The New York Times Company (NYSE:NYT) Q2 2019 Earnings Conference Call Transcript

Aug 07, 2019 • 11:00 am ET

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The New York Times Company (NYSE:NYT) Q2 2019 Earnings Conference Call Transcript

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Executive
Mark Thompson

particular focus on scaling direct relationships and engagement.

When a user is registered and logged in, we can communicate with them and understand their preferences and patterns of consumption, more effectively than if they're anonymous. That typically leads the higher engagement and subscription conversion. At the start of July, we launched more extensive testing of registration and login.

The test play out differently on different platforms and we plan to experiment with a range of parameters and business rules, how many free articles a given user is able to read, for example, in return for registration over the coming months. We don't expect this testing to have a dramatic near-term effect on net subscription additions. Over time, however, we believe that the growing numbers of registered and logged in users of The Times will help us maintain or increase our momentum in building out our subscription base.

Turning back to Q2 2019. We also added 66,000 new subscriptions to our Cooking and Crosswords products. The Cooking product which crossed the 250,000 subscription mark in the second quarter and the Crossword product with more than 500,000 subs at its own right, are two of America's largest digital subscription products from a news provider. Together with the growth in the call core, that made for 197,000 new digital subscription ads and a grand total of 3.8 million digital-only subscriptions for the company.

Q2 2019 was also a good quarter for advertising. Digital advertising grew by 14% year-over-year with a strong performance in direct sales including from The Daily and our creative services. These gains on the digital side were more than enough to offset the familiar secular declines in print and total advertising revenue grew slightly. Now Roland will give you guidance on advertising for Q3 in a moment. But it's worth noting now, that we don't expect the second half of 2019, to be as strong in digital advertising as the first half.

In recent quarters, we've been tracking against relatively weak digital advertising comparisons from a year earlier. That's played a part in the significant year-over-year gains we've achieved in those quarters. From Q3 onwards we begin to comp against the strong gains from last year and we expect that to have an impact. One of the factors that contributes to the comp challenge is what I previously called lumpiness. Our digital advertising business is increasingly focused on large scale multi-month and in some cases multi-year partnerships with some of the world's leading brands. Demand for advertising partnerships with The New York Times is strong. Indeed, in recent months we've included some of the largest deals in our history as a company, deals from which we will see much of the benefit in 2020.

These partnerships are distinctive and difficult to replicate and give us real pricing power. And that's why we're pursuing them so energetically and are willing to accept the increased variability that comes with them. A big moment for us in Q2 was a successful launch of