketing services business, while our desktop home page and directional products continue to decline.

Lower print advertising was mainly due to declines in luxury, technology and telecommunications, financial and travel categories.

On a monthly basis, overall advertising revenue was down 9% in January, 1% in February and 10% in March.

Other revenues grew 21% versus the same quarter in 2016, to $26 million, principally driven by affiliate referral revenue from the product review and recommendation websites, The Wirecutter and The Sweethome, which we acquired in the fourth quarter of 2016.

GAAP operating costs increased 4.5% in the quarter, while adjusted operating costs increased 5.5%.

We continue to keep a sharp focus on our cost base while investing where necessary to support growth.

To that end, our print production and distribution costs were lower in the quarter, while costs grew in marketing as a result of our brand campaign and to drive the increased level of consumer acquisition.

Additionally, we experienced cost growth in advertising and as a result of the 3 companies we acquired in 2016.

In the quarter, we recorded one special item, a nearly $2.5 million charge, which has been included from our pro forma results, for the reconfiguration of our headquarters building to make more space available for rental income.

Including this quarter's charge, we expect to incur approximately $10 million in noncapitalizable expense related to this project over the course of 2017, which will be broken out as a special item each quarter.

As I said last quarter, we expect to incur approximately $50 million in capital expense related to this project in 2017.

We have begun to market this space, and we expect to begin recording rental income in 2018.

Moving to the balance sheet.

Our cash and marketable securities balance grew during the quarter and ended the quarter at $753 million, with total debt and capital lease obligations, principally related to the sale-leaseback of our headquarters building, of approximately $248 million.

Now let me conclude with our outlook for the second quarter of 2017.

Total print and digital revenues are expected to increase at a rate similar to the first quarter of 2017 driven by the continued benefit from our digital subscription revenue growth.

We also expect digital-only consumer revenue to grow at a rate similar to that of the first quarter of 2017.

Overall advertising revenues are currently expected to decrease in the low- to mid-single digits, with growth in digital advertising in the mid-teens.

Other revenues are expected to increase in the mid-teens, largely from the impact of The Wirecutter business we acquired in late 2016.

And we expect increased costs related to an elevated level of marketing and advertising spend to support digital revenue growth, higher newsroom costs reflecting the active news environment, as well as additional costs associated with the 3 acquired companies.

As such, operating costs and adjusted operating costs are expected to increase in the mid-single digits.

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

Thank you.

(Operator Instructions) Our first question comes from John Janedis from Jefferies.

I was hoping to dig a little bit more into the composition of the digital subs, away from the students piece.

Are the demos skewing younger?

What impact are you seeing from international?

And then more broadly, Mark, you spoke to this, but can you expand a little bit more on why you think the subscriber opportunity has decoupled from the news cycle?

Okay.

Well, let me talk briefly, but I'll hand over to Meredith on the kind of demographic shape of the -- of new subscribers.

We're seeing, I think, a group of people who are, in some respects, similar to the subscribers we already have, but there's some encouraging signs in terms of a broader range.

I want to say about international that the surge we've seen in Q4 and Q1 contained a similar proportion broadly, a bit -- slightly less in Q4, slightly more in Q1 of international subscribers.

I think interested in what's going on in America and, frankly, at the other big stories in a pretty complicated and disrupted world is attracting thoughtful readers outside the U.S., and we're very excited about that.

We've done the launch in Australia of an enhanced service for users in Australia this week, so we're very encouraged by that.

The point I was trying to make in my remarks was that we were seeing our model -- if you go back to 2015 and look at the track through 2015 relative to 2013 and 2014, we could see the things we were doing in adjusting some of the parameters in the pay model, in particular, side doors and so forth, the customer journey through the pay model, and simply through superior, progressively superior execution in our consumer marketing department.

We were seeing -- we saw very encouraging numbers both in terms of higher new starts and also better numbers in terms of retention.

And in the -- since 2015, we've been learning and improving.

We have some, we believe, significant further levers to pull in terms of the pay model.

So we believe that the fundamental story from 2015 onwards is a better understanding and better execution of the pay model and an opportunity to accelerate it.

And I think that -- when I look at the next few years, I think that we're certainly not saying that we expect the short-term effects of Donald Trump's election as President and the associated news cycle necessarily to last at its current rate forever.

But we do think the potential to go on accelerating the model is there, definitely.

Do you want to talk about the new subscribers?

Sure.

John, psychographically, we have defined our targeted audience and also our subscribing audience broadly as curious people, so lots of ways we can describe that.

Probably the easiest is people who, in their leisure time, want to be learning and want to be engaging and exposed to things that they didn't know previously or are new to them.

