The New York Times Company (NYT) Q3 2017 Earnings Report, Transcript and Summary

Good morning, and welcome to the New York Times Company's Third Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note that, this 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, James 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 continue to grow with the 105,000 net new subscriptions to our digital news product. The Times now has 3.5 million total paid subscriptions by far the most in our history. Through 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 so many new subscribers have decided to pay for Times journalism is it sheer breadth. The New York Times continues a course to offer comprehensive and offer regulatory and gender setting coverage of current U.S. politics. With the Times is like a multi-ocean navy unusual to be breaking major new stores about the Trump Administration and devoting expensive 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. Reported Jodie Kantor and Megan Toole [ph] spent months meticulously naming down the details and convincing sources to go on the record. This comes after Emily Phillip and Michael Schmidt's [ph] reporting on Bill O'Reilly and 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 news replaced an unusual number of large scale, hard news 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 Seager [ph] was named styled editor, Jessica Bennett [ph] was named gender editor and we'll drive our coverage at how gender shapes the lives of people across the globe. And we have a certified genius, Nicole Hanna Jones [ph] with Leyla MacArthur genius [ph] Editorial Department won an Emmy that 10th at The New York Times and unusual 4 [ph] Online Journalism Awards. And then there is the Daily, our nine-month-old audio news report, that has been 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, an industry ranking. The Daily audio program that we uniquely position to deliver lies heavily on the breadths and depths of Times journalism and the extraordinary level of expertise of Times reporters and editors. It became a daily habit setting the tone for the news day for the more than three quarters of a million people who download and stream at 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 a 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 standalone product and as an addition to higher price subscription bundles. Revenue from the company's digital only subscription 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 spent time delivery and print single copy sales rose 14% to $247 million. The subscribers who enrolled in the fourth quarter 2016 and first quarter 2017 continue to retain at least as well as and in some case better than previous cohorts on the same promotions. Of course, we'll continue to monitor engagement of frequency depths and types of content with which they engage as they reached to 12-month mark, but so far, we are 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 if 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 of some individual campaigns in 2016, not repeat in 2017 in the corporate and adequacy categories underlie that we will have less in country to sale for dramatically, but we had during the elections season last year. But we will remain fully confident in our ability to deliver sustainable revenue growth in digital advertising by completing our display offering with a broadest way to marketing services and more commercial partnership like those we currently have with Samsung and Google. We will continue to roll out the strategy in 2018. The print advertising market remains challenging and Q3 decline over 20% year-over-year with almost deeper to previous quarters. But our exposure to declining revenues stream is less than since ever been. Print advertising represented just 17% of total company revenue in the quarter, almost $22 million less than digital subscription revenue which is why we are able to grow by the top-line revenue and adjusted operating profit despite these headwinds. Total advertising revenues will $114 million down 9% from the previous year. Revenues for the company at a whole with $386 million up 6%, while our adjusted operating profit of $26 million represents the 44% increase compared with the same quarter last year. This increase will drive growth in digital revenue. We continue to follow road map outlined in our path forward and our Newsrooms 2020 report and we are on tracked 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 given follow at last we announce intention to retire in early 2018. James has been a trusted advisor to me and our publisher and I am very grateful for his many contribution of his nearly a lovely career New York Times. If we will fulfill the end of February next year to help achieve us snooze transition to success us. The search process is now underway, but it means for James to have one more New York Times Company earnings call to look forward to lucky charm. 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 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 online subscription revenue continuing to grow strongly. Subscription revenue from digital online products grew 46% in the quarter. On the Print subscription side, revenues were 1.5% higher as Home delivery revenues more than offset of decline and 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 declines 5.3% in the quarter compared with the prior year while Sunday circulation declined 2.6%. As was the case last quarter ARPU continue to decline in the third quarter largely due to sharp increase in net subscription additions over the past year, most of which start in promotional discount. Since we have experienced significant increase in net subscription over the past year, we expect our ARPU continues to decline before stabilizing when these new subscriptions step up the full price. Moving on to advertising, we reported total advertising revenue decline 9% as print advertising decline was an offset digital advertising growth. The growth in digital advertising was driven by smartphone, programmatic and marketing services. Lower print advertising revenue mainly due to declines in the luxury travel, real estate, technology and telecom categories. On a monthly basis overall advertising revenue declined 2% in July 6% in August and 15% September compared to last year. Other revenues grew 18% versus the same quarter in 2016 to $25 million, principally driven affiliate referral revenue from the product review and recommendation website, Wirecutter which we acquired in the fourth quarter 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 cost decreased 2% in the quarter, while adjusted operating cost 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 cadence from our International operations. In the quarter, we recorded two 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 hydro power assets at a paper mill previously operated by Madison Paper Industries a partnership in which the company has a 40% interest, and which seized 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 $2.5 million charge in non-capitalizable expenses with the reconfiguration of our headquarters building to make some more space available for rental income. For the first three 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 these projects throughout 2017. We continue to be encouraged by the interest we have seen in the seven floors we're 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 security balance grew during the quarter and ended the quarter at $823 million, with total debt and capital lease obligations principally related to the sale-lease back of our headquarters building of approximately $249 million. Late in October we announced that we 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 3800 retirees and will be funded through assets in our pension trust. This transaction was the latest in the series of actions we've taken over the last several years that we've taken to reduce the size and volatility of our pension obligations and the ongoing administrative costs associated with these obligations. Since 2012 we've settled close to $625 million in pension obligations. With this latest transaction we expect the booking 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 a $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 future. As a reminder, we began the year with under-funded 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 oppose 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 owned subscription revenues expected to increase approximately 40%. Overall advertising revenues are expected to decrease in low double-digits with digital advertising flat or decreasing slightly. Other revenues are expected to increase approximately 10% largely from the impact to the Wirecutter business we acquired in late 2016. And with that, we'd be happy to open up for questions.

