New York Times Co (NYT) 2017 Q3 法說會逐字稿

Good morning, and welcome to The New York Times Company's Third 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 Third 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 Operating 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 turn the call over to Mark Thompson.

Thanks, Harlan, and good morning, everyone.

Well, this was another strong quarter.

We grew revenue and operating profit year-over-year.

Subscriptions continued to grow with 105,000 net new subscriptions to our digital news products.

The Times now has 3.5 million total paid subscriptions, by far the most in our history.

During the quarter, we put much of our new digital operations organization in place under our new COO, Meredith Kopit Levien.

I'm already seeing improved coordination and execution, both of which will help us to continue to scale our digital business.

One of the reasons that many new subscribers have decided to pay for Times journalism is its shed breadth.

The New York Times continues, of course, to offer comprehensive and offer -- often regulatory and agenda-setting coverage of current U.S. politics.

But The Times is like a multi-ocean navy.

Our newsroom can be breaking -- making new stories about the Trump administration and devoting extensive journalistic resources to other investigations as well as general domestic and international news.

The Times was the first to reveal that Harvey Weinstein reached numerous settlements with women for sexual harassment, sparking a global discussion on predatory behavior by powerful men.

Reporter Jodi Kantor and Megan Twohey spent months meticulously nailing down the details and convincing sources to go on the record.

This comes after Emily Steel and Michael Schmidt reporting on Bill O'Reilly on Fox News earlier this year, a continuing story that they added to a little more than a week ago, and also Katie Benner's coverage of harassment in Silicon Valley.

It was also a quarter where our newsroom faced an unusual number of large-scale hard new stories, providing unrivaled coverage of the Las Vegas mass shooting, earthquakes in Mexico and back-to-back hurricanes, without missing a beat covering the rest of the world from the economy, to Washington to the arts and more.

The Times continues to attract the best journalistic talent in the business.

[Corey Seeker] was named Stars Editor, Jessica Bennett was named Gender Editor and will drive our coverage at how gender shapes the lives of people across the globe.

And we have a certified genius in our midst, Nikole Hannah-Jones was honored with a MacArthur genius grant.

Our editorial department recently won an Emmy, the 10th for The New York Times, and our newsroom took home 4 online journalism awards.

And then there is The Daily, our 9-month old audio news report that is being downloaded more than 100 million times since February.

It's consistently at the top of the Apple podcast chart, and is the fifth most popular podcast according to Podtrac in industry ranking.

The days in audio program that we're uniquely positioned to deliver has relied heavily on the breadth and depth of Times journalism, and the extraordinary level of expertise of Times reporters and editors.

It's become a daily habit, setting the tone for the Newsday, for the more than 0.75 million people who download and stream it each day.

So let's now look at the results for the quarter in detail.

We added 154,000 total net new digital subscriptions, an increase of nearly 60% over this quarter last year.

Of these, as I said, 105,000 came from our News product, 26,000 from our Crossword product and 23,000 from our Cooking product.

We transitioned Cooking to a paid product in July, and it's off to a very encouraging start, both as a stand-alone product and as an addition to higher-priced subscription bundles.

Revenue from the company's digital-only subscriptions, which includes News, Crossword and Cooking subscriptions, increased 46% compared to the third quarter of 2016 to $86 million.

Overall subscription revenue, that includes digital subscriptions, print home delivery and print single copy sales, rose 14% to $247 million.

The subscribers who enrolled in the fourth quarter of 2016 and first quarter of 2017 continue to retain at least as well as, and in some cases better than, previous cohorts on the same promotions.

Of course, we'll continue to monitor engagement, frequency, depths and types of content with which they engage as they reach the 12-month mark.

But so far, we're very encouraged by the results we've seen.

Turning to advertising.

This quarter, marked our fifth consecutive quarter of double-digit revenue growth for digital advertising, in this case, up 11% year-over-year.

You've often heard me say that we don't expect digital advertising growth to be a straight line.

And in fact, we project digital advertising revenue for the fourth quarter to be flat or slightly down compared to the same quarter last year.

That's due in part to some individual campaigns in 2016 not repeating in 2017 in the corporate and advocacy categories, and the likelihood that we will have less inventory to sell programmatically than we had during the election season last year.

But we remain fully confident in our ability to deliver sustainable revenue growth in digital advertising by complementing our display offering with a broader suite of marketing services and more commercial partnerships like those we currently have with Samsung and Google.

We'll continue to roll out this strategy in 2018.