And we're seeing that hold up for the new subscribers, so we're tending to draw people who, psychographically, look similar.

Demographically, the new audiences tending to be younger and skewing slightly more female, and that is in part based on work we're doing to target that way.

And it is also, I think, based on who's interested in engaging with The Times.

And I think one of the most notable things is we're still seeing -- we've been seeing this for some time prior to the elections, and we're continuing to see that our single largest cohort of growth on The Times is millennials.

That's helpful.

And then maybe, Meredith, sticking with you, maybe on the digital advertising component.

Given the safety guarantee in terms of the content, are you seeing any evidence of dollars or budget shifting to your digital properties from some of the larger players?

So I'll broadly say that the mood music around brand safety and around marketer and the news organization or the content company having a direct relationship has intensified, and I think that bodes very well for The New York Times.

It's hard to imagine that hasn't played a role in 3 straight quarters of double-digit increases in digital advertising.

And I would say even -- so yes, I think it is playing a role.

I think it's quite important.

I think marketers are becoming much more conscious, not just of their ability to buy audiences efficiently at scale, but also to not only disassociate that from the provider of content that actually convenes that audience.

And again, I think that bodes well for us.

The next question comes from Kannan Venkateshwar from Barclays Capital.

So just a couple for me.

Mark, you mentioned that some of the trends you're seeing right now actually originated last year, even before the elections.

When you look at the cohort of the first set of customers post your ramp, how is the retention?

I think Jim touched on this a little bit.

But how are you seeing the churn rate evolve for the growth over the last year or so versus what you had prior to that?

And -- so Jim, your perspective, there's obviously some growth in costs this year.

So when we look into 2018, is it fair to assume that the fixed cost model that typically has generated operating leverage on the print side of the business?

I mean, that kind of a model will start becoming more evident next year even as digital ramps?

Or should we wait for some time before we start expecting those trend lines?

Okay.

Let me have a go at churn first.

We've seen an overall picture of an improvement in churn, which has been pretty consistent now for many quarters.

Although it is too early to be certain that, that will continue with the very large number of new subscribers that we've had essentially around 1/4 of the whole that arrived in recent months.

I think it's fair to say the early indications about retention in the early months are very encouraging relative to the previous cohorts coming in.

These are subscribers, the overwhelming majority who are on introductory offers.

We moved to longer introductory offers some time ago.

And that is a, we think, is a significant factor in improved churn numbers.

Because it turns out the long introductory offers, where people get habituated to Times, come to value it, are better at retaining subscribers.

But in the early months of the tenure of these new subscribers, the churn rates we're seeing are encouraging.

But I also want to give some caution.

We've seen a lot of new subscribers arriving.

We're going to discover over the course of the next 12 months or so whether their behavior continues to be better in churn than previous cohorts or not.

On the cost side, Kannan, I will say a couple of things.

First of all, I think the first quarter, I don't view as kind of indicative of kind of longer-term trends in our cost base.

We already kind of isolated some of the cost growth around some of the acquired companies, some of the marketing spend.

So as we get to the back half of this year, I think you'll see some moderation there.

But underneath that, the core kind of cost structure of the business, the fixed cost structure, continues to be tightly managed.

But at the same time, we're going to have to be adaptable to the change in the market, the changes in our consumer business, the change in our digital business.

So hard to say long term other than kind of a commitment to be aggressive on costs, the real estate project, which we've talked about a lot, will begin bearing some real fruits in 2018.

But it's a little hard to go long term.

This is a business that's in significant transition, and we'll be adaptable, and we will want to continue to invest where we think we need to.

The only thing I want to add is, we said in the last earnings call about Q4 last year, that we had a commitment to returning to a growth of adjusted operating profit as a company as soon as we could.

I said back then in the beginning of February, I didn't know when exactly, but we couldn't say exactly when that was going to start.

In fact, we just had a quarter, Q1, with a modest increase in adjusted operating profit.

And we remain committed to driving revenue and managing costs, such that we can get that critical adjusted operating profit measure to grow year-over-year, quarter-by-quarter.

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

Great.

A few questions.

Jim, maybe I'll start with you.

On the cost front, if you take out the small acquisitions, is your core cost up like low single digits?

Is that what we're sort of expecting for the full year?

Well, we said -- I think mid-single-digit growth in cost in Q2.

I haven't gone beyond that, but I'm largely signaling where I think we would see better year-over-year performance.

We're going to start lapping through some of the acquisitions in the back half of the year.

We think marketing spend in the first quarter is probably more aggressive than we'll see in subsequent quarters.

But again, we will have to be adaptable as the market changes.

