The New York Times Company - Earnings Call - Q4 2024

Executive Summary

• Q4 delivered healthy top-line and margin expansion: total revenue rose 7.5% to $726.6M, operating margin expanded ~110 bps to 20.2%, and diluted EPS increased to $0.75; adjusted EPS rose to $0.80 as digital subscription revenue grew 16% and digital ad revenue grew 9.5%.
• Outperformance vs internal guidance: digital-only subscription revenue landed at the high end of the +14–17% range, while Other revenue (+16.3%) exceeded the +11–13% guide; adjusted operating costs grew 6.5%, slightly above the +5–6% guide due to opportunistic marketing spend with attractive ROI.
• Strategic milestones: The Athletic turned AOP positive ($3.5M vs. -$4.4M y/y), ARPU rose 4.4% to $9.65, and Q4 net digital adds were 350k, bringing total subscribers to 11.43M (10.82M digital-only).
• Capital returns accelerate: Board approved a new $350M Class A repurchase authorization and raised the quarterly dividend by $0.05 to $0.18, reinforcing balance sheet optionality and mid-term capital return commitments.

What Went Well and What Went Wrong

What Went Well

• Digital engine firing: Digital-only subscription revenue +16% y/y to $334.9M, driven by both higher subs and ARPU (+4.4% to $9.65); digital ad revenue +9.5% y/y on expanded supply and improved products.
• The Athletic profitability milestone and portfolio leverage: The Athletic revenue +29% y/y to $49.7M and AOP of $3.5M (from -$4.4M y/y), supported by higher subscription, advertising, and licensing revenue.
• Wirecutter/Other revenue strength: Other revenue +16.3% y/y to $95.0M, aided by “best Cyber Week” and stronger affiliate and licensing—management highlighted Wirecutter’s momentum and broader lifestyle engagement.
• Management tone: “Momentum gives us confidence that we can deliver another year of healthy growth in subscribers, revenue, and profitability, as well as strong free cash flow” (CEO).

What Went Wrong

• Print pressures persistent: Print ad revenue -16.4% y/y; total ad revenue +0.6% y/y with digital strength partly offset by print declines (luxury/classifieds/entertainment).
• Cost intensity increased: Adjusted operating costs +6.5% y/y, slightly above guidance as media expenses rose 46% to $46.4M; sales and marketing +21.3% y/y; product development +6.0%.
• Litigation expense: $3.2M pre-tax Generative AI litigation costs in Q4 (special item), a continuing non-operating headwind called out by management.
• Advertiser sensitivity to hard news persists: Management again cited some advertisers’ avoidance of hard news topics, though diversified lifestyle ad supply helped offset.

Transcript

Operator (participant)

Good morning and welcome to the New York Times Company's fourth quarter and full year 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference operator by pressing star and zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Anthony DiClemente, Senior Vice President, Investor Relations. Please go ahead.

Anthony DiClemente (SVP of Investor Relations)

Thank you and welcome to the New York Times Company's fourth quarter and full year 2024 earnings conference call. On the call today, we have Meredith Kopit Levien, President and Chief Executive Officer, and Will Bardeen, 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. These statements are based on our current expectations and assumptions, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2023 10-K and subsequent SEC filings. 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.

In addition to our earnings press release, we have also posted a slide presentation relating to our results on our website at investors.nytco.com. And finally, please note that a copy of the prepared remarks from this morning's call will be posted to our investor website shortly after we conclude. With that, I will turn the call over to Meredith.

Meredith Kopit Levien (President and CEO)

Thanks, Anthony, and good morning, everyone. The fourth quarter capped another strong year for the Times in which we made further progress toward becoming the essential subscription for every serious person seeking to understand and engage with the world. In 2024, we added over 1.1 million digital subscribers, putting us further on the path to our next milestone of 15 million total subscribers. Digital subscription revenue, the largest engine of our growth, increased 14%, and we delivered consistently high subscriber engagement in news and across the portfolio, which contributed to strong increases in digital advertising, Wirecutter, and licensing. Healthy revenue growth, paired with a disciplined approach to investing, drove higher adjusted operating profit, margin expansion, and increased free cash flow. These results demonstrate that our strategy is working as designed. Our market-leading news and premium lifestyle products proved more valuable to more people in 2024.

