Q4 2020 New York Times Co Earnings Call

February 4, 2021

Good morning, and welcome to the New York Times Company's fourth quarter and full year 2020 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions to ask the question you May Press Star then one.

One when you touched on his phone.

Please note. This event is being recorded and now I'd like to turn the conference over to Harlan <unk> Vice President of Investor Relations. Please go ahead.

Thank you and welcome to the New York Times company's fourth quarter and full year earnings. The full year 2020 earnings conference call on the call today, we have Meredith Kopit, Levien, President and Chief Executive 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 2019 10-K as updated in subsequent quarterly reports on form 10-Q.

In addition, our presentation will include non-GAAP financial measures and we've provided reconciliations to the most comparable GAAP measures in on.

The earnings press release, which is available on our website at investors Dot N Y T. C O dot com with that I will turn the call over to Meredith Kopit Levien.

Thanks, Harlan and good morning, everyone.

2020 was the year, none of us could have imagined the pandemic, it's devastating human toll and its many economic with the operation.

National Reckoning of race and social Justice.

Ah bitterly contested U S presidential election, and an unending hunger for relief from at all of the need for quality independent journalism with a huge effort and my colleagues across the times rose to meet that need they did say with energy and the rigor of commensurate with our mission.

Their work, which was confirmed at historic levels led to a year of strong business result at the end of 2020 of the times now has seven then of half million total subscriptions across our digital and print products and notably needs Cross the 5 million digital subscriptions Mark.

Thanks to acceleration of gross in our digital subscription business and to a lesser degree of disciplined cost management and despite the loss of $138 million in high margin advertising revenue last year, we recorded a slight increase in annual adjusted operating profit.

That increase was driven by $2 3 million net new digital subscriptions and the 30% increase in total digital subscription revenue of 15 percentage point acceleration compared to last year.

All three of our products news cooking and games broke all previous records for annual net adds and we saw continued success with our two strategic pricing initiatives and the new <unk>.

Promotional subscription the higher prices at the one year, Mark and nearly a full year of our first ever price increase on tenured subscription.

The strong new cycle has continued to meet the record audiences, albeit with real fluctuation during the election week 273 million global readers came to the times nearly doubling our previous weekly record and the reader tools like our expansive Corona virus database and Covid.

19 vaccine information still among the most comprehensive of their kind of continue to drive elevated traffic now I can't tell you, which storylines will drive outsized audience growth in the future just like you could've predicted of devastating global pandemic or on Violet.

So at our nation's capital in.

Indeed, the new cycle will change and audience will fluctuate, which could mean considerable variability in net subscription additions in any given quarter and as I said in the last earnings call. We regard 2020 as an outlier here for net subscription additions, but whatever the new cycle.

I believe we are well positioned to deliver continuous gross and in 'twenty 'twenty, one more right than we drilled in 2019.

We're more than a year into a registration based customer journey and we're encouraged to see that while many readers convert immediately amendment from high newsfeed. There are plenty of others to do so over time as they begin to understand and experience of the times breadth and value and with each passing quarter, our understanding of the audience signals are.

Ability to act on them, making it easier to drive conversion.

Advertising also performed better than expected in the fourth quarter, the pandemic substantially impacted our AD business all year and we experienced the he's sitting of decline in our traditional print categories at least some of which are unlikely to return, but we also saw some stabilization in our digital app.

Business by mid year in fact, if you control for the closure of our services businesses, a lot of society and people on and for our removal of the open market programmatic advertising from our apps at the beginning of the year.

All year of digital advertising revenues would have declined much more modestly instead of the 12 per cent. We're reporting today, we credit that stabilization to the increasing potency of our AD products and tour and team's continued ability to rapidly transform our value proposition.

In advertising first party data targeted media and audio remain our biggest growth drivers in the second half of 2020, we introduced more unique first party audience products, which are performing well. We also recorded $36 million in podcast advertising revenue.

In 2020 up $7 million from the prior year powered by our expanding portfolio of audio programs.

We expect podcast revenue growth to be strong into 'twenty and 'twenty one as we continued to see steady demand for the daily and our other shows and as we benefit from our acquisition of cereal and the right to sell advertising against this American life.

Now.

Yes.

Now.

Now let me set all of these results into a broader strategic context, as we gain what feels like more than just another new year last year, we achieved two key milestones.

It'll revenue overtook print and digital subscription revenue, which has long been our fastest growing revenue stream from this point forward will also be our largest those two milestones and our best year on record for subscription Mark the end of the first decade of the times strategic transfer.

Permission to a digital first subscription first company.

Also mark the beginning of the new decade the.

Times sold its first digital subscription 10 years ago this quarter.

