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New York Times Co (NYSE:NYT)
Q4 2019 Earnings Call
Feb 6, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to The New York Times Company's Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Harlan Toplitzky, Vice President of Investor Relations. Please go ahead.

Harlan Toplitzky -- Vice President of Investor Relations

Thank you and welcome to The New York Times Company's fourth quarter and full year 2019 earnings conference call. On the call today, we have Mark Thompson, President and Chief Executive Officer; Roland Caputo, 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 2018 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.

Mark Thompson -- President and Chief Executive Officer

Thanks, Harlan, and good morning, everyone. I'll begin this morning with our performance in 2019 as a whole and what it says about our progress in our digital journey, and then dive into the Q4 results.

A few weeks ago, we shared some key milestones of the year with our colleagues here at The Times and the wider world. Back in 2015, we set ourselves the goal of doubling digital revenue to at least $800 million by the end of 2020. In fact, we managed to hit that goal a full year early with digital revenues of $801 million in 2019.

Even more significantly, we were able to add more than 1 million net digital subscriptions last year, the largest number since the launch of the pay model in 2011; indeed, the largest number in the history of The New York Times, and as far as we know, the history of American journalism.

These new subscriptions meant that we ended 2019 with approximately 4.4 million digital subscriptions as well as 850,000 print subscriptions for a grand total of 5.3 million, again an all-time record for the Company. So we're seeing continued real acceleration in our digital transition and especially in our core digital-only subscription business.

2019 was another big year for news and know that that's part of the explanation. But I'd point to three other important factors. First, our new customer journey, which we launched halfway through the year and which requires most users to register and log in if they want to access more than a limited number Time stories, is clearly working. We now have many more million registered users than we used to and are seeing real success in converting them to subscribers.

Second, we're successfully graduating subscribers on even our lowest introductory offers to higher prices and continuing to effectively manage retention as a whole. 17 months after the introduction of the $1 a week offer in the U.S., and five months after the first $1 a week cohorts hit the one-year mark, we're still seeing them retain in line with other cohorts.

This week we begin to roll-out a price rise to a subset of our tenured digital-only news subscription base. Our broader progress with retention gives us confidence that we'll be able to execute this effectively too. This is the first price rise [Phonetic] since the launch of the pay model in 2011. Since then, we've not only seen nine years of rising costs, but also unprecedented investment by The Times in its journalism and digital offerings.

We believe that our digital news report still represent excellent value for money even with this price rise. Our loyal subscribers know that their financial contribution plays an essential role in maintaining the quality, breadth, and depth of the report they value so much.

The third factor is this; under Meredith's leadership, we're now running digital operations of The Times in a radically different way than even a couple of years ago. With cross disciplinary teams, who enjoy significant autonomy and access to the machine learning engineering and testing capabilities they need to achieve a set of key enterprise objectives.

This new way of working has reduced decision cycle times. It's enabled us to make some bold new bets, like that new registration and login model with greater speed and confidence than before. But it also means that we can continually optimize every part of the digital subscription business with dozens of parallel tests running in the background all the time.

We believe that this breakthrough in how we do digital is perhaps the biggest single reason why we're seeing such sustained momentum in the model and why our core digital results are decorrelating with the rest of our industry.

A similar objective-based team-centered approach also explains the progress we made in 2019 with our stand-alone products, Cooking, Crossword and Wirecutter as well as audio and TV.

So now let's look briefly at Q4 itself. We added a total of 342,000 net new digital-only subscriptions, of which 232,000 were to our core digital-only news product, the balance to Cooking and Crosswords, with cooking especially having a spectacular end to a strong year with 68,000 net new subscriptions in the quarter.

To underline my earlier point about acceleration, it's worth noting that 232,000 net new subscriptions to our core digital-only news product were 35% more than the 172,000 we added in Q4 2018 and 134% more than the 99,000 we added in Q4, 2017.

Digital-only subscription revenue grew 16% compared to a year earlier to $122 million. Encouragingly, despite the acceleration of subscription numbers, marketing costs actually fell year-over-year. Although we'll continue to spend marketing dollars to help drive digital growth when the economics make sense and that will do not guarantee that we'll see reduced spend in this category in every future quarter, the fact that we saw these positive moves in both Q3 and Q4 suggests that improving operating leverage in our digital model is achievable.

We warned in our last call of the big spurt in digital advertising 32% year-over-year which we saw in Q4 2018 would make Q4 2019 a tough quarter for us and we guided to a decline in the mid-teen percentages. In fact, we did a little bit better than that, posting 11% year-over-year decline. As you'll hear when Roland gives you guidance in a moment, we expect to see a sequential improvement in Q1, despite another tough comp.

