New York Times Co (NYT) 2018 Q2 法說會逐字稿

Good morning, and welcome to The New York Times Company's Second Quarter 2018 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 Second Quarter 2018 Earnings Conference Call.

On the call today, we have Mark Thompson, President and Chief Executive Officer; Meredith Kopit Levien, Executive Vice President and Chief Operating Officer; and Roland Caputo, Executive Vice President and Chief Financial 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 2017 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.

Q2 was another solid quarter for the company.

We grew revenue and GAAP operating profit in the quarter though our own measure of adjusted operating profit fell by around 8% as we ramped up spending on higher funded marketing, in particular.

During the quarter, we announced the deal to create a new TV show, The Weekly, to be distributed by FX and Hulu.

Like our phenomenally popular podcast, The Daily, we hope that The Weekly will bring Times journalism to new audiences, generate substantial revenue itself and support engagement and subscription to our core digital news and opinion offering.

It joins a growing a body of work, including The Daily and other podcasts, Wirecutter, Cooking and Crosswords, but complement our central news product.

And it'll first air in 2019.

Let's look now at the revenue streams in detail, beginning with digital subscriptions.

In Q2, we added 109,000 net new digital-only subscriptions for a total of 3.8 million subscriptions, 2.9 million of which are digital-only.

Of the net new digital-only subscriptions, 68,000 were to our core digital news and opinion products, the balance to our standalone Crossword and Cooking products.

The net adds to the core product were lower than we've seen in recent quarters, but still much higher than we typically achieve in Q2 since the launch of the pay model.

The second quarter generally sees lower audiences than other quarters and therefore, fewer net subscription adds, although this effect was less apparent in Q2 2017 a year ago, a quarter which fell within the initial Trump bump and which peaks the number of exceptional news events, including the firing of James Colby and the appointment of special counsel, Robert Mueller.

Lower audiences year-over-year in Q2 2018 also played a part in our digital advertising performance in the quarter.

A second less significant factor in the digital subscription result was our decision during the quarter to reduce our marketing spend on Facebook because of concern about the way Facebook intended to categorize our marketing messages.

We subsequently made some progress in our discussions with Facebook and hope to increase spending with them again in Q3.

Overall churn and specifically, churn amongst the election and postelection cohorts, remains very encouraging.

We're also pleased with our progress in driving international subscriptions, especially in markets like Australia and the U.K., where we're making coordinated efforts with journalism, opinion and new marketing tactics.

Across both subscription and advertising businesses, our international strategy has begun to bear fruit.

We remain confident, moreover, that we can scale our digital subscription business much further, both by attracting more new subscribers at home and abroad and by making additional inroads into churn.

We'll do that by deepening engagements through an improved product experience and personalization, incentivizing registered and logged on use, developing a more compelling customer journey and optimizing both our pay model architecture and pricing and bundling strategy.

Our newsroom and editorial departments and product, marketing, tech and data science teams are working together on this challenge.

We'll report back on progress in future earnings calls.

Print subscription revenue declined in Q2 at a higher rate than in recent quarters.

We believe, however, that this does not represent a new trend, but rather is because we were comping in this quarter against an exceptional increase in print revenue a year earlier.

Again, part of that initial Trump bump effect.

Now advertising.

In the last earnings call, I warned that we expected Q2 to be a second down quarter in digital advertising, and so it was.

Total digital advertising was down 7.5% year-over-year at $51 million.

But I also said in that call that we're expecting a rebound in the second half of the year.

And we're certainly seeing a strong sequential uptick in early Q3.

As you'll hear, our guidance calls for 10% year-over-year growth in the current quarter, and Q4 is also currently looking very encouraging.

We were particularly pleased in Q2 by the rate of growth of our directly sold business and the increasing number of major ideas-driven partnerships we're signing with the big brands.

The new European regulations on data usage, GDPR, became effective midway through the quarter.

Preparing for these new regulations required significant work across the company.

So far, the impact on our advertising revenue has been minimal.

More broadly, we will continue to carefully monitor how changing attitudes and regulation as they relate to user data may affect the digital advertising business.

On the cost side, second quarter adjusted operating costs increased year-over-year, primarily as a result of higher marketing cost and additional cost associated with the growth in commercial printing at our owned and operated College Point production facility.

In conclusion, we remain confident in our strategy, the pillars of which are investments in quality journalism, ever deeper audience engagement and subscription-first monetization.

We already have more subscribers than at any time in The Times history and will soon pass 3 million digital-only subscribers and 4 million total subscribers, but we're working across the company to grow our digital subscription business even faster.