Selecting back. These last 10 years have been all about proving out our strategy of journals worth paying for to redirect to consume on digital subscription. The next decade will be all about scaling that idea.

The close look at the investments we made last year. It gives you a picture of our emerging plans in three areas news product work and the Standalone products I'll start with news.

The access going forward will continue to rely first in most of the quality breadth and differentiated value of our news report so in the coming year, we will continue to invest thoughtfully in our 1700 strong newsroom, particularly around covering the biggest stories of our time.

One of our core convictions about our growth in the next decade is that we're just at the beginning of unlocking all of the digital news can be and do in People's lives.

To tap that potential will also continue adding digital product talent engineers product designers data scientists and product managers.

Mark will make her journalism more accessible engaging and impactful.

We're investing in product work is already helping the times begin to meet more news me in 2020, which improved our experience for up to the minute coverage expanded our use of visual and data journalism created new story format and began to personalize aspects of our customer journey on.

All of which are beginning to drive increased engagement.

All of our product progress is increasingly evident to consumers, we still have plenty of work to do and investment to make to ensure that our underlying tech architecture, our strategy and our culture match or growing ambition.

Some of our focus on improving those platforms lives on our growing ambitions around news adjacent products as I've alluded to in the past, we see even the bigger market opportunities for both gains and cooking and given their growth potential we expect to invest more in content product development and marketing in these.

Then we have in previous years.

We're also thinking hard about expanding our subscription product portfolio. This year will test the possibility of a subscription product per wire cutter and experiment more aggressively the autumn the read aloud audio subscription service we acquired in mid 2020, we see all of those.

As a way for the times to me the even more in People's lives and also to make the relationship with the New York Times brand more valuable and speaking of more valuable 10 years. After we launched the pay model with $6 7 million digital subscriptions of nearly $600 million in annual digital.

Scripture revenue the opportunity has proven far bigger than we imagined there of 1 billion people reading digital news and then the expected 100 million willing to pay for it in English. So it's not hard to imagine the times having of subscriber base that is substantially larger than where we are today.

External factors will continue to influence our subscription growth most notably as I mentioned fluctuations in the news cycle that could drive variability in net adds from quarter to quarter.

But with every passing quarter. There is also more in our control from an improving understanding of consumers to pricing power to more disciplined management of cost of our legacy business and.

And as our command of levers improves so too should our profitability.

As we continue to make progress on these areas. We aim to see modest profitability improvement in 2021 with more improvement to come in the years that follow that said, we will continue to invest in our long term growth, even if that variability impacts our profitability and the new.

Near term.

Before I turn things over the one let me say a few words about our people and the culture will work in the build as we continue to evolve and grow.

Our team has always been a key differentiator New York times, most of the people who come to work here whatever their role do so because of an extraordinary level of commitment and a passion for our mission.

As we grow and scale our operation we're hard at work on being the kind of company that attracts develops and drive impacts from best in class talent in all of our major disciplines.

To help me and the rest of our leadership team in this critical work I was very happy to welcome our new Chief Human resources, The officer, Jackie Welsh to the times last month.

I'll close with a heartfelt. Thank you to our team of almost 5000 around the world who did amazing work in a year that presented historic challenges. They are at the center of all we do and we couldn't fulfill our mission without them and with that I'll hand things over to Roland.

Thank you Meredith and good morning.

The Merit said, it's been an incredible year and our business results give us even more confidence on our ability to continue scaling the business.

Adjusted diluted earnings per share was <unk> 40 cents from the quarter three cents lower than the prior year.

We reported adjusted operating profit of approximately $100 million, which is slightly higher than the same period in 2019.

We added 425000, net new subscriptions to our core digital news product and 202000 net new subscriptions to our Standalone digital products for a total of 627000 net new digital only subscriptions.

This quarter was the second best ever from net subscription additions with only the second quarter of 2020 outperformed this quarter.

As of the end of the quarter, we had nearly 850000 of games subscriptions and 725000 cooking subscriptions and while international and domestic subs. Both grew strongly the international growth rate returned to outpacing domestic.

The international share stands at 18% of total new subscriptions.

Total subscription revenue increased nearly 15% in the quarter with digital only subscription revenue has grown almost 37% just the $167 million.

The continued acceleration in the range of year over year digital subscription revenue growth, which was 18% in the first quarter, 30% in the second 34% from the third quarter and now 37% from the fourth quarter is largely a result of three factors.

First the large number of new subscriptions, we have added in the past year.

Ongoing strength in retention of the dollar per week promotional subscriptions, who have graduated to higher prices.

Finally, the positive impact from our first ever digital subscription price increase which began late in the first quarter.

Digital news subscription are proof of the quarter declined approximately 10% compared to the prior year on approximately 1% compared to the prior quarter of two percentage point improvement in the quarter over quarter trend.