[Operator Instruction] The first question comes from John Janedis with Jefferies. Please go ahead.

Thank you. Mark, I was hoping that you could talk more about subscriptions broadly, in the past you talk about it overall opportunity for service somewhere maybe 7 million higher overtime and the question that is that you have change. And then on new products you have the crosswords and I guess cooking now, by there are other products you can add, and can you give some color on whether this step have been up solid from news or do they represent a low-cost opportunity to drive digital service or maybe a new digital severance increase ARPU overtime.

Good morning, John. Thank you for both of those. So, we have an undiminished belief that we can grow 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 in abroad and I think our opportunity to build our business far beyond its historic scales is there. I want to say, you heard me say today, we got through 3.5 million subscriptions. I think the absolute peak, a number of subscriptions in the Print York Times is as history was in the earlier 90's was 1.8 million. So, we have already got many more subscriptions today than we have then. And although we as you know in recent months we have been reorganizing, we think there are better ways of coordinating, 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 three questions. We are very encouraged by the success we've seen so far and with our smallest subscription products and we launched cooking in part to explore whether we could make this standalone product out of the vertically and to state this obvious, the New York Times has positions in many, many verticals. And I think cooking does encourages to think about whether we can bring other new standalone 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 just appointed Art [ph] one of our very best executives to run a new products division inside our new digital organization. You will definitely see more news on that front. As I said in my remarks, the advantage of this products is an ability both 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 whoever high willingness to pay and we've tested that, and it works in the real world and those are already helping us sell more expensive bundles. So, I guess to answer your last question, we see potential both for standalone subscription relationships, some of our Crossword subscribers example are just Crossword subscribers who do don't subscribe to renewal time but also the using concept with our core news offering to build our business.

Okay. Thanks for that. And then maybe separately you talked about the slowing in digital advertising, obviously the comps get tougher but are you seeing a more compatible environment either on the inventory of pricing side?

Hi there. 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 are still seeing pretty intense change for the character of demand and that goes for the media part of the business, which I think you are asking about and also for two areas, where we've been investing heavily partnerships like Mark mentioned in his scripts, and like to be commercial partnerships we have with Google and Samsung, and also our surfaces business. So, we are seeing increased demand from partnerships and for services. We are well-positioned to continue to capture that demand and I think that capturing that demand has an effect also exceeding more media business. So, we remain very confident in our strategy around that, I think, particular to your question, that flex stream [ph] family of products that we've launched in media, over the last couple of years are performing quite well. So, those are our larger canvas ads, where we've been able to hold CPM based on the ads ability 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 has led pivoting 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 to that strategy, we think it's been working. You've heard me say, in the past on calls sometimes, they have a lumpiness to it, it was a couple of quarters in 2016, where we saw less growth, we have one quarter of a slight decline in 2016. We're very confident, that with some variability quarter-to-quarter, but we can continue to grow this business significantly.