Week by week, we're winning new audiences, in many cases, younger audiences, with our daily podcast.

We hope to do the same with The Weekly on TV.

And meanwhile, our newsroom and opinion departments are gearing up for what promises to be the liveliest set of midterm elections in modern U.S. history.

But now for details on the quarter, here's Roland Caputo.

Thank you, Mark, and good morning, everyone.

As Mark said, this quarter represents continued progress in the execution of the company's strategy.

Adjusted diluted earnings per share was $0.17 in the quarter, flat compared with prior year.

We reported adjusted operating profit of approximately $59 million in the second quarter compared with an adjusted operating profit of $65 million for the same period in 2017.

Total subscription revenues increased 4% in the quarter, with digital-only subscription revenue growing 20% in the quarter to $99 million.

On the print subscription side, revenues were down due to declines in the number of home delivery subscriptions as well as the continued shift of subscribers moving to less frequent and less expensive delivery packages.

Total daily circulation declined 10.5% in the quarter compared with the prior year, while Sunday circulation declined 7.7%.

These declines continue to reflect difficult comparisons with the strong second quarter of 2017 when we experienced elevated postelection home delivery subscription and single copy demand for the newspaper.

ARPU on our digital-only news products in the second quarter was down very slightly compared with the first quarter of 2018 due to lower-priced international offers compounded by a strengthening of the U.S. dollar during the quarter.

Quarterly ARPU declined approximately 1% compared to the prior year, which represents continuing sequential improvement in the variance versus the prior year.

Total advertising revenue declined 10% compared to the second quarter of 2017 as both print and digital advertising were lower in the period.

Digital advertising revenue declined 7.5%, driven by a smaller audience as well as a decline in creative services revenue.

Lower print advertising revenue was mainly due to declines in the technology, telecommunications, entertainment and luxury categories, partially offset by growth in the financial category.

On a monthly basis, compared to last year, overall advertising revenue declined 9% in April, 19% in May and 1% in June.

Going forward, we intend to discontinue providing this monthly disclosure due to the highly variable nature of monthly advertising revenue.

Other revenues grew 40% versus the second quarter in 2017 to $35 million, principally driven by growth on our commercial printing operations from the Newsday suite of products.

We expect to ramp up -- the ramp-up of Newsday production to be nearly complete by the end of the third quarter.

Growth in other revenue was also driven by 4 additional floors of rental income from our headquarters building as well as affiliate referral revenue from the product review and recommendation website, Wirecutter.

GAAP operating cost decreased 1%, while adjusted operating costs increased 4% in the quarter.

The decrease in operating cost was largely related to lower severance cost in the quarter, which was partially offset by higher marketing costs.

Adjusted operating costs grew primarily as a result of higher marketing and commercial printing cost.

In the quarter, we recorded one special item, which has been excluded from our adjusted results.

This $1 million charge represents noncapitalizable expense related to the reconfiguration of our headquarters building to make more space available to generate rental income.

We have found leases for 4.5 of the 7 new floors we have made available, 4 of which were reflected in the revenue we reported in the second quarter.

We still expect to execute leases on the remaining floors and to begin recording rental income from them over the next several quarters.

Our effective tax rate for the second quarter was just shy of 30%.

Moving to the balance sheet.

Our cash and marketable securities balance increased during the quarter, ending at $779 million.

Total debt and capital lease obligations, principally related to the sale-leaseback of our headquarters building, were approximately $252 million.

Let me conclude with our outlook for the third quarter of 2018.

Total subscription revenues are expected to increase in the mid-single digits compared with the third quarter of 2017, with digital-only subscription revenue expected to increase in the high teens.

Overall advertising revenues are expected to decrease in the low single digits compared with the third quarter of 2017, and digital advertising is expected to increase approximately 10%.

Other revenues are expected to increase approximately 50%, largely due to the growth in our commercial printing operations.

Operating costs and adjusted operating costs are expected to increase approximately 10% compared with the third quarter of 2017 as we continue to invest in marketing and ramp up our commercial printing operations.

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

(Operator Instructions) Our first question today will come from John Janedis of Jefferies.

Two questions for me.

One is, can you give a little more detail on the composition of the expense growth for the third quarter?

Meaning, maybe the component of marketing versus commercial printing?

And then separately, on the digital subscriber side, understanding you haven't gotten it in a while, to what extent do you expect the election to be a driver of net adds for the quarter?

Okay.