The newly acquired subscriptions, mostly on the dollar per week promotion domestically and a deeper promotional rates in many areas outside of the U S continued to more than offset the benefits from both subscriptions, graduating from the introductory promotion as well as from price increases on our more tenured full price subscriptions.

Our crew related solely to domestic new subscriptions declined approximately 7% versus the prior year and 1% versus the prior quarter.

We expect our digital pricing strategy to continue to provide a tailwind to digital news our crews throughout 2021 as the result of the following factors one the impact from subscriptions, graduating from discounted promotions and to the price increase on tenured digital subscriptions.

Given the large number of subscription additions in 2020, we expect approximately $1 6 million subscriptions will graduates of higher prices in 2021.

In 2020, we also increased price on approximately 900000 digital subscriptions and expect another 500000 over the course of 2021.

On the print subscription side revenues were down nearly 3% largely due to a decline in single copy in the international bulk sales.

Revenue from domestic home delivery print subscriptions grew two 2% in the quarter as the home delivery price increase implemented early in the year more than offset year over year subscription declines.

It's also worth noting the print home delivery net subscription losses with the lowest we've seen in the last three years driven by people working from home the strong news environment and internal efforts.

Total daily circulation declined 14% in the quarter compared with prior year, while Sunday circulation declined three 2%.

The widespread business closures vast decrease and commuting and reductions in travel as a result of the pandemic contributed approximately five percentage points to the daily copy decline and one percentage points of Sunday.

Yes.

Total advertising revenues declined approximately 20% in the quarter as price continued to be severely impacted by lower market demand during the pandemic.

Digital advertising declined approximately 2% in the quarter compared with the prior year with gross and podcast and open market programmatic, partially offsetting declines in our creative services businesses.

As a reminder, in the early part of 2020, we closed our Hello Society, and fake love agencies and turned off open market programmatic advertising within our apps.

These together were responsible for approximately $8 million in revenue in the fourth quarter of 2019 and $28 million for a full year of 2019.

It's also worth noting that our fourth quarter digital advertising revenue is better than the guidance. We gave from their own December largely as a result of better than expected rates earned on open market programmatic advertising.

Our first party got offerings delivered more than 20% of our core digital advertising revenue in the fourth quarter compared with less than 7% from the same period last year.

Meanwhile, print advertising declines of approximately 38% with entertainment media and luxury of categories hit hardest.

Other revenues declined approximately 12% compared with the prior year to $54 million, primarily as a result of fewer TV episodes as well as lower revenues from live events and commercial printing.

These declines were partially offset by an increase in wire cutter affiliate referral revenue.

Adjusted operating costs were slightly lower in the quarter.

Cost of revenue decreased approximately three 5% as lower print production and distribution and advertising servicing costs more than offset higher digital content delivery subscriber servicing and journalism costs.

Sales and marketing costs decreased approximately 9% largely driven by lower advertising sales costs.

Product development costs increased by approximately 23% largely due to the gross in the number of engineers employed.

We plan to continue adding to head count in this area over the next 12 to 18 months as we expect to continue leaning into our investments in product development and the core news on Standalone channels on to drive further growth.

General and administrative costs increased by approximately 11% largely due to increased head count appreciation of the company's stock price on stock based awards.

And higher consulting costs.

We recorded two special items in the fourth quarter.

$5 million gain reflecting the company's share of the distribution from the ongoing liquidation of Madison paper industries assets.

And an $81 million noncash pension settlement charge, which is the result of the transfer of pension benefit obligations to ensure allowing the company to resume.

To reduce the overall qualified pension plan obligation by $235 million.

We had an income tax benefit from the quarter, primarily attributable to the pension settlement charge. However, as we've said previously we expect our tax rate to be approximately 27% on every dollar of marginal income the record with significant variability around the quarterly effective rate.

Our qualified pension plan ended the year 100 in the 2% funded with an approximate $36 million surplus.

This is an improvement from the 94% funded status we reported on our May 2020 earnings call. During the early weeks of the COVID-19 pandemic.

Over the long term, we intend to continue working to increase the funded status of these plans.

Moving to the balance sheet.

Our cash and marketable securities balance ended the quarter at $882 million, an increase of $82 million compared with the third quarter company.

Company remains debt free with the $250 million revolving line of credit available.

Given the continued strong results over the past several years company's board of directors has approved the one cent per share increase the dividend to the dividend to seven per quarter. The <unk>.

The increase in the last three years.

Management, and our board will continue to keep the balance sheet on our plans for capital allocation of under close review.

The previously stated we have a strong preference from maintaining the flexibility to invest went in the amount of we want in order to fuel further growth in our digital business independent of the vagaries of the market and will therefore continue to take a relatively conservative approach to the management of the balance sheet.