The print advertising market remains challenging, and Q3's decline of 20% year-over-year was somewhat deeper than the previous quarters.

But our exposure to this declining revenue stream is less than it's ever been.

Print advertising represented just 17% of total company revenue in the quarter, and with $22 million less than digital subscription revenue, which is why we were able to grow both top line revenue and adjusted operating profit despite this headwind.

Total advertising revenues were $114 million, down 9% from the previous year.

Revenues for the company as a whole was $386 million, up 6%, while our adjusted operating profit of $56 million represents a 44% increase compared with the same quarter last year.

This increase was driven by growth in digital revenue.

We continue to follow the roadmap outlined in our path forward and our newsroom's 2020 report, and we are on track to meet our goal of $800 million of annual digital revenue by 2020.

Before I conclude, I just want to take a moment to acknowledge my colleague, Jim Follo, who last week announced his intention to retire in early 2018.

Jim has been a trusted adviser to me and our publisher, and I'm very grateful for his many contributions over his nearly 11-year career here at Times.

He will be with us until the end of February next year to help us achieve a smooth transition to a successor.

A search process is now underway, but it means that Jim still has 1 more New York Times Company earnings call to look forward to.

Lucky chap.

Now let me turn over to him for a more detailed financial review.

Thanks, Mark, and good morning, everyone.

As Mark said, the third quarter reflects continued solid progress in advancing our long-term strategy.

Adjusted diluted earnings per share was $0.13 in the quarter compared to $0.06 in the prior year, and we reported GAAP operating profit of approximately $33 million compared to an operating profit of $9 million in the same period of 2016.

Total subscription revenues increased by 14% in the quarter, with digital-only subscription revenue continuing to grow strongly.

Subscription revenue from our digital-only products grew 46% in the quarter.

On the print subscription side, revenues were 1.5% higher, as home delivery revenues more than offset a decline in revenue from single-copy sales.

The increase in home delivery revenues in the quarter, compared with the prior year, primarily resulted from a price increase in early 2017, which more than offset volume declines.

Total daily circulation declined 5.3% in the quarter compared with the prior year, while Sunday circulation declined 2.6%.

As was the case last quarter, ARPU decline -- continued to decline in the third quarter, largely due to the sharp increase in net subscription additions over the past year, most of which start on promotional discount.

Since we have experienced a significant increase in net additions over the past year, we expect our ARPU to continue to decline before stabilizing when these new subscriptions step up to full price.

Moving along to advertising.

We reported total advertising revenue decline of 9%, as print advertising decline more than offset digital advertising growth.

The growth in digital advertising was driven by smartphone, programmatic and marketing services.

Lower print advertising revenue is mainly due to declines in the luxury, travel, real estate, media technology and telecom categories.

On a monthly basis, overall advertising revenue declined 2% in July, 6% in August and 15% in September compared to last year.

Other revenues grew 18% versus the same quarter on 2016 to $25 million, principally driven by affiliate referral revenue from the product review and recommendation website, Wirecutter, which we acquired in the fourth quarter of 2016.

The increase was partially offset by lower revenues from our live events business, which had fewer conferences in the quarter compared to the prior year.

GAAP operating costs decreased 2% in the quarter, while adjusted operating costs increased 2%.

The cost increase was related to companies we acquired in 2016, and consumer marketing efforts, and was partially offset by lower print production and distribution costs as well as savings from our international operations.

In the quarter, we recorded 2 special items that have been excluded from our adjusted results.

The first item was a $30 million gain we recorded related to the sale of hydropower assets at a paper mill previously operated by Madison Paper Industries, a partnership in which the company has a 40% interest, and which ceased operations in 2016.

With the sale of the hydro assets, that business is now in the latter stages of winding down.

And we expect to receive a cash distribution from the final liquidation over the coming months.

We also recorded a $2.5 million charge in non-capitalizable expenses for the reconfiguration of our headquarters building to make more space available for rental income.

Through the first 3 quarters of 2017, we recorded $7 million in non-capitalizable expenses related to this project, and we expect to incur approximately $60 million in capital expense and $10 million in non-capitalizable expenses related to this project throughout 2017.

We continue to be encouraged by the interest we have seen in the 7 floors we are making available, and we expect to begin recording rental income in the first half of 2018.

Moving to the balance sheet.

Our cash and marketable securities balance grew during the quarter and ended the quarter at $823 million, with total debt and capital lease obligations, principally related to the sale-leaseback of a headquarters building of approximately $249 million.

Late in October, we announced that we had entered into an agreement to transfer approximately $225 million in pension obligations to an insurance company.