Thank you very much.

The next question comes from Alexia Quadrani, with JP Morgan. Please go ahead.

Hi, thank you. Did staying on the digital advertising for a minute, do you have a 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 - people maybe in pract there?

Good morning Alexia. 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, 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're also seeing a lot more geographic diversity, so real games outside the New York tri-state area. California has been a very bright spot for us in subs, but we're also seeing big games in states like Washington and Minnesota and Colorado. So, getting much more geographically diverse and that goes for international too. And then two other trends that I think are meaningful and important for how we navigate the business going forward, receiving more subscribers, who have come in through social, so we're there, first interaction with us, means on the social platform, and when they come to us, and they subscribe. And we're seeing more people subscribing on mobile, I will say, we have a lot room to continue to improve and how we convert people on mobile fields. You hear us talk about that a lot more as we go into 2018.

The other thing I'd just add, Alexia, as I said in my remarks, we launched to the cooking product. We actually launched a midway through the quarter, we launched in the middle of 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. I mean, this is particular encouraging that we've so quickly got traction with our cooking products, and I'll say we're already beginning to play with adding it to in testing to take a bundle to see whether it improves conversions. So, we're very embolden by that, and we think that the idea of extending the basic news offering, and enhancing it with these other offerings, it looks like this real consumer demand, that's a very positive note in the quarter.

And I think just one more if I may I'm quite mindful that's while you guys have done an incredible job internally and largely, your response is very impressive digital sub growth that you're seeing, you're also benefiting kind of height 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 attract, better present an information from your consumers all around I guess you 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 new cycle. Do you have sort of more internal fire power to kind of offset that?

Yeah, 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 two ways one, we're getting much better at understanding deeply what I would call engagement behavior so what number of active days and page views and the different kind 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 two ways we're beginning to see the results of that that you can expect to continue to see 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 new cycle around the election you see, you still continue 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 felt this on the folks who came in just before and then in the four or five months after the election and based on that understanding we have a fairly good outlook of how that'll retain and we're optimistic about that.

Thank you very much.

The next question comes from Craig Huber with Huber Research Partners. Please go ahead.

Yes, good morning. A few questions, on the cost side look like your cost in the quarter came in meaningfully better than your guidance and looks like probably SG&A line. Can you just talk about where are you putting the cost with your originally expectation for 3Q please?

I'd probably see one of the biggest movers is probably the marketing area that we had a little bit of shift data 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 and do much brand spending as in Q3 as we will do in Q4. I say that's the biggest driver for the spent 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 on the print side rate versus down 2% and 6% the prior two months, so what about categories in particular?

That was overall.

Overall, okay. Fair enough.

Yeah. I am happy to talk about that so on the print side I think Jim already mentioned the categories where we saw a pressure in September. I would say on the digital side, two interesting things happened. One, and they're actually both in the category of pressure on available add supply one with simply beginning to comp against the very intense period leading into the elections. So arguably a one-time event, so we do expect we continue to grow our audience and grow engagement of the audience. And the second thing, and this was unique to September, we intend to be pretty conservative and how we tag our content as tragedy and made a great deal of coverage around hurricanes, the Mexican Earthquake and I believe the Las Vegas shooting was in September. So, we have a lot of content with a lot of engagement around it, but where we actually did run end. So that had all these things effect on digital advertising.

And just put aside that prior point, but it's the trends for advertising thus you can tell us in October they fairly somewhat you saw in September or a little bit better year-over-year?

I think in general, we'll continue to see some pressure on add supply as we get right into the most in terms period around the election. So that will be similar but as we have described we feel broadly confident in our digital add strategy and pivot that we have been work on to business that's increasingly driven by big commercial partnership and with marketing services.

And then my final question please. The headquarters redesign is you thinking that whole CapEx project that is going to be done by year end or you are going to - still meaningfully into next year?

We will say meaningfully, but there could be some spill over to next year, but I think most of the work will be completed this year but not all.

Okay. Thank you.

The next question comes from Doug Arthur of Huber Research Partners. Please go ahead.

Yeah, thanks. Jim just as a point of clarification, you said guidance for Q4 and - is mid-single-digit the press release says high single digit.