Let me conclude with our outlook for the first quarter of 2021, which is based on our current knowledge of assumptions and could be impacted by the evolving the effects of the pandemic.

Total subscription revenues are expected to increase approximately 15% compared with the first quarter of 2020 with digital only subscription revenue expected to increase of approximately 35% to 40%.

Overall advertising revenues are expected to decrease from the high teens compared to the first quarter of 2020 and digital advertising revenues are expected to increase in the low to mid single digits.

Other revenues are expected to decrease approximately 10% to 15% as a result of fewer television episodes.

Both operating costs and adjusted earnings adjusted operating costs are expected to increase in the mid single digits compared with the first quarter of 2020, as we increase the investments into the drivers of digital subscription growth.

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

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone for using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two the.

The first question is from Alexia <unk> from J P. Morgan. Please go ahead.

Hi, Thank you very much understanding you don't give guidance on.

Going forward I guess, but maybe just some more color on on how we should think about that so when you look at the you know this quarter of the first or the first half of the of the coming months I guess, how would you characterize what youre seeing so far and engagement I guess compared to the record year last year or even on what you saw in terms of engagement of the fourth quarter.

<unk>.

Then my second question is just the now more focused on on the crossword and cooking on the outperformance you're seeing there.

Any more color on what's driving the how sustainable do you think it is and how much of that do you think you know with me now on 2020 came from the impact of the pandemic.

Yeah, great. Good morning of left the I'm happy to start enrolling you should jump in the deep.

On your first question I'll just.

Just broadly what do we expect to see al I'll reiterate what I said in the prepared remarks, which is.

In the year less.

Less than we thought on 2020 more more than we saw in 2019 and on a lot of that is because the sort of.

You know growing the strength of the underlying fundamentals that we do think.

Audience will fluctuate with the new cycle, but even as that happens.

Still have a lot of room to bring in new registration the convert.

People, who do register and we're feeling really good.

About being able to sort of broadly hold churn despite the the.

The base growing very very rapidly. So you know I'd say.

Broadly optimistic and I think even as the audience fluctuates and the new cycle changes our ability to.

It's what we know about the engagement.

Net people to return either intra day or intra week.

<unk> is improving.

On on cooking and games.

Say, it's a little bit of both if I heard your question correctly, you know certainly the pandemic played a role of lots and lots of people home and kind of getting what we saw that.

You saw that Pud family in the second quarter, but it was also an opportunity to have more audience more signal.

Due to more effective product development and I'll reiterate what I said in the prepared remarks.

No we think in both of those.

Products, we're playing in markets that we like and we think we've got really big opportunity of the youre going to see us investing more into those products. This year and beyond because we think there's real growth potential in both of them I think I said this in the prior call. We've just brought in.

On a new leader to gain the comes out of the games industry and the <unk>.

Got it got it.

The big hopes for that business, but on both I would say, we think theres a lot of running room.

I guess Meredith, maybe if I ask it different way of because I, probably asked the wrong I guess just on engagement in the fourth quarter, specifically I mean, you've always had that you know it's not all about Trump on you guys have so many contributors to what drives people to read the New York Times and I'm curious you know you know per.

Most of the election of everybody sort of assumed that the of drop off and clearly with the fourth quarter numbers were fantastic. So I'm. Just wondering you know how how much you know engagement sort of remained elevated.

Even post the election, given you know all the other news that was very heightened in the quarter. Yeah. It was just don't.

I I'd say broadly, it's still pretty high theres still plenty going on.

We do see and I said this in the prepared remarks, we do see variability month to month quarter to quarter, but in general I would say we are still in the period and we feel the smell of AR.

The very strong.

New cycle with multiple interrelated stories that are still playing out that we are and you know to the extent that the new cycle will shift and the change we're getting better at getting return, which is the big part.

On the engagement on a big part of the model to driving subscription.

Great. Thank you.

Thank you.

The next question is from John John <unk> from Wolfe Research. Please go ahead.

Good morning.

Maybe one related question to lecture isn't the one separately.

Mark you talked about the investment games. The cooking I think there are about call. It a quarter of the digital subs over the long term, how does that scale relative to news and with the lower RP is the profitability profile much difference.

From call it of new sub and then separately.

The little more if he can impact on what youre seeing in terms of subscriber retention for both the promotional and tenure of steps following the price increase thanks.

Yeah.

Three questions of man, if I Miss one Roland.

One of them jump in.

Let me just say affirmatively.

From there is no room.

On the news product.

Thanks.

On the prepared remarks, I think we're just.

The kind of what the digital needs can be and do in People's lives on.

We are.

At the beginning of.

Millwork.

The more new.

Since then.

On a good view.