So as I sit here today, I think second half performance relative to first half would be more favorable on a year-over-year comp.

It's still off.

I mean, we're still -- we don't cycle through acquisitions until -- the biggest acquisition until deep into the fourth quarter.

We also -- this is a onetime event, so we're cycling back at the Olympics and elections last year inflated cost in the back half.

So there's a number of factors I think that worked in our favor in the second half, but I'd rather be not much more precise in the first than the second quarter.

And then on your second quarter outlook for print advertising, I guess, embedded in your guidance sort of tears print down 10% to 15% year-over-year.

Is that a fair statement?

I think, Jim, given the guidance, what I'll say is...

Are you going to stick with that?

And I'm going to stick with it.

We've seen periods of steep decline in print before that have been followed by periods of moderation, and it remains a business that is quite hard to predict.

But as Mark said earlier, it is becoming less important to the overall picture than it's been.

Look, I would say, broadly, I mean, the guidance we gave this morning suggests an improvement in advertising trends.

Sequential overall improvement, yes.

Yes, I would say the mood feels a little better on print, but it's a relative statement.

The one thing I would say is I think you're all aware that the comparisons weaken, get easier for us throughout the year.

Back half of last year was like a negative 20%.

First quarter was down about 10% last year.

So that's a factor, but it's a pretty tough market right now to predict longer term.

But in our guidance of low- to mid-single digit decline would suggest some improvement but not -- I wouldn't say it's a radical improvement.

Yes.

Yes.

I'll say one other thing about print advertising, which is that it still does play a very important role in the marketing mix, and in particular categories.

So there are things that print does for a marketer that haven't yet been replaced wholly by a digital solution, like driving to retail, which is a category under enormous pressure, but there's still value there, and like signifying that a particular thing is important in a moment in time.

We could also -- the first question from John Janedis about brand safety, and it seems to me that I wouldn't rule out the idea of print feeling like a very, very secure environment for brands and all rest of it.

I wouldn't rule out the idea that if those concerns continue, I think it's helping our digital business.

I think it could also help our print business to a degree.

If you had to rank the reasons why the last 2 to 3 quarters you had a significant increase in the digital subs, I mean, where would you rank the anti-Trump movement out there, if you will?

Any of the enthusiasm around the election and all that is helping to drive that number.

Is that #1 or #2 in your minds?

Or is it 50% off 12 months that you guys have?

And the marketplace offers the first 12 months?

How do you foresee that thing?

Yes.

I would rank extraordinary news cycle #1, but I would say a close and very important second is that we are just fundamentally getting better at executing on both conversion and retention.

And as we get better at it, retention is becoming even more focused.

And we -- on the conversion side, we far, far better understand the customer journey, what experience someone has to have to actually want to subscribe.

And on the retention side, we're understanding how to onboard people more effectively.

That really matters given that we've just brought in close to 600,000 subscribers in the last 6 months.

We're getting better at identifying what we call customer priority moments, what are the moments in their relationship with us.

When -- it can sort of turn either way.

They see more value, or they say, "I no longer want to subscribe." And we're also getting better at identifying customers who are at risk because they haven't engaged enough, and we can action much more effectively around that to get them to engage.

I would say, of course, news cycle is playing a role.

But in the background, we are getting much more effective at our own marketing.

So that when we reach a period where the news cycle is less intense, we feel confident that we can still move the business pretty significantly.

So just to clarify, so you feel you guys are doing a better job marketing, understanding the marketplace out there.

It's just -- almost honestly, just a pure coincidence it happened based right around the elections here in the U.S.?

No.

What...

I mean, I know it's building for a number of years.

But was it...

Sure.

But what Meredith's saying is we absolutely believe that the extraordinarily intense news cycle has been a very significant factor.

And indeed, Meredith said she's -- and I think she's right.

It's the single most important factor, that the scale of the bump we've seen in recent quarters.

I think the news has become the news in many ways.

Certainly, that was the case in part of the fourth and much of the first quarter.

And I think that's also changed the mood music in the world around people thinking about the importance of high-quality journalism, substantially changed willingness to pay.

So that's had an extraordinary impact.

But all of that said, at the same time, we have gotten candidly a lot better at marketing.

And we've brought in a lot of talent to help us to do that, we're developing structures and processes to just do that more effectively.

And so what I tried to say in my remarks is we think we've got an underlying story of growth potential and acceleration in our model, that being added to in recent quarters by the extraordinary circumstance of the news cycle and the prominence of The New York Times within that news cycle.

We think the even when that subsides, the underlying story of potential and acceleration of growth will continue.

And if I were to be precise about that, I would say we've gotten much better at using data to understand the behavior of a customer on the journey to subscribe.