That was evident in high engagement across the portfolio, which fueled our multi-revenue stream model and enhanced our durability even in a dynamic information ecosystem. We begin 2025 with real momentum, which gives us confidence that we can deliver another year of healthy growth in subscribers, revenue, and profitability, as well as robust free cash flow. I'll turn now to our results in the fourth quarter. We added 350,000 net new digital subscribers in the quarter. Digital subscriber revenue growth accelerated to 16%, driven by increases in both subscribers and ARPU. Our bundle continued to be a major engine of subscriber additions and is well on its way to becoming a majority of the subscriber base. Bundle growth was propelled by our news product and also each part of our lifestyle portfolio, which is a key element of our strategy in action.

Each part of our portfolio also contributed to digital advertising revenue in Q4, which was up 9.5%. This was particularly true of Games and The Athletic, where we have strategically expanded ad supply. We also benefited from continued enhancements to our ad products and the growing sophistication of our targeting capabilities, such as our AI-powered BrandMatch. These results demonstrate the effectiveness of our ad products and the value of our diversified portfolio to marketers, and we delivered them even as some advertisers continue to avoid hard news topics. Revenue beyond subscriptions and advertising increased meaningfully. Wirecutter had another great quarter, including its best Cyber Week sales period ever, driven by new coverage areas, format expansion, and deeper engagement. Finally, AOP grew and margins expanded even as we continued to invest in our strategic areas for growth, namely our world-class journalism and premium product experiences.

Before I close, I'll share some reflections on the year we just finished and our priorities for further growth from here. This year, we'll build on what we accomplished in 2024, which was a standout year for the Times in terms of delivering value to our users. Despite a challenged and changing ecosystem, the Times grew its audience in 2024 and once again ranked first among digital news destinations in time spent per visitor. Our world-class news coverage led on the biggest stories, from the election to AI to the wars in the Middle East and Ukraine, and we significantly evolved every product in our portfolio. We relaunched our core news app with expanded surface area for discovery and engagement. We released a new version of our award-winning games app to much success.

We continued to expand national sports coverage on The Athletic and also made it easier to follow the teams you love, and we enriched the Cooking experience with more easy-to-make recipes and short-form video. As a result, our journalism and products were more essential and more relevant than ever before. Tens of millions of people came to the Times every week to understand the world, play our Games, follow the teams they love, figure out what to make for dinner, and shop smarter. Our goal for 2025 is to deliver value at even greater scale and to be so distinctive that even more people seek us out directly and build daily habits with us. To that end, here's where we'll focus.

First, we'll continue to comprehensively cover the most important stories, from the new administration to the economy, from the rapid evolution of AI to the impact of a changing climate, with a world-class team of expert journalists and the deep reporting independence and ambition the Times is known for. Second, we'll keep adding and innovating in video and audio to make our reporting more accessible to more people. Last year, one in three visitors to our homepages watched video, and over half of our news report was listenable via AI-powered automated voice. In 2025, we'll go further with multi-format journalism and give people more ways to discover and get immersed in the Times. Third, we'll focus on making each of our products more valuable to more people and have a robust pipeline of new content, shows, features, games, and other enhancements in store for 2025.

And finally, all of that is meant to drive a larger engaged audience for the Times, with a particular focus this year on growing the engaged prospect pool for each of our products. We believe those priorities, expert journalism delivered in more formats and increasingly valuable product experiences that appeal to larger audiences, are the way to inspire millions more people to build a direct daily habit with us. And strong execution in each of these areas is how we expect to create a larger and more profitable company. With that, I'll turn it over to Will for further details on the quarter.