An example of that the palms and the last year has gotten.

But.

Much more work into it.

Lies in developing new so you.

You know.

We're much more likely to be of place today than we were previously when something is unfolding in real time for people to come and I think we're just at the beginning of that I think were also adjusted the beginning of.

How many more varied formats from tax taxed at the times and if you think about what we were able to do come up the format perspective with the Covid case tracker, which is just the next to each generator of of return of audience and now the the information on on how the vaccine rollout of its happening.

And how to get a vaccine you can imagine us applying those tools to any number of other subjects. So I want to be clear we.

We still think.

There's just a huge opportunity ahead for us the knee.

And we're optimistic about the needs in particular and I think you know that the.

The sort of the premise.

We continue to we didn't have a really big I'm engaged audience that is growing at a really big engaged subscriber base that is growing it is I think the the other products.

To some degree depend on Madden on the model depends on that.

And I think that's the answer to your first question that I do.

As I said, we've got big ambitions.

For the news the adjacent products and I mentioned in my prepared remarks, beginning to experiment with others as well all of them, which which we acquired last year.

And and beginning to test the possibility of.

Of wire cutter of playing a role in our subscription I think your other question was about price and I'm Gonna Hanmi repeat it just the way I think.

I think you're asking about retention on on dollar of weeks items is that right.

Yes, there is that piece and then.

Back to the.

The games and cause of the products is the profitability profile of what's different safe from news based on relative price or do not break it out that way in terms of thinking about it internally.

I am well and I'll, let you answer, but I'll say in general.

We're focused on the overall unit economics, which get better over time, and particularly when you think about us having a portfolio of products I think that all looks better over time.

The where pension question I'd say, we're still feeling really good about them using the dollar of weeks two brand new large numbers of people in particularly during the during big new for them.

I'm feeling very good about on the ability to step them up to higher prices either full price or in the intermediate price and I think we said in the last call that the bid essentially training training algorithms using data science, which ultimately.

It should be better than the randomly.

Randomly choosing which which groups going into the step up price versus all the way up on that data science is actually beginning to work and so we continue to be optimistic that I'm not the sort of promotional price with with the step up of moment at a year or going to full price of the year and then a higher price.

Certain point of tenure is working very well for us when I don't know if you have anything to add.

I'll add a little bit of color to both.

On the on the step up pricing on the retention question, Yeah, We've got a model that's choosing.

Choose as 80% of.

Of the subs that go to either step up our full price and that's that's masked because we like to have a 20% hold out because we constantly want to test the <unk>.

The C of the model versus versus the random sample and the model is is beating the random sample.

By a statistically significant amount.

Also.

We've inched up the number going straight to full price. So that's more than 50% now a bit more than 50% are asked to go straight to full price and the kind of the real proof of the models efficacy is that we actually now see the retention on those as they go to full price slightly ahead of those who don't.

Which said the model is very good at picking those who have.

Our lower elasticity to price so we're quite happy with that and overall of the the retention rate on the subs as the group.

<unk> is similar to what we had on all of our previous offer so couldnt be happier with the way that's full of going on the profitability question for for cooking versus.

Versus core news.

As Meredith said, we're really interested in the hole, but if you can think about it on the price side.

So.

Core news as of $17, a month of product and cooking is of $5 a month product.

Wherever we discount the the news product to a dollar of week for the first 52 weeks in and we don't do the same with cooking. So that's the kind of a five dollar product out of the gate.

So over time, you can see that the profitability of those kind of kind of come together.

But again.

We don't really focus too much on that the both the both highly profitable and the told you in the economics for the digital side of the company are very good.

That's helpful. Thank you.

The next question is from John Belton from Evercore ISI. Please go ahead.

Thanks, I have one on bundling and one on profitability. So first on bundling, adding to the the first two questions here.

So.

Within cooking in the games products, which what percentage of those subscriptions are now coming from your new subscriber base and if you looked at revenue per subscriber which includes all product types, how would that trend line look relative to this digital ARPA trend line that Roland described earlier as kind of being down on year over year.

But improving.

And then the second one is for Meredith on profitability.

You said in your prepared remarks, you're expecting modest profitability improvement in 2021. So just specifically are you talking there about adjusted operating income dollars adjusted operating income margin or any more comment there would be appreciated.

I'm happy to go all of a sudden you're.

Although the first on your second question and then Roland you you can take the first question I was referring to modest improvement this.

This year as our aim.

And adjusted operating profit.

So as I said to the degree we see fluctuation we were under investing in.

No.

We're incredibly excited about Roland why don't you take the other question.

Yeah, and I'll, just put a finer point on the first one John so so that's in terms of dollars we expect.

Adjusted operating profit in dollars to a modest increase this year and then accelerate in the years going forward.

