Just a quick note on research disclosures. For important disclosures, please see the Morgan Stanley Research Disclosure website. If you have any questions, please reach out to your Morgan Stanley sales representative. Right. With that, I'd like to welcome Meredith Kopit Levien, President and CEO at The New York Times. Thank you so much for joining us. Thanks for having me, Thomas. It's good to be here. Yeah. This time last year, The company had just acquired The Athletic and Wordle, and we were up here talking about your integration priorities. Since then, you've refined and launched an All Access, which has crossed over 1 million subscribers in relatively short order. As you look ahead, how should we think about any further evolution of this product set and the go-to-market strategy from here? Yeah. Well, it's good to be here and a year after all that happened. I'll just start by saying, we feel really confident about our essential subscription strategy and really good about the progress we made last year. To your point, yes, we have more than 1 million people now who are subscribed to the broader, The New York Times bundle, and actually more than 2.5 million who are subscribed either to the bundle or more than one product from us. In terms of what we're focused on from here, I would say it's continuing to deliver on our vision of becoming the essential subscription for every curious English-speaking person who wants to understand and engage with the world. There are three pillars to that: advancing our lead in news, building leadership and lifestyle products that help people engage with their lives and passions, and putting those two things together in a bundle that makes The Times kind of indispensable, whatever the news cycle. I'll say within that, so that's what we were doing last year, that's what we're doing this year, there are sort of two really big areas of focus this year. One is widening the pool of engaged prospects. You mentioned Wordle, you mentioned The Athletic. I would say for every product within The Times portfolio, we're very focused on increasing the number of engaged prospects. We are also very focused right now on exercising our pricing power and monetizing our subscribers in all the ways we can do that. It's just. It's worth saying we are doing everything I just described against a backdrop of a lot of market, you know, uncertainty and headwinds that we're feeling pretty acutely. Even still, even if our growth isn't linear, we are deeply confident, just to go back to where I started, that we're on the right path and have the right strategy to build a larger and more profitable New York Times Company. That's great. You led with news, and there seems to be a greater emphasis these days on bundles as the selling approach. I think news still sits at the center of the value proposition of that bundle. I guess first, what's the right assumption there in terms of the core news remaining the key driver of the growth opportunity ahead? How does the bundle strategy alter the path of that core news adoption? Yeah. Let me tackle each of those. The first thing to say about news is, you know, we believe it is certainly subject to, you know, kind of market cycles. Over the long arc, demand for the kind of work we do, we believe is only gonna go up. The demand for quality, independent journalism in a world that is only getting more interconnected, more complex. We're feeling all kinds of market headwinds now. I've talked about some of these on earnings calls. The big tech platforms are sending less traffic to news. The news cycle itself has really changed. You know, we went from like a half dozen years of having these one or two giant stories that dominated like nothing before. First the politics story, then even more the COVID story. We're now in a more varied news cycle, we're also looking at a year this year where I'd say, you know, there's not a known kind of expected tentpole news event. Even still, we think demand for news kind of only increases and that news will remain at the center of the audience engine and the value proposition for The New York Times. I think what you're pushing on is the degree to which the bundle is really a catalyst with news in it for driving both starts and retention. We certainly saw that last year. You know, it's worth thinking last year felt like a tough year everywhere in subs, and The New York Times overall had its second-best year ever for net subscriber additions, and I would say that's the bundle strategy in action. Our non-news product funnels definitely played a role in that, games in particular. That's kind of the strategy at work. We think we've got a really big market to penetrate of something like 135 million people who speak English and are willing to pay for a digital subscription to news, games or recipes or shopping advice, or sports information. We're sort of just at the beginning of the journey of penetrating that audience. We believe the bundle is gonna help us do that really, really well. We also think the bundle sort of helps us well into the funnel because we know that up to this point, folks who've subscribed to The New York Times bundle, they engage more, and that has sustained even as we've grown the number of bundle subscribers. Because they engage more, they're more likely to retain better and pay more over time. It sort of works across the whole of the funnel. The last thing I'll say is. We're gonna lean even more into the bundle this year, but we are also still really interested in our standalone product funnels, so the games funnel, The Athletic, and so forth, being able to drive people into The New York Times portfolio, even if they're not ready to buy news or the bundle. Do you see evidence that from a growth starts or new join perspective, that the bundle is reducing the volatility of the ebbs and flows of the news cycle, which historically has been a source of volatility on a quarterly basis for how subs come in? I mean, the short answer is yes, and I go to my point that, we had such a good year in net additions, in a moment where the news cycle is changing