Will Bardeen (EVP and CFO)

Thanks, Meredith, and good morning, everyone. In 2024, we drove strong results, including another year of healthy revenue growth, AOP growth, margin expansion, and strong free cash flow generation. As Meredith said, we continued to grow our subscriber base over the course of the year, adding 1.1 million digital subscribers while also delivering strong subscriber engagement along with ARPU increases. This led to an increase of approximately 14% in digital subscription revenues and helped power growth across our multiple revenue streams. We grew overall revenue in the full year by approximately 7% as growth in digital subscription, digital advertising, affiliate, and licensing was partially offset by ongoing declines in print. These healthy revenue results, coupled with our disciplined approach to cost throughout the year, drove operating leverage.

AOP grew by approximately 17% year over year in 2024 to $455 million, and AOP margin expanded by approximately 150 basis points to 17.6%. We delivered these results even as we continued to prioritize strategic investments aimed at further differentiating our high-quality journalism and digital products. Due to our capital-efficient model, a large majority of our AOP converts to free cash flow. We generated approximately $381 million of free cash flow in 2024. Over that same period, we returned approximately $168 million to shareholders. This included approximately $85 million in share repurchases and approximately $83 million in dividends. Consistent with our capital allocation strategy, today we announced an increase in the quarterly dividend from $0.13 to $0.18, as well as a new share repurchase authorization of $350 million. Now I'll discuss the fourth quarter's key results, followed by our financial outlook for the first quarter of 2025.

Please note that all comparisons are to the prior year period unless otherwise specified. I'll start with the discussion of our subscription business. We added approximately 350,000 net new digital subscribers in the quarter, bringing our total number of subscribers to 11.4 million, with growth coming from multiple products across our portfolio. Bundle and multi-product subscribers now make up approximately 48% of our total subscribers, well along the path to exceeding 50% by the end of next year. Total digital-only ARPU grew 4.4% to $9.65 as we continued to step up subscribers from promotional to higher prices and raised prices on tenured non-bundled subscribers. The value we've added to our products, combined with the encouraging results we're seeing at pricing step-up points, gives us confidence in the continued strength of our ARPU trajectory.

As a result of both higher digital subscribers and digital-only ARPU in the fourth quarter, digital-only subscription revenue came in at the high end of the guidance range we provided last quarter, growing approximately 16% to $335 million. Total subscription revenue grew approximately 8% to $467 million, which was in line with the guidance we provided last quarter. Now turning to advertising. Total advertising revenues for the quarter were $165 million, an increase of approximately 1%. Digital advertising revenues increased approximately 9.5% to $118 million. Other revenues outperformed in the quarter, increasing approximately 16% to $95 million as Wirecutter affiliate revenues and licensing revenues continued to perform well. Adjusted operating costs grew 6.5% in the quarter. This was slightly above our 5%-6% guidance range as we opportunistically increased marketing investment during a period of high expected ROI.

Looking at each of the lines, cost of revenue increased approximately 5%. Sales and marketing costs increased approximately 21%. Product development costs increased approximately 6%, and adjusted G&A costs decreased approximately 1%. Adjusted Diluted EPS in Q4 increased $0.10 to $0.80, primarily driven by higher operating profit and higher interest income. I'll now look ahead to Q1 for the consolidated The New York Times Company. Digital-only subscription revenues are expected to increase 14%-17% compared with the first quarter of 2024, and total subscription revenues are expected to increase 7%-10%. Digital advertising revenues are expected to increase high single digits, and total advertising revenues are expected to range from a low single-digit decrease to a low single-digit increase. Other revenues are expected to increase mid-single digits.

Adjusted operating costs are expected to increase 5%-6% as we continue to invest in our high-quality journalism and digital product portfolio to add value for our audience while maintaining a disciplined approach to costs. In summary, our strong economic results in 2024 demonstrate our essential subscription strategy is working as designed. The strategic priorities for the coming year that Meredith highlighted are all aimed at building a larger and more engaged audience over time, growing our subscriber base, and powering our multiple revenue streams. In 2025, we expect healthy growth in revenues and AOP, as well as continued margin expansion and strong free cash flow generation. We remain on the path to achieving our midterm targets for subscribers, AOP growth, and capital returns. With that, we're happy to take your questions.