But let me take a minute to set out at a broader perspective on digital advertising and its place in our overall digital growth story. The past few years in digital advertising have been generally tough for premium publishers with the major digital platforms taking nearly all of the growth in the market and the shifts from desktop to mobile and from direct sell to open market programmatic, both accelerating.

At The Times, we bucked this trend with a cumulative annual growth rate of 7% over the past four years. We achieved that by reducing our reliance on generic digital display and developing distinctive new offerings in areas like branded content and marketing services, and podcasting, as well as by improving our product offering and performance on mobile.

The pressures on the broader industry are likely to continue in the coming years and we'll continue to transform our advertising business to respond to them. As you know, in addition to the more traditional segments within our digital advertising mix, we're successfully forging large scale partnerships with the world's leading brands and building revenue from audio and other new sources like last year's brilliantly successful food festival.

This year we'll launch formidable [Phonetic] new first-party data based advertising solutions to create new privacy safe ways of reaching our engaged and valuable audience.

We're ahead of many of the world's other publishers in all of this, we believe, but the pivot will take its time to complete. We expect to return to year-over-year revenue growth from our digital advertising business by the second half of 2020 but this growth rate will be relatively subdued and below that 7% CAGAR for those and some subsequent quarters as the balance of the business shifts.

But the strong and sustained growth we're seeing in our digital subscription business means that we remain confident about hitting our overall digital revenue targets, despite the more constrained immediate prospects for growth on the advertising side. Indeed, the current strategic track of the business strongly endorses our declaration 4.5 years ago that The Times is a subscription first publisher.

That is why, when confronted with the potential trade-off between our digital subscription and advertising businesses, we generally favor subscriptions and the best possible user experience, a casing point is the departure of open market programmatic advertising from our apps last week, which we believe will significantly improve the user experience while also increasing the value of our directly sold advertising.

Print subscription revenues in Q4 declined approximately 3% and print advertising by 10.5% year-over-year. But strength on the digital side meant that total company revenue grew in the quarter by just over 1% to $508 million. Adjusted operating costs grew slightly year-over-year to $412 million with higher content costs, including production costs related to our TV series The Weekly, as well as increased staffing in our newsroom, partly offset by lower costs in print production and distribution advertising and that lower-than-expected marketing cost line I mentioned earlier. The net result was that adjusted operating profit for the Company grew from $94 million in Q4, 2018 to over $96 million in Q4 2019.

So, a good quarter to cap a strong year for the Company and we enter 2020 with real confidence not just in the current run rate of the business, but also in the potential of New York Times to grow still further both by finding additional levers of acceleration in our core digital news product and by finding new ways of capitalizing on the incredible IP and customer loyalty that The New York Times commands.

But now, for a detailed look at the quarter, here is Roland.

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Thank you, Mark, and good morning everyone. As Mark said, 2019 was a strong year for the Company and we continue to be optimistic about the opportunity ahead. Adjusted diluted earnings per share was $0.43 in the quarter; $0.11higher than the prior year.

We reported adjusted operating profit of approximately $96 million in the fourth quarter, which is slightly higher than the same period in 2018. Total subscription revenues increased approximately 4.5% in the quarter with digital only subscription revenue growing 16% to $122 million. This represents a sequential increase in the rate of quarterly growth.

As Mark said, we remain very happy with the retention we're seeing from the $1 a Week promotional subscriptions who have passed the year-long promotional period. We continue to run the test that deliberately bifurcate subscriptions at promotion expiration, with approximately half moving to full price, while the others are moved to an intermediate step up price.

The goal of the test is to identify characteristics that might indicate whether a subscriber may be more price sensitive and therefore may require additional engagement with our product before moving to full price. Over the longer term, we expect that most subscriptions will eventually move to full price.

Quarterly digital new subscription ARPU declined approximately 10% compared to the prior year and approximately 3% compared to the prior quarter. While the impact from the large number of newly acquired subscriptions, mostly on the $1 a Week promotion continue to be larger than the benefit from existing subscriptions, whose promotional offers ended and graduated to higher prices during the period.

This marks a slight deceleration in the rate of ARPU decline over both the prior year and quarter. Given the success we're experiencing in retaining new subscriptions beyond their initial promotional period, either at full price or an intermediate step-up price, we plan to continue to use a low introductory price to acquire long retaining profitable subscribers.

As was mentioned in this quarter, we have begun to phase in a price increase for many of our more tenured digital new subscriptions, with those currently paying $15 per billing cycle moving to $17. We expect the phasing to consist of a handful of tranches, with the largest tranche of subscriptions affected beginning with their March bill.