The transfer will shift the annual benefit obligations and administration for approximately 3,800 retirees, and will be funded through assets and our pension trust.

This transaction was the latest in a series of actions we have taken over the last several years that we have taken to reduce the size and volatility of our pension obligations and the ongoing administrative costs associated with these obligations.

Since 2012, we have settled close to $625 million in pension obligations.

With this latest transaction, we expect to book a settlement charge in the fourth quarter of approximately $95 million, which represents the acceleration of deferred charges currently accrued and accumulated other comprehensive income on the company's balance sheet.

Also in October, we made discretionary contribution to our pension plans of $100 million pretax or approximately $60 million after-tax.

This contribution improves the funded status of the plans, allowing us to further reduce pension volatility and reduces the need for required contributions in the plans for several years in the future.

As a reminder, we began the year with underfunded qualified pension plans of approximately $220 million.

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

As a reminder, fiscal 2017 is a 53-week year.

And therefore, our fourth quarter will have 14 weeks as opposed to 13 in the prior year.

We plan to disclose the estimated impact on revenue of this extra week when we released our fourth quarter results.

Estimating the cost impact of this extra week is more difficult, and therefore, we will refrain from doing so.

Our earnings release, which we issued earlier this morning, includes guidance related to the impact of this extra week.

On a comparable 13-week basis, total subscription revenues are expected to increase approximately 10%, with digital-only subscription revenues expected to increase approximately 40%.

Overall advertising revenues are expected to decrease in the low double digits, with digital advertising flat or decreasing slightly.

Other revenues are expected to increase approximately 10%, largely from the impact of the Wirecutter business we acquired in late 2016.

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

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

Mark, I was hoping that you could talk more about subscriptions broadly.

I know in the past you talked about overall opportunity for subs somewhere maybe 7 million higher over time.

So I wanted to ask, has that view changed?

And then on new products, you have the Crosswords, and I guess, Cooking now.

Are there other products you can add?

And can you give us some color on whether these subs have been up-sold from News?

Or do they represent a low-cost opportunity to drive digital subs or maybe a new digital sub and ARPU over time?

Thank you for those.

So no, we have an undiminished belief that we can grow our total subscriber numbers very substantially from where we are.

I mean, I've talked in the past, as an indication of the scale of the ambition about 10 million subscriptions being, in my view, a credible number.

We have global reach.

We are getting better and better at understanding audiences here and abroad.

And I think our opportunity to build our business far beyond its historic scale is there.

And I want to say -- you heard me say today, we got 3.5 million subscriptions.

I think the absolute peak number of subscriptions in the print New York Times' history was in the early '90s, was 1.8 million.

So we've already got many more subscriptions today than we had then.

And although we, as you know, in recent months have been reorganizing, we think there are better ways of coordinating and accelerating what we do.

We have an undiminished belief in our ability to significantly further scale our digital subscription business.

In answer to your second question, I think you essentially asked 3 questions.

We are very encouraged by the success we've seen so far with our smaller subscription products.

And we launched Cooking in part to explore whether we could make a stand-alone product out of a vertical.

And to state the obvious, The New York Times has positions in many, many verticals.

And I think Cooking thus encourage us to think about whether we can bring other new stand-alone products or features to bear, to enhance the value we give both existing subscribers and potential new subscribers.

And you will definitely see us over the next year or so.

We've just appointed Alex MacCallum, one of our very best executives, to run a new products division inside our new digital organization.

You'll definitely see more news on that front.

As I said in my remarks, the advantage of these products is an ability both to drive revenue potentially for some of the most standalone digital offerings, but also to use them in bundles to drive higher value and, therefore, to justify more expensive subscriptions for those subscribers who want the broader content and who have a higher willingness to pay.

And we've tested that and it works in the real world, and it has already helping us sell more expensive bundles.

So I guess to answer your last question, we see potential both for standalone relationship -- subscription relationships.

Some of our Crossword subscribers, for example, are just Crossword subscribers and do not subscribe to The New York Times, but also to use in concert with our core news offering to build that whole business.

And then maybe separately, you talked about slowing digital advertising.

Obviously, the comps get tougher, but are you seeing a more competitive environment either on the inventory or pricing side?

I would say I think the year has been one with a lot of headwinds in it for everybody in the digital advertising business, and we're still seeing pretty intense change in the character of demand.

And that goes for the media part of the business, which I think you're asking about, and also for 2 areas where we've been investing heavily, partnerships like Mark mentioned in the script, like the big commercial partnerships we have with Google and Samsung and also our services business.