Operator (participant)

Ladies and gentlemen, we'll now begin the question and answer session. To ask a question, you may press star and then 1 on your touch-tone phones. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and 2. Again, that is star and then 1 to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Benjamin Soff from Deutsche Bank. Please go ahead with your question.

Benjamin Soff (Director of Equity Research)

Yep. Good morning, everyone. Thanks for the question, so as you mentioned, you had an analyst day a couple of years ago where you provided multi-year guidance. Now, in 2025, we're entering that window. You've obviously accomplished a lot over the past few years, and the entire landscape has evolved, so I was hoping you could reflect a bit on how the business has changed and how we should be thinking about those long-term targets, and then I have a follow-up.

Meredith Kopit Levien (President and CEO)

Hi, Benjamin. Thanks for the question. I'm happy to start, and Will, you should feel free to add anything. I will say first that we have a lot of confidence in our strategy to be the essential subscription. We feel strongly that that strategy is kind of working as designed, and I think you see that in the results and in the forward outlook that Will and I have both attempted to paint a picture of here for 2025. I think we are sort of existing and delivering on that strategy in a really dynamic and kind of rapidly evolving ecosystem.

And I think the idea that we are first and most focused on building news coverage and products that are so good that people seek them out and ask for them by name and make room for them in their lives is the thing that's making us resilient even in that dynamic ecosystem. And you're seeing that play through in consistently strong engagement across our portfolio and in the revenue that that enables in digital subscriptions and advertising and affiliate and licensing. So, we feel very confident about where we are and where we're going and believe we're going to continue to be building a larger and more profitable company. But Will, feel free to add anything I may have missed there.

Will Bardeen (EVP and CFO)

I think the only thing to say based on the question is, given the success of the strategy so far and our confidence and the priorities that Meredith laid out, we believe we're on the path to achieving our midterm targets as previously stated for subscribers, AOP growth, and capital returns.

Benjamin Soff (Director of Equity Research)

Great. And then for the bundle product, you saw ARPU inflect to positive growth this quarter. It's a big milestone. Do you anticipate that bundle ARPU can grow sustainably from here, or will it vary depending on the cadence of subgrowth and the promos you're running?

Will Bardeen (EVP and CFO)

Yeah, I can take that. I mean, I think that I always say when you ask about one of those specific categories that the best metric to watch is really total digital-only ARPU. Having said that, we're really pleased with how the bundle step-ups are going. That's been the primary driver of that increase in bundle and multi-product ARPU you're seeing. And that really just reflects the strategy in action as we steadily improve the journalism and the products. People are engaging more, and they're placing a higher value on the service, on the bundle in particular, as you noted, which has been strong, and we expect to continue to be the case. And then that strengthens our ability to transition subs to higher prices over time and gives us confidence that we can have a strong ARPU trajectory going forward.

So, there's nothing I would say to call out one way or the other, just that we continue to have a lot of confidence in the strength of the multi-product ARPU and just our ARPU trajectory overall.

Anthony DiClemente (SVP of Investor Relations)

Thanks for the questions, Ben. Operator, we'll take our next question, please.

Operator (participant)

Our next question comes from Thomas Yeh from Morgan Stanley. Please go ahead with your question.

Thomas Yeh (Executive Director of Equity Research)

Thanks. Good morning. Meredith, you mentioned your focus on growing the engaged pool across verticals. Is that a top-of-funnel comment on registered users? And how does that translate into the different types of investments, whether that's more content or tech or maybe a different approach to marketing? And then dovetailing that with the marketing expense in the quarter, maybe for Will, I noticed the sequential step-up on paid media expenses. Can you dig a bit into the nature of your philosophy around ROI expectations on performance marketing and how we should think about the timing of when you might realize the ROI on that? Thank you.