We expect approximately 750,000 domestic subscriptions to see a price rise by the end of 2020. The effect on Q1 digital subscription revenue from this price increase is expected to be modest due to the rollout occurring late in the quarter and this is reflected in our guidance. We also expect the rate of pressure on ARPU to moderate in subsequent quarters this year.

On the print subscription side, revenues were down 3.2% due to declines in the number of home delivery subscriptions, a continued shift of subscribers moving to less frequent and therefore less expensive delivery packages, as well as a decline in single copy sales. This decrease in print subscription revenues was partially offset by a home delivery price increase that was implemented early in the year.

Total daily circulations declined 10.3% in the quarter compared with prior year while Sunday circulation declined 8.3%. As we mentioned on last quarter's call, at the end of August, the Starbucks retail chain discontinued the distribution of all print newspapers, including The New York Times at is corporate-owned locations. This had a meaningful impact on copies, accounting for approximately 2 percentage points of the decline.

Print subscription revenue was approximately 1 percentage point lower as a result of the loss of this distribution channel. The effect was more dramatic than in the third quarter when only one month of sales was affected. Print and digital advertising revenue each declined approximately 10.5% compared with the prior year.

The decrease in digital advertising revenue was largely a result of strong comparisons in the prior year in direct sold advertising, both on our core digital platforms and in creative services, partially offset by continued growth in podcasts. The print advertising result was mainly due to declines in the luxury and financial categories.

Other revenues grew 30% compared with the prior year to $62 million, principally driven by revenue associated with our television series, The Weekly, which aired 10 new episodes in the quarter, as well as from our licensing revenue related to Facebook News.

GAAP operating costs and adjusted operating costs each increased approximately 1% in the quarter as a result of higher content costs, reflecting both higher staffing in the newsroom as well as production costs related to the weekly. Growth in the number of employees working in digital product development also drove the costs higher. These increases were substantially offset by lower costs in print production and distribution, advertising and marketing.

Our effective tax rate for the fourth quarter was 10%, which was lower than the statutory tax rate, largely due to the reduced tax rate on foreign derived income and federal tax credits for research activities. On a going forward basis, we continue to expect our tax rate to be approximately 25% on every dollar of marginal income with some variability around the quarterly effective rate.

The underfunded balance of our qualified pension plans at the end of the year was approximately $12 million and the plans were approximately 99% funded.

Moving to the balance sheet, our cash and marketable securities balance ended the year at $684 million, a decrease from the prior quarter as a result of an approximate $245 million payment made to exercise our option to retire the sale leaseback of our headquarters building.

With this debt retirement, the Company has regained full control of our original leasehold condominium interest in our headquarters building and the Company is debt free. As a result, the interest expense line on our income statement will flip to interest income in the first quarter of 2020.

Given the strong results in 2019 and the retirement of our last piece of outstanding debt, the Company's Board of Directors has approved a $0.01 per share or 20% increase to the dividend to $0.06. Management and our Board will continue to keep the balance sheet and our plans for capital allocation under close review.

But as I have previously stated, we have a strong preference for maintaining the flexibility to invest when and in the manner we want in order to fuel further growth in our digital businesses, independent of the vagaries of the market and we'll 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 2020. Total subscription revenues are expected to increase in the mid-single-digits compared with the first quarter of 2019, with digital-only subscription revenue expected to increase in the high teens. Overall advertising revenues are expected to decrease approximately 10% compared with the first quarter of 2019 and digital advertising revenues are expected to decrease in the mid-single digits.

Other revenues are expected to increase approximately 15%, largely due to our television series, The Weekly and licensing revenue from Facebook News. Both operating costs and adjusted operating costs are expected to increase approximately 5% to 7% compared with the first quarter of 2019 as we continue to invest in the drivers of digital subscription growth.

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

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from John Belton of Evercore. Please go ahead.

John Belton -- Evercore ISI -- Analyst

Hi everyone. I wanted to talk a little bit more about the price increase. So sounds like you said by the end of the year it would impact about 750,000 domestic subs. So, by my math, that's around 25% of your domestic digital-only news subs. How did you choose exactly which cohorts you were going to take price on? How do we think about the other 75% of the base? I know a lot of those are on promo pricing, but how do we think about the full price of their product moving forward more broadly? Thank you.