So we are seeing increased demand for partnerships and for services.

And we are well positioned to continue to capture that demand, and I think that -- capturing that demand has an effect of also feeding more media business.

So we remained very confident in our strategy around that.

I think, particular to your question that Flex Frame family of products that we've launched in media over the last couple of years are performing quite well.

So those are larger canvas ads where we've been able to hold CPM based on the ads' ability to do whatever a page can do.

And you'll continue to see us develop more in that family of products.

But we, I mean, we began to pivot this business.

Meredith, herself, led the pivoting of this business starting from 2013, away from our reliance simply on traditional digital display towards offering a bigger range of marketing services.

And we're still very, very committed add value.

We think it's been working.

You've heard me say in the past on the call sometimes, it's got lumpiness to it.

It was a couple of quarters in 2016, where we saw less -- we had 1 quarter of a slight decline in 2016.

We are very confident that -- with some variability quarter-to-quarter-to-quarter that we can continue to grow this business significantly.

The next question comes from Alexia Quadrani with JPMorgan.

Just staying on the digital advertising for a minute.

Do you have different visibility or better visibility on sort of digital advertising versus the print advertising?

I would think with some of your longer-term commitments in terms of maybe with some of your key clients, you might have a bit more visibility.

But I may be incorrect there.

Alexia, yes, I would say visibility is improving quarter-over-quarter in the digital business, particularly as it becomes more partnership and service driven.

But as Mark said, you can still expect to see some lumpiness from quarter-to-quarter.

Okay.

And then on the digital subscriber base.

Anything notably different in the quarter?

Any trends you're seeing in terms of the type of the incremental digital subscriber, the new subscriber, whether it's SKU by region or by demographic?

Yes.

Good question.

We've said in past calls, and it's still the case, that the new subscribers are tending to be younger.

So we're seeing real growth, particularly in people under, I think, it's 45.

We are also seeing a lot more geographic diversity.

So real gains outside the New York tri-state area.

California has been a very big bright spot for us in subs, but we're also seeing big gains in states like Washington and Minnesota and Colorado.

So getting much more geographically diverse, that goes for international, too.

And then 2 other trends that I think are meaningful and important for how we navigate the business going forward, we're seeing more subscribers who come in through social.

So where their first interaction with us is on a social platform, and then they come to us and they subscribe.

And we're seeing more people subscribing on mobile.

I will say we have a lot of room to continue to improve in how we convert people on mobile.

So you'll hear us talk about that a lot more as we go into 2018.

The only thing I'd just add, Alexia, as I said in my remarks, we launched the Cooking product.

We actually launched it midway through the quarter.

We launched it in the middle July and achieved 23,000 subscribers.

I mean the Cooking market and the plethora of pretty good free recipe and Cooking resources on the web means it's particularly encouraging that we so quickly got traction with our Cooking product.

And as I've said, we're already beginning to play with adding it to -- and testing to different bundles to see whether it improves conversion.

So we're very emboldened by that.

And we think that the idea of extending the basic news offering and enhancing it with these other offerings looks like there's real consumer demand for it, so that's a very positive note in the quarter.

Just one more, if I may.

I'm quite mindful that while you guys have done an incredible job internally and largely you're responsible for this very impressive digital sub-growth that you're seeing, you're also benefiting for kind of the hype news cycle.

And I'd love to sort of get a better sense of the work you're doing on the data side, to really better understand, better track, better present information in front of your consumers or all around.

I guess when will we might see some benefits or some direct benefits from that work?

I'm just trying to get a sense if you do see a softening in the news cycle, do you have sort of more internal firepower to kind of offset that?

Yes.

I think that's a really good question, and it's a place where we're spending a lot of time and energy.

I'll answer it 2 ways.

One, we're getting much better at understanding deeply what I would call engagement behaviors.

So what number of active days and page views and the different kinds of contents viewed mean on somebody's path to subscribing or moving through our funnel and also path to retaining.

And we are getting much better at how we activate around that knowledge.

And I think -- I would say, in 2 ways, you're beginning to see the results of that, but you can expect to continue to be more and more, one, on the acquisition side, and I think we've talked about this in prior quarters.

If you actually compare, say, this quarter to the first half of last year.

So before we were in the heated news cycle around the election, you see -- you still continued to see marked improvement.

And I would say that's based on our ability to apply what we understand about our funnel to creating action within our user base.

And we're seeing that as well, Alexia, on the retention side.