and where lots of other... You know, it felt like a hard time in subs in the market generally. Great. Yeah, I mean, I think drilling down on kinda the positioning of that bundle relative to those standalone assets, I think a portion of the bundle subscriber growth that we've seen in recent quarters has been coming from the migration of existing news subscribers into an upgraded larger product. As you kinda look to grow your overall subscriber base, do you see the bundle increasingly as the primary source of new joins, or do you see it as maybe a part of a deeper part of the funnel for existing single product subscribers to maybe kinda like migrate into over time? Yeah. I think the bundle is well-positioned to do both of those things. If you think about what I just said about it's a big market, we think there's, you know, well over 100 million people who will pay for a digital subscription in English to the things that The Times is now doing within its portfolio. We know, our own research tells us that, you know, half that audience is open to The New York Times for at least one product, and something like a third of the audience is open to The New York Times for two or more products. So to us, the bundle is a way to get at many of those people, even if they're not kind of ready or willing to pay for news yet. It also works deeper in the funnel because people who buy the bundle, so far at least engage more, retain better, pay more. Makes sense. I mean, on the last earnings call, you did speak about kind of some early experimentation for pricing on the standalone products relative to the bundle. Yeah. What's kind of the philosophy more broadly on managing the relative pricing and the value proposition that the bundle has relative to these standalone assets? Yeah. you know, broadly, I would say since the end of last year, we've talked about testing, our pricing power on, individual subscriptions, so news, cooking, games for tenured subscribers. Just to remind folks who've paid attention for a while, in 2020, we kinda methodically had tested in 2019 and into 2020, a tenured price increase on news, and we rolled that out and it went very, very well. We've taken a similar approach to testing, can you raise price for news, for cooking, for games? We like what we see so far, so much so that at this point we can say that, you know, we will raise list price for tenured subscribers for at least news in the first half of this year. You know, what does that mean sort of relative to the bundle and everything else we're doing? If you assume price rise on news, it is an even more rational choice to buy the bundle. We think that has, you know, two effects, that it, you know, allows us to exercise the pricing power for the tenured individual subscriber and/or it tips them into taking the bundle instead. The question I get asked a lot these days is Wordle ever going to move into a paid version where-? The answer I give is I hope you're still playing it because everyone else is. Definitely. Everyone else is. The streak's getting better. You know, Wordle has been like this unbelievable megaphone for everything else The Times does. You know, it's been awesome for games. I said earlier that our non-news product funnels played a big role last year. You know, Wordle bringing people into our games product and then showing them, "Hey, there's a game here called Spelling Bee, and you have to subscribe to play it," that had a great effect. We think that there's real power in free Wordle to introduce people to everything else we're doing. I'll just say, it is just as likely for someone to start on Wordle and then become interested or engaged in news as the other way around. That's like the model working. That's the strategy in action. You come for one thing, but we get you interested in something else, and you're more likely to pay, stay, pay more. Makes sense. On that pricing strategy, I think historically you've talked about an approach of migrating promotional subscribers either into full pricing or some various intermediate stages. Right That you've been experimenting. As we think about the new All Access bundle joiners who are, I think, lapping their one-year anniversary over the course of this year since you kinda launched that product last year. Yep Does higher engagement that you spoke about on the bundle suggest maybe a different playbook, maybe a greater opportunity for like a greater mix of full price? Yeah. To answer your question directly, our expectation at this point is that the pattern that we've followed for years now with news subscribers bringing the vast majority of them in at promotional prices and then stepping them up, in some cases in one go, in other cases over time to fuller prices. That pattern is what we're expecting, kind of broadly speaking, with the bundle. As you say, we're kind of just at the beginning of that first year of renewal. Time will tell. We're saying two things there. On, you know, our algorithms have got a lot of signal. Our algorithms kind of get better and better, so we get more sophisticated in our approach to doing that. Two, the bundle and its full price is a higher priced product, so it remains to be seen, how well that works. That's the plan, and we've got a lot of confidence about having done this for years now very, very successfully in news. If I may, can I just talk about the pricing strategy. Yeah A ittle more broadly? Because I think for any of the individual products and the bundle, it's sort of broadly the same. The idea is we, you know, we wanna be able to get at everybody, under the demand curve, and we think our pricing strategy of bringing people in at promotional prices and stepping them up allows us to do that really well. It certainly has so far. The majority of subscribers come in on a promotional price, and we're able to drive them at the 1-year mark to full price. We've done that in news. We intend to do that for the bundle. There is some group of people who we think our algorithms tell us need to engage even more, and we bring them up through interim prices in either one or two goes. It's just