On the bundling question.

Most of our most of our sales are not in a bundle at this point so the vast majority of our independent.

We do have some subscribers, who who buy all.

All three products independently or a combination of two.

The way to think about the profitability on that is just to look at our overall on <unk>.

Digital revenue growth trend, which as I mentioned in my prepared remarks has been accelerating throughout 2020.

Okay. So you don't think about it you don't try to kind of square customers that are buying the products separately on looking at revenue per customer.

I guess just the we are net.

We do look at that and we'll be headed in that direction and the most more stronger way in.

In the near future and you can see Youll see some more thought on bundling from us coming sometime this year.

Got it well. Thank you all in service of maximizing the profitability.

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

Yes. Thanks, Meredith you you've talked about sort of the next phase of focus for the company being scaling.

The operations.

Can you sort of talk about what what does that imply from your previous 10 million sub goal I think by 2025, what does it imply for the 1700 journalists, how large could that grow and what does that imply for the 800 and almost $900 million of cash on the per.

All of the sheet in terms of of building out the standalone products.

Yeah.

Let me, let me try and take each of those the.

On the first one I think what you're hearing from us and we.

I have been the scenario in.

In the last quarter as well I think we're just increasingly ambitious about the opportunity.

And you know it.

And in the addressable market that we expect to be 100 million people willing to pay for for English language digital means we see no reason why the time can have a subscription base that is substantially larger than we have today you know we're at.

You take from it.

Our expectation of the Pam.

The 100 million today, Yeah, we have set of Manhattan per cent of that no reason, we can't have two three or four times that over.

Over time.

Even more so youre hearing us.

The more ambitious.

On on 17 of hundred journalists were going to keep doing what we've done in the newsroom, which is steady investment and I'd say relatively modest in the context of the opportunity we're going to keep hiring journalists were going to keep making sure we can be on excellent and.

Really expenses on the biggest stories and as I said in my prepared remarks, and actually in answer to <unk> question. We're also going to keep focusing on how we eat more news means but that investment is not gross and proportionate to our expectation of subgrade ore to the opportunity and I think you've seen that.

Over the last few years, so investing but in a moderate way.

And then I think you're asking about of balance sheet.

I'd say given the opportunity we have ahead of us.

We like to have the option to go to.

And the best into the opportunities on the balance sheet and I think we've managed our capital.

Sure.

With that in mind.

Well, one I don't know if you want to add anything to that.

Yeah sure so just a little bit more on on on the on the cash part of the business. So we expect to to continue to generate cash.

Despite increased investments in and in the areas, we talked about really based on the fact that the natural leverage in the digital part of the business.

Is really kicking in as we step people up in price and the print part of the business is getting smaller.

And so those two things are going on you're going to make sure that we generate cash and then just as far as our use of that cash and we really would like to put that cash.

To use.

To further the gross so we are continually looking at in the.

In the acquisition space.

For things that would further our subscription business and we believe that that would be the best use of that cash for for all shareholders. Because we believe that will generate more gross more growth and more profitability over the long term.

And I'll just reiterate what what we both said which is being conservative and on management of the balance sheet has really served us well.

And we will continue to do that.

Okay, and just as a follow up on Rolling media expense was down 5% in the fourth quarter of.

What's the what's a good expectation for that specific coarse cat or cash.

<unk> in 2021.

So I think the way I would think about it is you know.

We were going to restore that spend you know after the the pandemic cut back on and you saw some of that in Q4.

So the sort of that that's one layer and then then another layer is to think about the fact that we believe we've underinvested in games and cooking products in support of those sort of kind of layered on top of getting back to a normal spend we're going on we're going to layer of little bit on that because we think that there'll be a really good payback.

Our marketing support of games and cooking.

Thank you.

The next question is from what's silly care, sorry up from Kimball Research. Please go ahead.

Thank you very much good morning, Meredith I wanted to ask you to talk maybe about the competition.

First of all if you look back of the year the two.

2020 was.

What did you see from the standpoint of competitive response to the situation and.

And Europe estimation did you end up having a better competitive position or.

Sort of came out.

Ken on net.

Net neutral after the year and also what our specific challenges from the competition that youre seeing kind of how are you planning to respond to those so it would really appreciate your thoughts on that.

Yeah those are great questions on good morning, all.

Let's say roughly.

The thing about that that's the first one is sort of broadly.

The competitive position coming in the.

The year.

Yeah highly highly eventful on new Jordan, there and we like our competitive position coming out of the year and starting the new one end of June starting when I describe the next.

Next decade of our gross.

So we I think.

Sort of how we see our competitors has changed the view if you go back to when I joined the times I think we were competing on.

Really steadily with the other publishers.

One of the things that's really interesting if you look at last year, if you look at our audience trends.