Mark Thompson -- President and Chief Executive Officer

Good morning, John. Let me begin with that and I'll hand over to Roland. I mean, it's just -- and let me talk about the broader approach and I'll get Roland to deal with the specifics. This is the first price rise that we've introduced since the launch of the model and we think it's entirely appropriate, for the reasons I said. We've had many years of rising prices. We've also added hundreds of new journalist on newsroom and in all sorts of ways broadened -- extended our offering to subscribers and we think The Times will continue to represent really good value.

We think it made sense as obviously we currently have a file with a large number of people who are fairly new to us and many of whom are still enjoying introductory offers. We thought it was appropriate to take, if you like, a more tenured subscribers, many of whom who've been enjoying The Time for many, many years without a price rise and beginning the process of moving prices up with that group.

But with a view, as Roland said that over time, this new as were headline ticker price is going to become the norm for everyone who becomes a full priced subscriber of The New York Times on digital and that means ultimately we want once people are out of their introductory period, the target will be to get as many as possible of our subscribers to this new full price.

But Roland, do you want to talk a bit about the 750,000?

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Sure. John, just on kind of the criteria we chose. Basically we started with what would seem like a reasonable approach to how you would apply a price increase. And then, I think as you know, we conducted a fairly extensive test last year and we tested a whole bunch of things and used the results of that test to inform what we should set as the final criteria.

I'm not going to share what all those items are, but as we've mentioned, tenure is a large attribute or our large criteria here. And then, thinking about the numbers, I think the way to think about it is, this is being the first price increase that we've implemented since 2011 and knowing that tenure is one of the major criteria, as you can imagine, the first time you do this, you apply the price increase to subscriptions that have just hit that 10 year criteria. Those that have hit that many moons ago and everyone in between.

So if you think about going forward with this, while you'll get the benefit of that basically $2 increase on those subscribers this year, next year, going forward, etc., the incremental numbers of folks that will pass through that 10-year gate will be significantly smaller than the first time it's implemented.

John Belton -- Evercore ISI -- Analyst

So it sounds like tenure is probably the most important or the biggest criteria you're using. Are you using engagement as well? Is it -- can we think about sort of a usage based model longer term?

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Yeah, we're not going to disclose it but we do have a list of criteria, tenure being one of them and kind of the most obvious one, as a surrogate for value. Beyond that, I don't think we have a lot to say about the criteria at this point.

Mark Thompson -- President and Chief Executive Officer

The only other thing I'd add John is that in addition to the test we did on the digital price rise in 2019, we also have many, many years of experience with our very loyal print subscribers when thinking about price and our lessons and the tactics we developed over many years for the print side, we're also applying to the digital price rise.

John Belton -- Evercore ISI -- Analyst

Got it. Thank you very much.

Operator

Our next question comes from Alexia Quadrani of J.P. Morgan. Please go ahead.

Alexia Quadrani -- J.P. Morgan -- Analyst

Thank you. I just wanted to follow up on a couple of comments you made in your opening remarks. I guess first on the folks coming off the $1 a Week promotion, any color you can give us in terms of churn in general, how it's impacted. I know you mentioned half go to full price or half go -- kind of to a step up in between. Do you have any -- any color you can give us in terms of what percentage sort of you have to keep or revert back to the $1 a Week to sort of keep them engaged? And then I have a couple of follow-up.

Mark Thompson -- President and Chief Executive Officer

Meredith, why don't you...?

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

Sure, happy to. Good morning, Alexia. I think Roland basically gave the detail that we feel comfortable giving, which is roughly half of the population goes up to full price, roughly the other half goes to a step up price. There is a small number of people who we end up saving at the $1 a Week. In general, it looks quite similar to what we've seen in our prior cohorts of 50% off and we are feeling really good about it.

The thing to sort of know and think about going forward is as we're doing this, it relates a little bit to John's prior question. We are training models with machine learning to better understand the relationship of engagement, to willingness to step up into full price. So I think we're going to get -- you should expect us to get better over time as we go. So, pleased with where we are so far and I think it gets better over time.

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Just the only thing I would add to that quantitatively is that over 200,000 folks have cycled through their promotional period, and we're still seeing retention overall in line with prior offers. So we're quite happy with that and we feel that that is, that really establishes what we can expect going forward.

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

That's right. And I'll just say in relation to that -- in relation to transition of full price for people who come in at a $1 a Week and the price rise more generally. A huge component of why we expect to continue to have the pricing power that Mark described is not just the additional journalistic value we're putting into what people get from us, but also the digital product value and there is an enormous amount of work going on to ensure that the digital experience itself, the app, our emails, the journey that one has as a subscriber to The New York Time is that much more enriching and personalized and relevant. And I think that's going to play a big role in our continued pricing power.