Meredith Kopit Levien (President and CEO)

Yeah. Thanks, Thomas. That's a great question. I think the best way to answer what you're asking is we feel like there's real running room in every direction of the portfolio to grow engaged audience and to get more people into a direct relationship with The New York Times and to have a multi-day habit with us, and I'll just touch on how we intend to do that in each part of the portfolio. In news, it's really about continuing to deploy the world's best journalists and deploy them on the biggest and most important stories. What's changing in our ability to do that is that we can do it now in more and more formats. Last year was a very big year for us in terms of more video and audio, and you'll see us continue that in 2025.

I think that's kind of self-evident if you use our products, but you can expect a lot more of that from us in 2025. Matt, to your question about sort of where in the funnel is that, I think that makes Times journalism appealing to more people, top of the funnel, and it makes them more engaged, middle of the funnel. We see that really in news. In games, we've got a robust pipeline for both feature development on the games we already have, and also a very good track record now of building new games. Games are also great in every part of the funnel. They bring a lot of new people to us, but they're very habit-forming. Also, probably self-evident. I'd say they're running room in all parts of the portfolio. Sports, we continue to be early.

It is a huge market. We've been pleased all year long with growth in The Athletic's audience. You can expect us to continue to be very focused there. I'd say maybe even more than in the other products on top of funnel, making sure people know The Athletic exists and is a great reason to come to the Times, so very good progress there so far and a lot more to come, and then I'll just say shouldn't count out Cooking and Wirecutter and even our podcast and sort of ability to get at people through what they listen to, so running room in every direction, and specifically to your question, at the top of the funnel, in the middle of the funnel, and of course, we're always very focused on subscriber engagement and getting people to stay, pay more over time, stay longer.

Will Bardeen (EVP and CFO)

Thomas, I can take the media investment question. We were pleased in the quarter. You noted that increase in your investment. Pleased with the role that that played in the quarter and has been playing overall. I always want to step back when I talk about the media investment and just remind you and everyone else that the significant majority of our subscribers start to come organically. That's the core of the model, and we continue to believe it will be given all the targeted strategic investments we've made and continue to make into the journalism and the product development. Regarding the media investment specifically, there's no change to our approach there. We're very ROI-focused. So, what you're seeing is not a change in ROI demands and the expectation of higher ROI.

But as we've always said, we consider leaning in when we see opportunities, given what's happening for variety of factors in the market, to take advantage of really attractive ROI. So, that's what was reflected in Q4. And I think you can expect, as we've said, in any given quarter, those levels will fluctuate depending on what we're seeing. And in terms of timing of realization, haven't given sort of specifics on that, but needless to say, it's not in the quarter itself that we're spending the money. It plays out over multiple quarters. And given the sort of longevity of our experience with the model, we have a lot of confidence in our ability to step people up and just the overall value of the product leading to pricing power over time.

We have a lot of confidence in our LTV models to give us a sense of that expected ROI is real, so I'll leave it there for now.

Anthony DiClemente (SVP of Investor Relations)

Great. Thanks so much, Thomas. Operator, let's go to our next question, please.

Operator (participant)

Our next question comes from David Karnovsky from J.P. Morgan. Please go ahead with your question.

David Karnovsky (Senior Research Analyst)

Hey, thanks. Digital ads, Meredith, wanted to see if you could just expand on the rollout on the lifestyle products to date. Curious how visible those ads are, say, on athletic and games relative to what you would see on news. And then I think growth has largely come from increasing programmatic supply. Should we think of that as the driver ahead? And then just a separate question, your cash and securities balance is approaching $1 billion. Assuming no further change in capital allocation, how do we kind of think about the optionality here? Is there potential for M&A, for instance, that we should be thinking about? Any color would be great. Thanks.

Meredith Kopit Levien (President and CEO)

Yeah. I'll do the first question. I'll do a little bit on the second question and see if Will wants to add anything. On digital advertising, it's a good year in digital advertising, and we are excited about the new year we've entered in part for the reason you're pressing on. We continue to feel like there's more supply ahead to roll out. I would say it's not just a supply story. There's real demand for our lifestyle products. I think marketers like working with the Times. We have a great audience broadly for the enterprise news and our lifestyle products. We now have very effective ad products that we've got years of experience in first-party data and targeting. We've got this great new AI product in BrandMatch, and we have these big, beautiful canvases in news and across the portfolio that we're still rolling out.