We've like jumped up of category in terms of of the average weekly audience.

Level of engagement of that audience and we use that we used to track ourselves number of page views pages per unique all of the stuff that you can see in Comscore, we used to be sort of in the center of towards the top of the pack of publishers, we literally moved up the category the now.

Seeding with companies.

Companies that are TV native.

And I think that that's exciting.

The of our opportunity and I think we've said this in prior calls during during peak Covid moment, something like one and two adult Americans were coming to the times.

And I think that just means we're.

We're competing we're.

We're competing with it on a different level.

We like that we think really hard about.

How do you compete with with.

Companies that were born on.

Video of engage it won't TV companies, we think really hard about how do you compete.

Oh on a global footprint, we've invested a lot of I'd say two things.

Net of our news room, so it's sort of all the times had the huge.

On needs a journalistic base all over the world and we will be able to to attack. The biggest story tell the biggest stories in an expansive way from from all of the World and then you see us pushing into maybe more new.

Like the need for kind of the wide news on the developing story and this past year was the year, where we put a lot more resource into that building.

Workflows in the newsroom, we built new technological tools and you can imagine.

Scaling those tools to the.

The issues that go well beyond Covid and politics from the last thing I'll say on the competitive standpoint is.

No.

There was a period, where we've been very focused on the platforms and we're always paying close attention to what the platforms and the tech companies that have the news products can you do.

On your increasingly convinced that the the times when the differentiated who experience.

Is it is.

The island, particularly unique from what a tech company in the platform.

The might do so I said in my prepared remarks that during the election week, we had 273 million.

People are using the time line.

For us that the.

The number of new kind of remember most of them are there.

The the differentiated experience on our on our hands of screens and a lot of day in our App.

And that's just something very very different in that list of story.

And youre going to see of continuing to push into that as our competitive differentiation. So all long winded way of making the point I made at the top which is we like our competitive position.

One other thing to say that we're still making the market for prepaid digital new.

And so you know it's one company line doesn't make the market in and we're comfortable that that other companies.

The emerging can help make that market for paid digital news.

Thank you very much.

The next question is from kind of on Venkatesh War from Barclays. Please go ahead.

Thank you.

The room I guess, just one clarification on some of the comments you made earlier in terms of the number of subscribers stepping up in price next year. So I think you mentioned $1 6 million.

Yes, and then compare that to essentially the net additions. This year a lot of that was of course promotional and the on top of that it also taking price increases on some of your legacy base.

But that number I would have expected it to be a little bit bigger so I just wanted to.

Understand the framework to get good at 1.6, if you kind of look.

Yeah, Yeah. So the one six is solely of those folks who are still on a promotional price today, who will be stepping up.

In 2021.

There was another let's call it a half million tenured subscribers.

Who will be.

Receiving of price increase this year is because they've they've kind of skewed through the gate.

Of all the attributes that that.

Let us signaled to us that it's time to give them on a price increase so if I add the two together it's more like.

$2 1 million.

Subscriptions that will pay more in 2021 than they did in 2020.

Got it.

The one of the.

There is the.

When I look at the total number of subscribers with stepping up in price, it's more than a third essentially of your beef that will step up in price next year.

And so you know when I look at when I, just do some back of the envelope math on that it seems like.

The <unk> the canine from next year.

Over the course of 2021 true.

True to essentially be de minimus, and if I'm on.

And maybe I'm, just reading the comments wrong, but lots of quoting acquired equaled a one of the comments you made I could.

The implication was about a mid single the good kind of or the client first put out of a pool over the course of 'twenty. One. So just hoping you could help of pink true.

What does the with of course of the year of just beyond the scale of the step up yeah. Certainly so so you know if all goes as expected we expect that.

That debt.

Year over year decrease in <unk> is going to slow.

Considerably.

Through the first half of the year and we expect that our year over year will actually turn positive in the back half of the year.

Third and fourth quarter.

And if we are speaking sequentially, we actually expect that turned to happen slightly earlier.

I understand the math that makes perfect sense.

Yeah, we think will be on it will be on excuse me of net positive on.

Proposition.

Year over year Delta come second half of next year.

Got it that.

That makes sense, thanks a lot.

The next question is from Craig Huber from Huber Research partners. Please go ahead.

Thank you I appreciate the comments right there on the <unk>. My other question I do have one ask about wire cut of you piqued my interest there.

It's my understatement of something like consumer reports of something like.

Seven of upwards of 7 million obtained subsets of the digital product line I think roughly $30 on average per year.

Could you just sort of a dream to think about wire cutter on the subscription side of things how big do you think this may be it could be going down the road here I mean can you get it to roughly.

10 of 20% of of the consumer reports out on <unk> that you have a bigger brand name out there, but it sounds like you're putting a lot of effort behind the times.