Alexia Quadrani -- J.P. Morgan -- Analyst

So it sounds like basically from what you're saying about the retention rate being similar to the past and also your commentary on the earlier question about how much research and testing you did on the price raise for the tenured subscribers that we probably don't necessarily -- we probably will not see a pickup in churn rate in general company sort of wide as the year progresses or at least I should say, but there's not -- we shouldn't necessarily anticipate any pickup in churn rate, is that fair?

Mark Thompson -- President and Chief Executive Officer

We don't want to jinx it, Alexia. But, we -- there's no question that our capabilities in both these areas both step up and we believe also from the testing we did with price, and more broadly with retention, because retention is a much bigger topic than just on these price points. It's also about loyalty over many years is getting better. And I think just to go back to the point Meredith made and Roland as well. That that 50-50 split, when we -- with the early as well period of the -- period of the step-up from a $1 a Week and half of them -- of the cohorts move to full price and half to -- at the moment that 50-50 which began as a random sample, as Meredith said, we're getting more sophisticated about how we assign people to those two groups that will continue to develop. So we think this is an area where like everything else we're doing in digital, there is still room for optimization. And so, yeah, I'd say that generally we feel very confident about holding retention to low levels as we go forward.

Alexia Quadrani -- J.P. Morgan -- Analyst

And then just jumping to your commentary about -- which I think you've been doing now for a couple of quarters is the requiring the reader -- the casual readers to register their email to continue to read. I'm curious how much that has improved your ability to convert them to a paid subscriber and also how much it may help on the advertising front?

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

Yes, good questions. And the short answer to your first question is a lot. So we're really pleased with what we're seeing in terms of the number of people who we can compel to register so that they get more access to content. We're hard at work on after they register, figuring out how to get them to return and engage. So we're incredibly focused on how many people are logged in on-site at any given time. We're very pleased with what we're seeing there.

And then obviously we did this because a registered engaged user is much more likely to convert and there is an enormous amount of effort in sort of all three of those areas. So I would say it's a big driver and we still have a lot more kind of room to go to improve the result there.

On the advertising side you're getting at the long game that we're intending to play and that long game is that the more direct relationships we have with deeply engaged users who we're -- to whom we're delivering an increasingly personalized experience, the better first-party data we have to build a different kind of digital ad business and we are hard at work at that as well.

This is the first year where you'll see us begin to do some material things around privacy-powered [Phonetic] first-party data. It's going to take a long time just to set expectations to get that into the water supply in a way that become -- makes it -- becomes a growth driver in the business, but we're confident that it's the right approach and a competitive approach for our ad business.

Alexia Quadrani -- J.P. Morgan -- Analyst

And then, just last one on the post Facebook licensing deal and I think the change in leadership at Apple News. Is there an opportunity to sort of renegotiate with Apple or even other partners using that kind of Facebook framework -- as a framework?

Mark Thompson -- President and Chief Executive Officer

So Alexia, what we said both inside and outside of building is, firstly the broad principle that we think that digital platforms gain real value from having our presence, our brand presence and Times headlines, maybe Times summaries in their environments. And that that should be reflected in value back to us to help pay for the journalists, which they -- they're enjoying some of the value of.

That broad principle doesn't just apply to Facebook, it applies -- it ultimately, it seems to us, to every partner that we've got. And so, as we go forward, I'm not going to go into individual names, but we do expect to review our relationship with every significant company that's distributing The Times in different forms.

This is a different philosophy than in the past. In the past there was a sense that perhaps the platforms were doing us a favor by distributing our content to users. We think that the balance of value has changed now and so you should expect us -- no, I'm not going to predict what's going to happen, but you should expect to see us sitting down with all of the major platforms and discussing our relationship over the coming months and years.

Alexia Quadrani -- J.P. Morgan -- Analyst

Thank you very much.

Operator

Our next question comes from Vasily Karasyov of Cannonball Research. Please go ahead.

Vasily Karasyov -- Cannonball Research -- Analyst

Good morning. Just wanted to clarify the comments on the digital advertising revenue growth. Did I understand correctly that the sub-7% growth will come in the second half of the year or is it going to be for the full year where we'll see a growth rate...?

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

I'll just -- I'll refer back to what Mark said, which is we are expecting in the near term, sequential improvement, but we've still got very tough comps through the first half of the year and in the -- what I would call short to medium term. We're expecting moderate growth over the long haul as I've just described to Alexia and we remain optimistic that we can have a strong ad business based on scaling direct relationships with deeply engaged subscribers and the first-party data that comes from that.