On the expense side, the increase in marketing costs is a much larger number than we expect from the increase in commercial printing costs.

And I can give more color to that.

I -- you're going to see us continue to experiment more aggressively with marketing in all parts of the funnel.

So we are doing more marketing in what we would characterize as the middle of the funnel, driving users, things that we consider -- virtuous behavior, so registering, reading another story, getting closer to the gateway, downloading the app.

And you'll continue to see us experimenting with more upper funnel marketing.

And what I'll say is we are getting much more sophisticated at how we spend and also how we see return on that spend.

And the more work we do in the middle and toward the top of the funnel, the longer it takes to return.

But I think you'll see us continue to get better and better over time.

On the second point, the election.

I mean, I think it's foolish to try and predict [whoever wins] to changing real word news events.

But to state the obvious, there's intense interest already in this year's midterms.

Our colleagues in our newsroom and opinion departments are deep into planning that we're offering amongst other things the most detailed kind of polling -- real-time polling snapshot of the country as people head towards the vote in November.

We would expect that to be reflected in audiences.

Historically, that typically happened.

It began to happen towards the end of August and in particular, after Labor Day in September, so towards the end of this quarter.

But I want to say, we're living, to state the obvious, in unpredictable political times.

And although every journalist here thinks that it's going to be an incredibly interesting and important set of elections, we'll have to see how audiences react to it.

Our next question will come from Alexia Quadrani of JPMorgan.

Just a couple questions.

Mark, thank you for the commentary about the seasonality in Q2, that you typically see that was masked last year because of the Trump bump.

Is there any other seasonality?

Or any other color you can give us for other quarters of the year that we should be aware of in a more normalized year that we may see influence the digital sub growth?

And then just on your commentary on the Facebook and the marketing spend in the quarter that impacted digital sub growth a little bit, you said you sort of resumed progress talking to them.

I'm wondering if you think then that Facebook will be still a negative factor for sub adds in Q3.

Alexia, it's Meredith.

I'm happy to take the first question.

And what I would say is I think more -- sort of the more interesting and important thing in seasonality is what levers we still have to pull on this side in the business.

And I would say we still have great confidence in a number of the levers.

I just talked about marketing.

You'll see us continue to do more and more efficiently in paid marketing.

And I think we still have quite a bit of room to market through messaging on our own platform differently and better.

I think we have real levers that you'll see in the coming quarters in the product itself.

So we're doing quite a bit of work now, Mark has alluded to this in his remarks, on unlocking, what I would call, dormant value in the products that we publish, 250 stories a day.

We can get a lot better at, in addition to expressing our judgment about the most important stories, putting the right stories in front of people based on their interest and what we know about them.

And then I think we still have real room.

And you'll see this in the coming quarters on the model itself and particularly, in how the model allows us to improve engagement and scale direct relationships with people.

So I think Mark alluded to work on registration and log-in and all sorts of activities that get people to engage more, come back more days, more often during the day around our content.

So I think we're thinking about that as sort of less seasonality but quite a bit of more work we have ahead of us.

And in a way, I think that's also -- what Meredith said also, really I think gives you some idea about how we think -- you had a Facebook question, which is we -- as I said, we think it is likely that we will begin to spend more with Facebook again, that's not certain yet, but we think it's likely.

But in practice, we're beginning to diversify the way we think about marketing, both as we're thinking about targeting higher points of the -- in the funnel, so not simply trying to literally write at the bottom of the funnel to simply influence conversion, but thinking about how we get people to engage more deeply so that they become more likely to converse in the future.

But secondly also, making sure that we're not overreliant on individual marketing channels.

That's right.

In the second quarter, we actually introduced a number of new marketing channels, and we're now, let's say, 3 years into really making our marketing operation more sophisticated.

And what we've learned is it can take a quarter or 2 to make a particular channel more efficient.

And we're beginning to see the benefit of that on channels we've started earlier in the year, and you'll see more of that to come in the second half of the year.

Yes.

Just -- I just have a -- it sounds like it has a bit of a long tail in these sense these are all work in process.

I guess to the extent you can comment, do you think you'll see with Q2, if there is anomaly in the softness, you should start to see some of the impact of these efforts in Q3 and Q4 in terms of digital subs?

Or you really just can't have that kind of granularity in terms of visibility on the sub growth?

I think Roland has already provided guidance.

I would say that that's our general answer to that.

We are still incredibly optimistic about our ability to scale digital subscriptions.

And we're pretty confident that we're now working on some of the more fundamental levers that I've just described, particularly in getting the product and the model to provide the next acceleration.