Sorry, I correct, you're corrected. The press release holds.

And I guess that's not adjusted obviously for as you said you are not adjusting that at this point for the extra week. And then secondly on the ...

Sorry, just to make that clear, I am sorry, you're right, I just want to point that out, that is a - we are not working 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 a kind of organic comparable basis. Hard to exactly precise on that, but we do expect to have higher - marketing spends in Q4.

Okay, great, Thank you. And then on the circulation revenue guide for the fourth quarter its little bit of a slowdown from what you have 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, is it partly because the price increase on the print side starts to run out steam wide in the fourth quarter, I am just trying to see if there is anything to read into slight slowdown there? Thanks.

The biggest part of that is we are beginning to comp against a lot of the big net adds that we began to see in Q3 of last year into Q4, so the growth number is on the digital side, we start comp against, you will start seeing a percentage growth less than you saw a 46%. So that's part of it. But there is also I mean some of those same dynamics exist in the print side of our business where we started a number of new subscribers to the print products coming on around election and continue into Q1 and as you began to comp against those you will see a lesser growth number that we have seen throughout whole of 2017. So, both of those things but it's mostly on the bigger comps under different size that matters the most.

And still we are very healthy, once we said headline revenue growth both subscription earning as a whole and for digital subscription and we're still we are guiding a 40% increase.

And 10% overall 10% growth of this number.

Yes, and I will just add, because you asked specifically about retention, we are not expecting meaningful fall offs from a retention perspective and from everything we can tell so far based on month-over-month retention and shown we're actually doing better with the election cohort than we have done with the previous cohorts on the same kind of offers and based on their level of engagement, we have no reason to believe that we're going to see a steep fall off.

Terrific, thank you.

The next question comes from Kannan Venkateshwar with Barclays. Please go ahead.

Thank you. Just a couple of, 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 that you can give us about the price elasticity and what that means if you were to start raising prices at some point because that hasn't happened since the new subscription product came was launched a few years ago?

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 will see us we're always testing around price. That said, I think I just gave about what we are 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 pap cohorts who have been with us longer who have come in on the same long-term full year introductory offer. There are 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 rest price there and at this point we see no reason to believe we well.

Well, because we won't our top priority is to go the base and drive the numbers of subscribers. And the other thing I say Kannan 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 quite a flexibility around exporting the demand curve with or without price rises for individual bundles. So, we feel both confident, we've had one or two experiences for example in Canada where we've got some its look like a kind of a model of price rise, but real audience and we are encouraged that we would find real pricing power in our digital product as we found historically with our print product, There is no reason to think that our digital subscribers will be less willing to accept price rises in 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, 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 whereas we have announced today, so we still think we are really growing the business very strongly by growing the numbers of subscribers, but we certainly roll out price rises in the future result. I am sure that some point over next year price will play a role now strategy.

And it's fair to say that we are still in very early days on our middle tier and highest tier bundle in terms of testing what we can put into that to get more uptake on those bundles and we've done some great experimentation as Mark described around cooking and Crossword. We have also experimented in our highest tier with a more loyalty oriented set up 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, and I would say early days so a lot more room to get better at how we execute there.

Okay, and other question was on advertising, I mean is there a big overlap in terms individual advertisers on the print and digital side and could you help us with what be interaction is between those two silos?

I heard the first question I am not sure that the second one, but I would say, generally the overlap gets much greater overtime, so more of our partners are doing more with us across that platform. So, increasingly long-time print advertisers are doing more and more in digital and I would say expanding beyond digital media into partnership and services. I am not sure, I heard the second question.

No, that only answers that. But I guess as a follow-up, are there categories in digital substantially different I mean as this business has grown double-digits have the mix shift ...

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 will give two examples of that, we tended not to have meaningful business when we were mostly in newspaper advertising company in the package goods category and specifically in places like liquor or beauty or even just some of the more traditional like grocery oriented food, packaged goods. Those of all have 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 and like a beauty company buying newspaper pages that haven't bought pages from us in a long time. And I would say the go to market approach having a media business made up of print digital opportunities and also very unique set of partnership opportunities for marketers and a whole array of creative in front of services means we can play virtually every category and we have a mechanism to feed all three parts of our business from all those categories.

All right. Thank you.

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.