Vasily Karasyov -- Cannonball Research -- Analyst

Okay. A couple of quick ones. So if I look at the guidance for other revenue. Is it fair to assume that in Q1, all of the year-on-year growth is from Facebook and The Daily? And if you could give us some idea of how the seasonality within the year will progress, that would be great.

And one, a bigger picture question. I don't think you mentioned the news cycle this call. I'm sorry if I missed it, but do you feel like with your growing sophistication with the subscriber acquisition and retention, the news cycle and the overall news environment is less important now and will become less and less important as we go. So I would appreciate your thoughts on the subject.

Mark Thompson -- President and Chief Executive Officer

Roland, do you want to go first on other revenue?

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Sure. The biggest chunk will be attributable to The Weekly, which we hadn't launched as of Q1 last year. Facebook is a piece of it, but there is many other line items there that are driving the growth. But if I was to pick one item, it would be The Weekly since it's comping against zero revenue in the first quarter of last year.

Mark Thompson -- President and Chief Executive Officer

And perhaps I can start -- I think maybe both Meredith and I could both address news cycle. Look, I think the important thing to say is The Times is not reliant anymore on any -- if it ever was, on any one story. I would debate whether we ever were. But when you look at recent weeks, beginning of 2020, clearly U.S. politics on both impeachment and the run-up to the Iowa Caucus in beginning of the presidential election campaign have been important.

But there have been many, many other very, very big stories. Coronavirus is an example. The Australian bush fires will be another example. The tragic death of Kobe Bryant and others in a helicopter crash will be another example. Honestly the Harry and Meghan story is another example.

And I think with fundamental strength of The Times is the sheer breadth of its journalistic offering. I mean one of the biggest success of 2019 is the adaptation of Modern Love as a drama series. We have a very, very broad range of IP and it was, I think to be honest, a faulty analysis to suggest that the only thing that was really going on from 2016, '17 to today was a kind of incurred front bump. There is much, much more going on. And crucially that's not been backed by fundamental improvements in the way we think about digital product, digital engagement and of customer journey. Meredith, do you want to pick-up?

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

Yeah, I think all that is right. I'll just add, if you look at the success we've seen even just in the prior quarter, but very broadly in our Cooking product and in our Crosswords and increasingly new games product, they're playing a big role in the model and I think that just suggests that we have a number of opportunities to make our way into people's lives, and get them to form habits and we are launching new product all the time as a means of doing that.

I think audio is a great example. We launched about politics, but we launched new podcast I think three or four days ago called The Field and you're going to see much more product, not just about politics coming out of audio this year.

Vasily Karasyov -- Cannonball Research -- Analyst

Thank you.

Operator

Our next question comes from Kannan Venkateshwar of Barclays. Please go ahead.

Kannan Venkateshwar -- Barclays Capital -- Analyst

Thank you. So three if I could. I mean, the first is, Roland, if you could talk about the cadence of price this year because you do have price increases coming up in the first quarter and that rolls through the rest of the year and then of course you have the promotional roll-offs.

So as you look at the rest of the year, is there a point at which we can get to flat growth, by the time you exit the year? And then, from a conversion perspective, when you look at registered versus unregistered users, Meredith if you could just touch on what that conversion to paid process looks like compared to the period before you started this registration requirement?

And when folks convert, what price is it at? Is it at the promotional dollar price or is it the $2 price or the 50% off? I mean, if you could give us some sense of the economics behind conversion that would be great.

And Mark, from your perspective, News Corp recently right launched this aggregation product to aggregate news. Why isn't that something that is attractive to New York Times just from -- given the fact that it can also help you raise price over time and become a bigger force in that area? Thanks.

Mark Thompson -- President and Chief Executive Officer

So I think that was four questions in the end. But Roland do you want to comment on question number one?

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

No, there are so many question, I don't remember question number one. Actually Kannan, I wasn't sure exactly what -- specifically what line you are asking me about? Can you just rephrase the question?

Kannan Venkateshwar -- Barclays Capital -- Analyst

Yes. So cadence of price increases, because you have price increases as well as promotional roll offs and then you have -- of course have news that's coming in on promotions.

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Yeah.

Kannan Venkateshwar -- Barclays Capital -- Analyst

So that cadence of price over this year, I mean do we get to a point where instead of declines, we at least get to flat growth as we exit the year?

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

So, are you talking about ARPU or are you talking about...

Kannan Venkateshwar -- Barclays Capital -- Analyst

Yes ARPU growth.