Our next question will come from Doug Arthur of Huber Research.

Roland, just trying to understand this cost ramp a little bit better.

The -- I mean, is part of the issue here the year-over-year comp?

Because SG&A -- I would assume that the bulk of the cost increase in Q3 will be in SG&A.

I know newsprint tariffs are causing a little bit of havoc there.

But last year, your SG&A sequentially, seasonally or whatever was down quite a bit from the Q2 and Q1.

If you kind of ran your SG&A with this marketing spend plan at sort of flat on an adjusted basis with Q1, Q2 of this year, you'd be up 10%, 11% right there.

So is part of it a year-over-year comp issue?

Yes, that's correct.

And really, marketing is the major explanation here as we ramp that up, as Mark and Meredith just discussed.

As far as the newsprint and the tariffs, given the transformation of the company, newsprint is not really a significant expense item that it once was.

A matter of fact, it's less than 5% of our total expenses.

So again, I would focus -- on the expense side, I would focus on what we're doing in marketing and not necessarily on the newsprint.

No, no.

Yes, no, exactly.

And this new business with Newsday, is that going to make money for you?

Or is this just sort of like lots of revenues and lots of costs?

No...

That's what we're doing here, Doug.

It's already making money for us.

We like the margins.

It's not at a media margin, but it's very healthy.

And we're in the middle of the ramp-up.

So there's 3 components to this, the 3 products they publish, am New York, Newsday and something called home shopper.

And we've transitioned 100% of am New York and Newsday, and we're now in the midst of transitioning the home shopper, which is a very lucrative product for us to produce and transport.

So now if it's not realized -- it's not a revenue and expense play here.

This is a margin play, and we're really happy with it to date, and our expectations are that, that will improve.

Our next question will come from Kannan Venkateshwar of Barclays.

Just one question for me.

Meredith, you mentioned you're looking at various marketing channels and not marketing on Facebook seems to have had an impact.

So I just wanted to understand how important each of these channels are in terms of the priorities you placed?

And how important is Facebook specifically in terms of driving traffic via website and driving subscriptions and so on?

And secondly also -- go ahead.

Yes.

Sorry, do you want me to answer that?

Yes, and it's a good question.

And I think we just alluded to it to the answer in responding to Alexia.

The -- we are getting much more diverse in our marketing approach, so getting diverse in the funnel itself.

So when I got here, we marketed entirely at the bottom of the funnel, and we are now pretty evenly distributed, I would say, between bottom of the funnel and the middle of the funnel and the top being broader brand work.

And likewise, we're getting more aggressive at testing channels beyond the big 2, Google and Facebook.

So you saw us start marketing more aggressively in the second quarter on other social platforms.

You're seeing us experiment more aggressively with different kinds of display.

We introduced more video in the second quarter.

And I'm quite pleased with what we've been able to do with data science in terms of our sophistication on media mix modeling.

And I think we get, like, better and better with each passing quarter.

And what we're finding in that is that there are other places -- a number of other places where we can spend money to drive the business, and I think that will have an exponential effect over time.

If I can add, Kannan.

The other thing -- the other way I think about this is in the context of The Daily podcast, and indeed, the new TV show, these are, firstly, intended to be margin-generating profitable activities for the company.

But they also have the effect of introducing The Times and Times journalism to potentially significantly new audiences.

The audience to The Daily is a remarkably young audience for any news product, any media.

So this is a way of reaching out with our messages and engaging people with Times journalism in a way which is intrinsically profitable rather than being a marketing cost.

So we think quite broadly about how we're going to deal with the fundamental challenge of building a bigger, engaged audience, and classic pay for marketing is part of it.

But a large number of things, even the decision to let Showtime come and do a fly-on-the-wall documentary, which aired during the quarter, about The Times.

It's also part of a way of opening up The Times and reaching out to new audiences.

That's right, and I'll add more color on The Daily specifically.

As a channel for The Times, it is a very, very successful ad business.

It has more listeners every day than the weekday paper ever had subscribers, and that number is growing by the day.

I think it was the most downloaded podcast in America last year.

And we have a ton of evidence that suggests, particularly the format of The Daily is essentially one big story every morning, occasionally, too, that it actually drops people into our funnel.

So it makes people more likely to engage on our platform.

And as Mark said, the character of the audience for The Daily intends to be younger, more female and bringing new folks into our system.

Okay.

And so one of the comments in the press release was, I think, about some of the drop-off in traffic essentially having some impact on digital advertising.