As far as sort of what's ahead, I would say more supply to come on games, more places where you'll see us have ad experiences. And in sports, I'll just go, I think in my answer to Thomas's question, I'll say we still have a very big opportunity with The Athletic to build audience and awareness and get people just to engage with the product at all. We kind of love where we are with that, and there's a lot still ahead. And as audience grows on The Athletic, it's not perfectly linear, but you can imagine advertising growth to continue there as well as a result of that. On your precise question of should we expect it to be more programmatic, I would regard programmatic as a method for buying.

We are absolutely seeing growth and improvement in the way we execute programmatically, but I'd say the opportunity is in both direct sold and programmatic. The multi-product portfolio gives us a lot of opportunity to work with marketers in kind of creative ways. So, the sort of strength of the products that the breadth of the portfolio gives us optionality and lots of opportunity in both directions, direct and programmatic. So, that's my answer on advertising. Just very broadly, thinking about the balance sheet and you, I think, used the word kind of optionality. Yeah, I do think it gives us a lot of opportunity. I said this in the answer to Ben's question. We're existing in a very dynamic ecosystem. I think there's still lots of change to come in that ecosystem. We have a very clear strategy.

We're very well positioned, but we like the optionality the balance sheet gives us in that context. So, Will, I don't know if you want to say more about that.

Will Bardeen (EVP and CFO)

I just might add a few things, which is this is all our philosophy here. It's all part of a very disciplined approach to capital allocation, which we've laid out. It might be just worth just recalling that here. Our top priority is always to continue high return organic investment into our central subscription strategy to really continue to grow into that opportunity. And then after that, we intend to return at least 50% of our free cash flow to shareholders in the midterm, just noting the announcement today of the $0.05 increase to the quarterly dividend, as well as the new repurchase authorization of $350 million in addition to the approximately $155 million-ish left on our prior authorization. It's enabling us to make sure that we're delivering on that strategy. Part of the strategic optionality is at least 50% going forward.

And then, to the point Meredith made, having that optionality at this time of dynamic change, M&A is always something we consider. I want to reiterate that we have a really high bar for that. In the past, you've seen us with whether it's Wirecutter, Wordle, or The Athletic. The opportunities align with brands, have to accelerate the strategy, and provide a very attractive risk-adjusted return on invested capital.

Anthony DiClemente (SVP of Investor Relations)

Great. Thanks a lot, David. Operator, we'll take our next question, please.

Operator (participant)

Our next question comes from Kutgun Maral from Evercore ISI. Please go ahead with your question.

Kutgun Maral (Director of Media, Cable and Telecom Equity Research)

Good morning, and thanks for taking the questions. I wanted to follow up on the engagement front and was hoping you could expand on the strength you called out earlier. Maybe you could unpack the trends you're seeing, particularly post-election. It seems like we're perennially in unprecedented times, and presumably this adds to the value of your products, but perhaps you could help us think about the opportunities you see with the current dynamics and how it shapes your efforts to continue pushing the bundle and perhaps this year lean more into monetization. Thank you.

Meredith Kopit Levien (President and CEO)

Yeah. Thanks for the question. I would say generally, engagement among prospects and subscribers is sort of the high octane gas in the tank that fuels the whole model. And we feel very good that engagement has been consistently strong and gave an answer to a previous question about the sort of different parts of the portfolio. We still have lots of opportunity to have been consistently strong and have lots of opportunity to build that engagement in every part of the portfolio. I think that's one of the things that makes the Times very unique. I'd say we are bullish that there is persistent demand for what we do journalistically.