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Okay, that's what I thought. So we're going to see improvement in our ARPU results over the next few quarters. I think what you'll see is, if we're talking sequentially, when we get the full effect of the price increase, that could get us to get us to flat. But over the course of the year, we think what we'll see is a continued pressure on ARPU because we think we're going to continue to bring in large groups of new subscribers at promotional rate that will somewhat depress ARPU. But overall we think that the -- both the sequential and the year-over-year decrease in ARPU will improve with a possibility of a sequential flattish coming through when we see the full power of the price increase.

Mark Thompson -- President and Chief Executive Officer

But there is a lot going on including underlying acceleration in the numbers of people coming in, which is a further complication when you try and figure out what's going on here. I mean it's ultimately very good news for us. But obviously the fact that the sheer numbers of people coming in is affecting the total way in which kind of -- that's why aggregate growth and ARPU is shifting.

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

I don't think you'll see a pivot point where it will turn flat and positive and then continue to get more positive in this year. Specifically because of what Mark said, we think we're going to continue to bring on large, large numbers of new subscribers and as we've stated, we believe that using the promotional price is one of the levers that we'll continue to use there. And if you think about that ratio of new subscribers, to those transitioning to higher prices including those getting a price increase, there is still a larger effect due to the new subscribers coming on the file.

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

That's right. I think -- I think that does take us to your next question which I read, you can tell me if you meant something different, is are the registered users being asked or are we presenting them with $1 a Week or are we presenting them with other offers? And the answer is yes, both. We do bring in a large number of people on the $1 a Week and because our confidence is growing on our ability to actually get those people to engage and do things like download the app and set up our follow tab and sign up for email and sign up for alerts.

We see subscription at $1 a week as a means of engagement. So they may begin a relationship with us, and into that relationship we can get them to engage more such that they realize more value and ultimately come up in price. We're feeling increasingly confident about that.

That said, I think the other question you're asking is, are we seeing any smoothing out in the model as we have a cohort of people who're registered and logged in more regularly and I think it's fair to say that is the thing we're ultimately trying to get to, which is in a model where you've got more engaged users more regularly on the site. You don't always have to get them at a promotional price.

I would say we're still heavily weighted to promotional offers today, but over time, that could change and the only other thing I think you were asking is are most people converting from Reg G? I'll say conversion on Reg G, I've said this to Alexia, is certainly much better. It's why we flipped the model. We do still have plenty of people who come and convert as anonymous users potentially because we put up some friction first and they might as well go ahead and subscribe and because they're coming to us for emotional if not behavioural reasons. So we still think there's room in anonymous conversion as well.

Mark Thompson -- President and Chief Executive Officer

I can answer the question about The News, which is the new -- should we call it New Corp or News Crop aggregation site. Well, firstly, we're not active partners in that. And Times content and indeed The Times' logos is being used currently without any agreement or arrangement in place with us. It's another site which is attempting to use our content, along with other people's content to create something.

I can't work out yet whether it's -- as it were to prove a point about aggregation or whether it's intended to be fully commercial. Do we want to go down that road? I think it's the question, look we are really focused on a very, very simple business model which is trying to produce the world's best journalism to gather it together in excellent digital R&D print products and then find a deeply engaged loyal audience for it including many millions of people with the willingness to pay for it. We don't, I think rule out in theory the idea of partnering with other providers to offer a broader bundled service.

But generic aggregation, frankly whether algorithmic or human or algorithmic plus human of news headlines seems to me, honestly, to be part of the first generation of the Internet. It's fraught with difficulties, it's been existing clearly. It's generally been incredibly bad news for the world's individual news publishers and we don't see that as part of the main, as it was strategic path forward for this company.

So with The News, as with the other platforms, we'll look at it. No doubt we'll at some point, talk to them about our presence on it. The use of our logo and so forth. Just as we are with other platforms, as you heard me saying earlier. But we don't see that kind of aggregation, which is frankly almost a commodity out there now in the Internet as a way forward for The New York Times.

Kannan Venkateshwar -- Barclays Capital -- Analyst

Thank you so much. Very helpful.

Operator

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

Doug Arthur -- Huber Research Partners -- Analyst

Yeah. Thank you three questions, first on the Weekly, can you just remind, is this a multi-year commitment with FX or is after the current -- after the current run is there, can you talk about the future of it? Secondly, Meredith, can you -- you mentioned podcasting obviously we know the success of The Daily, kind of what are the thoughts about monetizing that platform over the next couple of years? And then finally on international and paid subscribers. Mark, can you just sort of update us on your thoughts there. Thank you.