So when you think about all these marketing initiatives versus the drop-off in traffic, is that just a function of the news cycle?

Or is that because you're going through this translation process and figuring out which are the best channels and so on and so forth?

I mean, how should we expect that trend to evolve?

You're talking (inaudible) Kannan.

It's a year-over-year effect to do with the very, very large audiences in Q1 and Q2 in 2017.

And that was the first months of the Trump administration.

I mean, step back and look at The New York Times' news audience, New York Times' digital audience over the past few years, and we've seen very considerable growth in the audience.

But the election in late '16 and the first 6 months, in particular, of the Trump administration were an extraordinary bear for audiences, and we've been comping against them.

And the effect in terms of digital advertising was also when we saw in the first quarter of this year as well and had a similar effect.

Although the principal reason that we believe we're going to have a fast, stronger half of the year in digital advertising than the first is because we're successfully executing our strategy, and we know from the pipeline about the very big deals that are coming through.

It is also true that we think the audience comps in the second half of '18 are going to be better from our point of view than the first half.

That's right.

And I will add that all the work that we are now doing, which I've alluded to a couple of times now, in marketing, on the product itself and on some of the more fundamental aspects of the pay model, should, over time, have the effect.

They're intended to have the effect of a much more deeply engaged audience.

The work is to turn some of more casual users into much more engaged users.

And over time, that should have a positive effect on the ad business.

I mean, the reality is, if you look at the digital ad business, it is becoming -- and certainly in the first half of this year, and you'll see this pay out across the rest of the year, it is becoming much more reliant on that deeply engaged audience, much more partnership driven and frankly, less driven by sort of the edges of less desirable, lower CPM programmatic advertising.

Okay.

And so the last one for me, which is when you look at the trajectory of gross adds versus churn.

So when you look at the overall pipeline for subs coming into your system, is it fair to assume that those trend lines remain stable and there's no shift in terms of the gross add versus churn mix that you see within your funnel?

I think that's a fair assumption.

And I think as we describe the different ways we are going to market and the different ways we are now working to connect with audience, we remain incredibly confident that we already have a sizable, engaged audience to convert and we still have an opportunity to grow and to engage the audience.

And we -- all that's sort of evidence as to who's coming to our platforms towards that.

Our next question will come from Craig Huber of Huber Research Partners.

I have a few questions.

The first one, can you just talk further -- you quantified the international subs in the quarter, what percent of the total is that?

International subs, I think, were 15% of the quarter.

You have that with a year ago, please?

I think we were 13% or 14%.

13%?

13%.

I mean, in other words, Craig, it's creeping up.

And we're pleased.

I mean, it's taking its time.

We -- the tactics we're adopting we're talking country-by-country.

But we're seeing a positive result.

I mean, the individual country, we can point to things we've done marketing tactics, journalists hired, making a difference to number of subscribers, Australia being a really good current example of that.

We've been very deliberate internationally about sort of thinking of the work in marketing, messaging, what we do in the newsroom and new product development.

And that's proved successful.

And some of the things we're talking about on the core as it relates to marketing product work and work on model is in that spirit of sort of getting the whole flywheel to work more effectively together.

And just to be clear on that 15%, that's at the end of the Q2.

The international subs make up 15% of the total.

Yes.

We don't disclose what percent of the net adds were associated with international versus domestic.

Okay.

And then my second question, on this ramp-up in marketing costs here in the third quarter, I mean, assuming this is not coincidental it's happening ahead of another election cycle, I assume.

If you touch on that, is it much in your mind onetime in nature?

Or it's just makes a new ongoing rate of marketing spend going forward?

Also, I'm curious, is a decent chunk of this new marketing spend is just traditional television advertising trying to drive some traffic that way?

That's a great question.

I'll take the last bit first, which is, I don't -- I would not say that you'll see us sort of overly rely on television advertising, although, certainly, that will play a role.

We've done essentially 3 TV campaigns in the last 1.5 years, and they've all gone quite well from our perspective.

So I expect that to be an aspect of our marketing work, but I wouldn't say a dominant aspect.

And we don't think of television work, particularly to drive audience, as much as we think about it in terms of creating sentiment and getting people to sort of think about the role of The Times in their lives and its relevance to them.

On the question of ramp-up in marketing spend, sort of into the midterms, as Mark described.

We're very excited about the work that our newsroom is doing and gearing up to do.

It's around the midterms.

We did -- like, 10 or 11 days ago, we published something we called an extremely detailed map about the 2018 election, which was like the most popular page on this site for a while.