I feel very confident that the investments we've continued to make in our coverage engine and in format innovation are really enabling us to meet the moment journalistically on all the big storylines right now, including a new administration in Washington, D.C. But well beyond that, the AI story, we had lots and lots of coverage about DeepSeek last week, the L.A. wildfires. I think the Times had standout coverage there. We are really well prepared to cover the big story wherever it goes. And as I said earlier, to get that coverage to people in lots of new and different ways. And we're going to continue to be very aggressive in our format of innovation, particularly around video and audio. And then I'll just say the broader portfolio and model is really designed to harness demand wherever it might come from.

So, we've got this incredible roster of habit-forming Games, and we've got a ton of running room in sports for the passionate fan and even the less passionate fan who's just interested in the biggest stories in sports and same for Cooking and Wirecutter. So, we have a lot of optimism about our ability to consistently engage people and find new ways to do that, even in a changing market.

Anthony DiClemente (SVP of Investor Relations)

Great. Thanks, Kutgun. Operator, your next question, please.

Operator (participant)

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

Vasily Karasyov (Senior Analyst)

Thank you. Good morning. Meredith, I wanted to follow up on your comments about advertising revenue and ask you this. Obviously, you have a lot of engaged audience and impressions for sale. And the press release calls out display as the main driver of digital advertising revenue growth. Do you see any opportunities for other formats, like video, for example, that would allow you to charge higher CPM, probably step up growth in that revenue line? And if you could share with us what you think opportunities are and what you're working on, that would be great. Thank you.

Meredith Kopit Levien (President and CEO)

Yeah. Thanks for the question, Vasily. I would say that we see a lot of opportunity everywhere in advertising. You call out CPM in general. We've got a business where I think the CPMs have been consistently strong. We don't get into detail there, but we've got a high-value ad product set, particularly on the direct sold side, and we are a majority direct sold business. We have been. I've been in and around this business for a very long time. We have been able to maintain high CPM. So, I'd say even the sort of broader display canvases are strong from a CPM standpoint, and we will continue to make those products performant for marketers with data that gets better and better, and our ability to target in sort of steadily improving ways helps keep CPM strong.

And I would just say there's a lot of running room there on just making sure those display canvases are still valuable. You asked about video. I think you see us taking those display canvases and experimenting more aggressively with different formats that in some cases include video. And then I would say audio has continued to be a very important part of the ad proposition at the Times. And there, obviously, there's podcast advertising, but I think there's still quite a bit of format innovation to come in audio advertising. So, virtually any space that you can imagine digital advertising playing in as to format, you can regard the Times as experimenting with. And the last thing I'll say is we've got this really unique sort of complementary product portfolio where people come and do different things.

Watching a recipe be made, playing a game, reading a news or sports story, or listening to a news or sports story, those are very different activities. I would say the ads that go with those things can be pretty varied as a result.

Anthony DiClemente (SVP of Investor Relations)

Great. Thanks, Vasily. Operator, let's take one last question.

Operator (participant)

And our final question comes from Doug Arthur from Huber Research Partners. Please go ahead with your question.

Dour Arthur (Managing Director)

Yeah, good morning. Will, just leaning into your answer on the media expense line item. I mean, when you talk about opportunity, did you see a sudden surge in traffic to the site? And so, you stepped on the gas. I mean, what's sort of the chicken and the egg there?

Will Bardeen (EVP and CFO)

Thanks, Doug. I appreciate why you're asking the question. The dynamics in any given quarter that we're playing in, there are a lot of dynamics going on that impact the subscription business overall and certainly the market in which we're doing the paid acquisition as well, so we don't really like to kind of speculate on specific dynamics. I think the key thing to say is we have a team that is really focused every day, every week on really looking at how we're performing, the ROI on our investment, and so we're constantly looking at that. We're willing to put more investment in when we see really attractive returns developing, and just the same, we're being quick to pull out if we see the opposite happening.

I think what you see reflected in that investment in Q4 was a view that we had some real opportunity there and we wanted to take advantage of it.

Anthony DiClemente (SVP of Investor Relations)

Great. We want to thank everyone for joining us this morning for our earnings call, and we'll talk to you again next quarter,.

Operator (participant)

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your line.