Oh.

Two things Craig.

I like your Dream and and we you know when we acquired the wire cutter, we bought them.

On it could it ultimately was something that could fit really nicely into our broader portfolio of subscription products from the New York times of need we think it works on the brands. You think there are so many things about it and it worked really well well just at the beginning of casting.

So so I won't say much more than that.

Other than you know, what what you're pointing to.

Where our eyes are on the horizon per wire cutter in terms of that there's really no of potentially big big opportunity here, but we're in the earliest days of testing that I'll also say I'd be remiss, if I didn't say, it's a great business, even without that ultimately our strategy of June wasn't worth paying for.

The more of our business the economics of realized through subscription and ultimately a subscription bundle the.

Better, but we really like the wired kind of business, it's performed very very well, particularly in the last year as we as we go.

Maybe there's a lot of investors out there.

I think that you guys got a huge Trump bump here in the last four plus years of stuff with him not an office right. Now can you maybe just elaborate on that on what I know it's early.

Here on a couple of weeks after the peak the inauguration you talk about what engagement is still on top of the breadth of your product.

And just in terms of yeah. The fact, you don't think it sounds like it is.

You have not an office here in terms of engagement with the entrance.

I'll repeat a few things I've said an interest in prior discussions I think the times for as long as it's been around that kind of all of them.

We've been bigger than any one story and I think the and I think our.

If you look under the Hood and how our subscribers and gauge on what drives people in the path to purchase and then ultimately day and be a healthy subscriber. It's the experience of the breadth of our journalism, we are better at converting and holding on to people, who engage with us across the range.

The topics.

Then the two come on any single topic. So in the long run we're quite optimistic that what the big stories of our job is to be excellent and expansive deep.

And create a differentiated experience on that helps people get to understanding on the biggest stories of their time, whatever they are and I'm I'm confident that that won't be able to do it.

That in my prepared remarks, I can't promise the there wont be some variability quarter to quarter as the audience fluctuates and thats, the new cycle changes, but we did.

This is one of them coming from the street.

My last job with every passing quarter.

Our sort of hold on the levers of the business and particularly our ability to.

Get insight about our audience in terms of that insight into action to get them to engage with us whenever the story gets better and better and I'm I'm really confident.

My final question, if I could you guys made up the big hire back in September on the hiring of Jonathan Knight on the games side of three hanger, but putting all of the dollars behind that so can you just talk about what the strategy might be here going forward in terms of from until about your games operation from the I guess, the digital subscription standpoint. Thanks.

Yeah, I don't I don't have a whole lot more to say in terms of detail than.

And then what I've already said.

He is the big hire the bodies here he won't be the only hire he has already begun.

Higher in that space within the market, we think there's a really unique place from the time to.

To play on puzzle of genome.

Let's say like what was the thing that gave us R. R.

Wow.

Can do so much more on here at the success of that wouldn't be.

On the level of engagement for selling the just shows kind of.

Running room and puzzles that at our share of its audience wants to play.

And I'll say to you I think that's been a nine mm.

A nice business I think we can be executing at a much higher level and that the Smith well have more to say I expect in the back half of this year about what that actually means but I would say you know the.

Sure of dispersion I can give you is crosswords are awesome, there's running room, there and I think we also have the big opportunity can be a place for other puzzles that met our kind of body on place.

If you just go down on.

On any given day now on to the bottom of our App on not just the many of the Arabs. We've got a host of things you can play and we're really excited about that.

Great. Thank you.

Sure.

The next question is from Thomas Your day from Morgan Stanley. Please go ahead.

Hi, Thank you going off the last question on the wire cutter I'm curious about the opportunity you see in subscription based monetization of the audio can you talk a bit about what youre going to do through item. How should we think about kind of the incremental value you would be the introducing to the subscriber there over time and kind of what goes into your thoughts on pricing there and then.

On the expense base, maybe on the print side, we saw some rationalization of that cost structure last year, but the circulation declining around COVID-19 scenario.

We might see some more of restructuring this year or are some expenses kind of coming back as things stabilize a bit mark. Thanks, Yeah, I'm going to let Roland take take the second part of your question, but I'll say broadly our print operation of the people who need it always.

It is the part of the operation, where when the best and doing the sort of on cost management and on.

Ongoing transformation.

Really fast changing conditions on I think that's it.

You know the the foreseeable feature.

We're going to be up the continued to do that because theyre new.

Good day.

On the audio I'll point back to what I said in the prepared remarks, we bought on them, which is we read aloud and go out and subscription fitness for audio sales.

Here, our journalism of you can you hear of journalism actually a little mini bundle of journalism from from the Atlantic from the New Yorker from from.

Other.

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