And you'll see us do more and more of that.

And what -- as that relates to marketing spend, we've proven that we can sort of spend into peaks when the news cycle is particularly strong, and that has very positive effect on the business.

So you'll see us do more of that.

The other thing to say, which I think you might be getting at in your question, is we have a fair amount of running room to spend efficiently, I mentioned this earlier in the call, to drive the kinds of behaviors that lead to more engagement on The Times and more relationship on The Times.

So spending to get people to be newsletter subscribers, spending to get people to read another story and get closer to the gateway and spending to get people to download the app.

And I think we have quite a bit of room to spend very efficiently there and drive more subscription.

And then also, can you talk a bit further about churn for your digital subs here?

You touched on it earlier, but, I mean, is the Trump bump -- I mean, how are those people -- the churn levels there versus what you can see in player cohorts, et cetera?

Yes, good question.

I would say, in general, all of the election cohorts -- and we broadly sort of characterize them in 2 ways: those who came in right around the election, so just before and just after; and then the next kind of sort of postelection cohort.

Those are retaining far better than any previous cohorts.

And the immediate cohort around the election is now the most aged in terms of subscriptions, and we are really pleased with their commitment to The Times and their level of engagement at The Times.

I think churn, in general, has been a very positive story.

And here, we are getting better and better at understanding what actually makes people stay.

There's a lot in frequency getting them to come back day after day.

So I still think we have room to improve on how we engage people, particularly early in their relationship with The Times.

So it's a very good story so far, and we think it can still get better.

And then also, I believe roughly the middle of last year, you had something like 13 million subscriptions, like 50-or-so e-mail newsletters and such that you guys put out there, I assume, almost all for free.

What's sort of an update on that number?

And is that sort of helping drive people to actually buy the news product that you guys sell, the digital product?

Yes.

It's a good question.

We have a large number of registered users.

I don't think we've chosen to disclose that number, so I won't put a number on it.

But just to say, our newsletters are incredibly popular, and we have a lot of them.

And we have 3 or 4 of them that have giant audiences.

The morning briefing, the evening briefing, our Cooking newsletters have really big audiences that we still think can get much bigger.

The issue that is sort of opportunity around registration is that we see it as a really powerful way to get people to make a habit of The Times and a really powerful way to kind of wake up dormant value by getting -- making content that might not otherwise be discoverable to people more discoverable.

So you're going to see us experiment more aggressively around registration.

We've got a couple of experiments live in market right now, one around registration in our Android app and another one around registration at the gateway, where we potentially tell people they've read all the stories available in the meter.

You could now -- we've got an experiment going where you can register to unlock more stories, and you'll see more of that.

Our next question is a follow-up from Doug Arthur of Huber Research.

I just wanted to follow up on your digital-only subscription revenue guide for Q3 of high teens.

I mean, kind of in line with the second quarter, good number, but it seems to embed kind of flat to down ARPU.

Is that slightly down?

Is that fair?

I mean, it's -- given the base of subs now, particularly the non-new sub growth, it seems like that could be -- it should be a tad higher if pricing was better.

I'll take this, and Roland may add to it.

I think, first of all, we look at ARPU as an output, and there's a fair amount of noise in the system that I'll try and describe.

On the positive side, we've seen real progress in uptake of our all-digital aspects bundle, which has Cooking and Crosswords in it.

And you're going to see us, as we go forward, we're very optimistic about those products.

You're going to see us keep adding value into them.

And you'll also see us keep rolling out new products that we talked about, a parenting product that we're doing some work on now.

On the other side of that, we are experimenting more aggressively internationally with discounting.

And you also saw, in the prior quarter, some impact of currency.

So all to say that I think there's a fair amount of noise in the system in both directions.

Yes.

I mean, you've heard me say before that we think of ARPU as much less important than the issue of the growth rate of digital subscription revenue.

And we keep a very close eye on that.

We want to grow a much bigger base of users, but we also haven't forgotten that we have a pricing lever.

And one of the things we -- I'm sure we didn't ever come in quarters looking at whether or not -- depending on where we get to and in particular, how our thinking about demand both domestically and internationally, how that plays out.

We don't rule out at all applying price to make sure that we're keeping that revenue growth going very, very strongly.

That's right.

You'll see us continue to experiment with price in the coming quarters on both sides of the demand curve.

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 again this morning.

We look forward to talking to you again next quarter.

Ladies and gentlemen, the conference has now concluded.

Thank you for attending today's presentation.

You may now disconnect your lines.