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

Yes. Great, I'll take the first two and maybe a shot at the third. On The Weekly, I want to say we're incredibly proud of the work so far. We just had a very good experience with our partners, FX and Hulu. We know that our work will continue with them in some way and we're working through now what shape it will take. I would say in any scenario I don't envision that any change to what we're doing will have a big economic impact. So that's The Weekly.

On podcasting and monetizing, I'll give you a slightly longer answer, which is to say we are monetizing it quite well today, as a high CPM ad business that is in enormous amount of demand. I don't see that abating anytime soon the demand for audio and particularly Daily audio, habit-forming audio is a great brand and the market is incredibly strong. So we're optimistic about that business as an ad business for the foreseeable future.

We are also, and I've talked about this on prior calls, we're also pretty confident in our ability to use, The Daily in particular, as a launch pad for other audio shows I just mentioned, The Field which launched earlier this week, which I already think is building an audience. You saw us launch 1619 in the feed of The Daily.

So, to us The Daily in particular and our audio in general presents a really unique sort of distribution mechanism into the world for building other audio. Other thing I'll say about podcasting is that if you listen to The Daily and our other podcasts, you will hear that pretty regularly we are now running, what I call house-ads, but we're running essentially commercials more for The Times where people who are doing the work on The Daily describe the pursuit of our journalism and that is really effective.

So we see it as a way to stimulate the model generally and to draw people into our funnel and we don't rule out that we will do that over time in even more direct way.

Mark Thompson -- President and Chief Executive Officer

And specifically the -- I think one of the great achievements of The Daily has been to deeply engage, 20 minutes-plus of engagement on smartphones typically on a daily basis millions of Millennials. So this is potentially a new deeply engaged audience for The New York Times. It's already, frankly, an extremely cash generative activity for us through advertising.

But exactly as Meredith says, who knows where that takes you over time in terms of building up the body of really engaged loyal users, which we know is the, is the foundation of future subscribers. So, I think very encouraging. Let me, I'm sure, Meredith want to say something about international, but let me just begin with international.

We're very bullish about our international potential. We have, I think, we disclosed that about 17% of the subscription file is from subscribers who are outside the U.S. The current run rate of it, over 20% and we're -- at the moment, and by the way, this is a further complication in terms of the track of ARPU, we are currently out there experimenting with very deep and kind of, as it works, locally relevant price points.

We're beginning to learn from others including some of the big streamers about trying to fit introductory prices to different markets around the world. And I would say, although this is fairly early days, we're seeing pretty striking results in terms of getting, again entirely new levels of interest in subscription in the time.

So, I think one thing you're going to see in '20 and '21 is the international story, which is already a very strong story. I mean I think we -- I think with 12X-ed the number of subscribers since I arrived as Chief Executive. I mean it's been -- I mean it's growing faster than the -- even the domestic and domestic has been obviously a pretty good story as well. But we really, we're looking forward to this year and next year and seeing really further striking growth. And I would say about the international users that they're interested in U.S. stories.

But like domestic users, there are also reading and consuming content about the whole world. And I think the idea of The Times is, as a news organization which reports the world to the world, is really a growing proposition for us.

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

I think that's right. I'll add two things to it. One is, just, I would say the last probably few quarters, we're beginning to see real growth in outer markets, some markets where we hadn't been certainly well penetrated before. So particular growth in Asia and in European markets beyond the U.K. where we've been incredibly focused and we're excited about that and we see a lot of opportunity there.

Also I'd say, there is a particular focus right now, it's not the whole of what Mark just described, but it's an important part of it, on international, which we see as a really big long-term opportunity for The Times and we've got some experiments in the market there that we feel good about. And then I'll just add that Mark in his script pointed to just our improvement generally on running the digital operation of the business, our approach to testing and learning, our ability to do many more complex multi-variant tests at the same time. And I would say, most of that internationally -- being organized to do that really well internationally is ahead of us.

Doug Arthur -- Huber Research Partners -- Analyst

Great, thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Harlan Toplitzky for any closing remarks.

Harlan Toplitzky -- Vice President of Investor Relations

Thank you for joining us this morning. We look forward to talking to you again next quarter.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Harlan Toplitzky -- Vice President of Investor Relations

Mark Thompson -- President and Chief Executive Officer

Roland A. Caputo -- Executive Vice President and Chief Financial Officer

Meredith Kopit Levien -- Executive Vice President, Chief Operating Officer

John Belton -- Evercore ISI -- Analyst

Alexia Quadrani -- J.P. Morgan -- Analyst

Vasily Karasyov -- Cannonball Research -- Analyst

Kannan Venkateshwar -- Barclays Capital -- Analyst

Doug Arthur -- Huber Research Partners -- Analyst

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