And then once they've subscribed on the journey, to see more and more value in their relationship with us.

Our next question comes from Alexia Quadrani from JPMorgan.

This is Parris Taylor on for Alexia Quadrani.

Just had a quick question here.

Can you guys discuss the current mix between traditional display, programmatic, mobile and branded content within digital advertising?

And are you guys seeing any seasonality within those particular segments in digital advertising?

Sure.

Good question.

So in the first quarter -- I'll do it in the context of last year at this time.

In the first quarter of 2016, what we consider our growth businesses, which were essentially mobile, mostly smartphone, programmatic, branded content and marketing services, was about 40% of the total digital advertising mix.

And then the first quarter of this year was almost 60%.

So we've seen a real shift in both demand and in our ability to service those growth businesses.

That's been our strategy for almost 4 years, and we intend to continue tilting in the direction of those businesses.

Okay.

And then also, just a quick follow-up, what percent of mobile is digital advertising?

If you guys can...

It was -- smartphones, specifically, was, I think, 21% in the first quarter.

And that's like 60%, 70% growth over last year.

Our next question comes from Doug Arthur from Huber Research Partners.

Yes, Meredith, just looking at digital advertising.

You mentioned, or Jim mentioned, that the comps in print get easier in the second half clearly.

They get more difficult in digital, and I know you're doing more and more project work on the branded side.

So any commentary on what digital growth could look like in the second half of the year against tough comps?

And then I've got a follow-up.

I will not guide beyond what Jim has already done.

But what I will say is, yes, I am aware of the -- we had an extraordinary third quarter last year and a very strong and very big fourth quarter.

What I'll say is, similar to what I just said, we have tilted toward the business, really being focused on branded content and marketing services, programmatic and mobile.

And just to break that down, 3 of those things tend to get bought in a different and more ongoing way, which I think bodes well for a more sustainable business.

But branded content, as it relates to individual campaigns and marketing services, tends to be bought in association with big ideas or very big direct partnership with marketers that are lasting.

We talked a lot last year about the lumpiness of the business, and that was frankly our getting from sort of beginnings of being good at that business to a more mature state.

And as that matures, we have some optimism that we'll see the benefits all year long, not sort of fluctuating as much from quarter-to-quarter.

In programmatic, interestingly, I think this is actually quite important.

We have been aggressively trying to move the business from open market programmatic, where, if you think of that original LUMAscape chart, you've got a marketer on one side, a publisher on the other and like a thousand intermediaries in between, we are doing everything in our power to cut down the number of intermediaries and to work as directly with marketers as we possibly can so that we're just really doing process automation.

And when you get that working well, that is a business that happens on an ongoing basis, where you connect the pipes, you figure out who the marketer is targeting, you figure out how to deliver that target on an ongoing basis, and you've got something that can happen month after month after month.

So all of those things, as they mature and we get more sophisticated in our ability to deliver them, become more stable over time.

Yes, we can't -- I mean, obviously, we can't -- I mean, partly because some of the deals are now very large, and they are difficult to predict exactly when they're going to land.

We can't rule out some lumpiness, to use that British word, in the future.

But it's really worth saying we feel very bullish about this business.

We think we've got great talent in place.

We think we really are finding marketers very, very open to the new forms of advertising that we're offering.

And it's worth saying our digital advertising growth is not significantly correlated with the news cycle or anything else.

It's a new business which we've been building, and we feel very confident about our ability to go on growing it.

Well, as a follow-up, is it safe to assume that as you add this really massive number of digital subs, and so you're sort of building a new digital ecosystem clearly of loyal followers, I would assume that, that has somewhat of a linear impact on not maybe CPMs but on digital ad, the attractiveness of your platform to digital advertisers.

Yes.

Well, if I -- I'll just say I think it's -- I think this is a really important point, having a deeply engaged audience of thoughtful, thoughtful users who want to spend time on our journalism, and the quality of the environment, so kind of the brand safety point taken together, do give us a really special opportunity.

I think that's right.

But Meredith, you can comment on it.

Yes, I'll just add, I would say exactly that.

I think the engagement thesis and the idea of taking lightly-engaged and moderately-engaged users and getting them to engage more deeply with us bears fruit in the consumer business, and it equally bears fruit in the ad business.

So the deeply-engaged users is the strategy, and it works in both businesses, and it feeds both businesses.

This concludes our question-and-answer session.

I would like to turn the conference back over to Harlan Toplitzky for any closing remarks.

Thank you for joining us this morning.

We look forward to talking to you again next quarter.

The conference has now concluded.

Thank you for attending today's presentation.

You may now disconnect.