So we have a very good understanding of the engagement behaviors of the whole base, but we've been particularly focused on the folks who came in just before and then in the 4 or 5 months after the election.

And based on that understanding, we have a fairly good outlook of how they'll retain, and we're optimistic about that.

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

A few questions.

On the cost side, it looked like your cost in the quarter came in meaningfully better than your guidance, and it looked like it's probably the SG&A line.

Can you just talk about what -- were you prudent in the cost versus your original expectation for 3Q, please?

I'd -- probably one of the biggest movers is probably in the marketing area.

I think we've had a little bit of a shift out of Q3 into Q4.

You'll notice in Q4, we do expect our cost to grow mid-single digits.

We think that growth in Q4 will be in good part due to higher marketing spend, both in direct-to-consumer and in brand.

We didn't do much brand spending as we -- in Q3 as we will do in Q4.

I say that's the biggest driver for the spend below our consensus number.

Okay.

And then also can you just talk a little bit further about what happened, I guess, in the month of September you guys said you were down 15% there, I guess, in the print side, right, versus down 2% and 6% the prior 2 months.

What about categories in particular?

That was overall advertising revenue, Craig.

Overall.

Okay.

Fair enough.

Yes.

Yes, I'm happy to talk about that.

So on the print side I think Jim already mentioned the categories where we felt pressure in September.

I would say on the digital side, 2 interesting things happened.

One, and they're actually both in the category of pressure on available ad supply.

One was simply beginning to comp against the very intense period, leading into the election.

So arguably, a onetime event though we do expect to continue to grow our audience and grow engagement of the audience.

And the second thing, and this is unique to September, we tend to be pretty conservative in how we tag our content as tragedy.

And we had a great deal of coverage around hurricanes, the Mexican earthquake and I believe the Last Vegas shooting was in September.

So we had a lot of content with a lot of engagement around it, but where we actually didn't run ads.

So that had I think an effect I think on digital advertising.

And just put aside that prior point, but is the trends for advertising that you could tell us in October, were they fairly similar to what you saw in September?

Or a little bit better year-over-year?

I think, in general, we'll continue to see some pressure on ad supply as we get right into the most intense period around the election.

So that, that will be similar.

But as we've described, we feel broadly confident in our digital ad strategy and the pivot that we've been at work on to a business that's increasingly driven by big commercial partnerships and with marketing services.

And then my final question, please.

On the headquarters redesign, are you thinking that the whole CapEx project there is going to be done by year end?

Or which you're going to still meaningfully into next year?

I want to say meaningfully, but there could be some spillover to next year.

But I think mostly -- most of the work will be completed this year, but not all.

The next question comes from Doug Arthur with Huber Research Partners.

Jim, just as a point of clarification, you said guidance for Q4 on cost is mid-single-digit.

The press release says high single-digit?

Sorry, I -- correct it.

You are correct.

The press release holds.

And I guess, that's not adjusted obviously for, as you said, you're not adjusting that at this point for the extra week.

And then, secondly on the...

Sorry.

Just to make that -- correct.

I'm sorry, you're right.

I just want to point that out.

That is a -- we are not breaking out the extra week, so some of that will be -- a good part of that will be driven by the extra week.

The cost will be up on kind of an organic comparable basis.

Hard to be exactly precise on that, but we do expect to have higher -- spends on marketing spend in Q4.

Okay, great.

And then on the circulation revenue guide for the fourth quarter, it's a little bit of a slowdown from what you've had the last couple of quarters.

Is there anything to read into that?

I mean, I know it's a very tough comp on the digital side.

That said, it looks like the retention was pretty good on the big surge and sign-ups last year.

ARPU is another issue, but is there anything to -- is it partly because the price increase on the print side starts to run out of steam by the fourth quarter?

I'm just trying to see if there's anything to read into a slight slowdown there?

The biggest part of that is we're beginning to comp against a lot of the big net ads that we began to see in Q3 of last year into Q4.

So the growth numbers on the digital side, we stop comp against.

So you will start seeing a percentage growth less than you saw at 46%.

So that's part of it.

But there's also -- I mean, some of those same dynamics exist in the print side of our business, where we saw a number of new subscribers to the print products coming on around election and continuing to Q1.

And as you begin to comp against those, you'll see a lesser growth number than what we have seen throughout all of 2017.

So both of those things, but it's mostly on the bigger comps on the digital side that matter the most.

And still, we're very healthy, the most we said, in the headline revenue growth both subscription revenue as a whole and for digital subscription numbers still, we're guiding to a 40% increase.

And 10%.

Overall 10% growth sales number.

Yes, and I'll just add, because you asked specifically about retention.

We are not expecting meaningful falloff from a retention perspective.

And from everything we can tell so far based on month-over-month retention and churn, we're actually doing better with the election cohort than we've done with previous cohorts on the same kinds of offers.

And based of their level of engagement, we have no reason to believe that we're going to see a steep falloff.

The next question comes from Kannan Venkateshwar with Barclays.

Just a couple.

First on price, just wanted to check, Meredith, I mean from your perspective, when you look at customers rolling off promotions and moving on to the regular prices, is there any sense you can give us about the price elasticity and what that means if you were to start raising prices at that some point, but that doesn't happened since the new subscription product came -- was launched a few years ago.

Yes, sure.

I don't think we've ruled out raising price.

I think price is a very interesting lever for us.

And it's something we're thinking about quite a bit, and you'll see us, we're always testing around price.

That said, I think the answer that I just gave about what we're seeing in terms of how the cohort of subs, who came in on a long introductory offer around the election, their month-over-month churn is very, very good.

And if we look at past cohorts, who've been with us longer, who've come in the same long-term, full-year introductory offer, there's groups retained quite well.

And based on the engagement of this group, we have no reason to believe that we won't.

I think the real question you're asking is do we need to reset price there.

And at this point, we see no reason to believe we will.

Well, because we want -- our top priority is to grow the base and to grow the number of subscribers.

And other thing I'd say, Kannan, is that the development of all additional offers, like Crossword and Cooking, and potentially other offers as well, means that we've got flexibility about how we package up our offers into different bundles, which may give us greater flexibility around exploiting the demand curve with or without price rises for individual bundles.

We feel both confident.

We've had 1 or 2 experiences.

For example, in Canada, where we've got something which looks like a kind of a model of the price rise with real audiences.

And we're encouraged that we would find real pricing power in our digital products, as we found historically with our print products.

There's no reason to think that our digital subscribers will be less willing to accept price rises than our print subscribers.

And we think we've got more flexibility.

But as we focus on trying to build out the scale of the subscriber base, that's our top priority at the moment.

And that growing of scale is delivering, we think, pretty impressive year-over-year revenue growth numbers.

As I say, we're projecting 40% on the digital side year-over-year growth in Q4.

As an example of that, even higher in Q3, as we've announced today.

So we still think we have really growing the business very strongly by growing the numbers of subscribers, but we certainly don't rule out price rises in the future at all.

I'm sure that at some point over the next years price will play a role in our strategy.

And it's fair to say that we're still in very early days on our middle tier and highest tier bundle in terms of testing what we can put it into that to get more uptake on this bundle.

So we've done some very great experimentation, as Mark described, around Cooking and Crossword.

We've also experimented in our highest tier with a more loyalty-oriented set of services, like events and opportunities for our best customers to take advantage of a whole number of things from The Times.

And that's going relatively well forget I would say early days, so a lot more room to get better at how we execute there.

Okay.

Another question was on advertising.

I mean is there a big overlap in terms of individual advertisers on the print than digital side?

I mean, could you help us with what the interaction is between those 2 silos?

I heard the first question, I'm not sure I got the second one.

But I would say, generally, the overlap gets much greater over time.

So more of our partners are doing more with us across both platforms.

So increasingly longtime print advertisers are doing more and more in digital.

And I would say extending beyond digital media into partnerships and services.

I'm not sure I heard the second question.

No, that broadly answered that both.

I guess as a follow-up, are the categories in digital substantially different?

I mean, as this business has grown double digits, has the mix shifted substantially?

That's a very good question.

And what I would say there is the big opportunity is that in digital, The New York Times can literally play in every category.

And that in its own way, has a modest but interesting impact on print as well.

So I'll give you 2 examples of that.

We tended not to have meaningful business when we were mostly a newspaper advertising company in the packaged goods category.

And specifically, in places like liquor or beauty or even just some of the more traditional, like grocery-oriented food package goods.

Those have all been very big growth categories for us this year, starting with digital, because we have so many ways that we can meet marketer demand, and that often results in like a beauty company buying newspaper pages that hadn't bought pages from us in a long time.

And I would say the go-to-market approach of having a media business made up of print and digital opportunities and also very unique set of partnership opportunities for marketers and a whole array of creative and content services, means we can play in virtually every category.

And we have a mechanism to feed all 3 parts of our business from all those categories.

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.