worth saying there is some number of people who probably never gonna get up to a more full price. The model is such that the unit economics are so strong for The Times, we don't pay to drive most of our starts. Even for those folks, it is. Everything I just described is kind of revenue maximizing. It is both revenue and profit maximizing to keep them even on that lower price. That's sort of the underlying idea. We've applied that to news. The assumption is now we apply that to the bundle. Got it. I wanted to touch back on the macro headwinds that you mentioned. Yeah. We've seen it in the advertising. You did mention subscribers as well, just more broadly from an ecosystem perspective. Has that been a source of pressure on just broader consumer willingness to pay, or the conversion opportunity is slower at this moment because of the broader macro situation? I think there's a lot going on in the market right now, and we've sort of talked about this. Sort of broadly, you've got some amount of macro pressure just on everybody's pocketbook. It remains to be seen the degree to which that plays out. I've just described to you that we're incredibly focused on widening our prospect pools and also driving monetization, so asking people to pay more. We'll see how that goes. We think it is, over the long term, absolutely the right approach. Beyond that, and I would say probably more profoundly, the platforms are just sending less traffic to news. That's been our experience so far, and that continues to be the case. What do I mean by that? You know, Facebook said very kind of loudly last year, we're, you know, less news in the feed. They stopped the News tab. I'd say that's a signal broadly of what we're seeing from the big platforms kind of writ large. They seem to be emphasizing video, favoring directing traffic to things that are more video. I would also say kind of beyond platforms and macroeconomy, I've mentioned this before, but it's worth underscoring, changing news cycle. You know, in different moments you're gonna have a news cycle that is very strong and drives lots of conversion, and in other moments you won't. Our model is built for that. Our strategy is built for that. The point of having this you know, multi-product portfolio is we can get you to convert for any number of things now. Right. Well, the changing relationship with large tech platforms is clear, and Facebook News, you know, the deal that you had has ended. There has been also an announcement of a recent new agreement. Yep With Google that's an expansion. Can you talk a little bit about that, the opportunity there? Like, what are you expecting to really be able to drive from a content distribution perspective? Yeah. I'd say it's the commercial agreement that we have made with Google is, it's just that. It is in the category of something the Times has been talking about for a long time, which is a belief that to the extent we provide value to the platforms in our content, that we should be compensated for that. I'd put it in that bucket. It is not, you know, entirely related or terribly related to the idea that I've just described about the de-emphasis on news or some downshifting to news from the platforms. I'd say those are two different things. We're happy, very happy to have done it. Mm-hmm. Excited about it. You know, if you follow us closely, you'll sort of find that deal generally in the other revenue bucket, and it will begin in earnest this year. Okay. Makes sense. I wanted to shift quickly also into an area of key focus amongst investors, which is your outlook on delivering margin expansion while also investing behind the business. Yeah. You've communicated a pretty meaningful step-down in marketing and media spend, which you expect to sustain, just given the fact that you're relying increasingly on your kind of organic audience engine. Is that reduction, should we think about it as coming from both the Brand and the performance-based channels, and how do you think about the right channels to deploy the remainder of what you're spending on marketing? Yeah, that's a good question. The first thing to remind everybody is that the vast majority of our starts come organically, so they don't come from paid marketing. It's a minority that are coming from paid direct marketing, and we've now been a, you know, a brand advertiser for a good number of years, which is about driving sort of perception and sentiment around The Times. Yes, as you described, in 2022 we began to see a slowdown in, you know, cost growth and actual cost there. I wanna say that has been part of the plan all along. You know, we have. It's tied up in the idea that the vast majority of subscription starts come organically. The idea is we invested, you know, into the journalism, into the digital product development and the marketing with the plan that ultimately the journalism and the digital product development in combination provide such an effective organic audience engine that you can begin to pull back on the marketing. That's what you're seeing play out. You asked about brand and direct. I'd say they've kind of come down at roughly the same rate. Both are important. One of the things we've been very careful about is to have kind of a mix of those two things in the market. We expect where we are today to be kind of broadly sustainable. I don't rule out that there will be reasons and sort of market cycles where scaling up again in one or the other makes sense. Yeah. Yeah, I mean, I would love to hear more about that organic audience engine, especially in terms of how it's evolved over the last few years. What kind of areas of sophistication in picking up behavior signals kind of leads you down a path where the paid subscriber conversion or the opportunity to. Yeah Drive greater action on paid conversion really is seeing some of the, you know, benefits of that. Yeah. Just to step back and give everyone kind of the full picture, somewhere between 50 and 100 million people every week come to The New York Times and to the whole portfolio of products. Our ability to sort of combine the human created, you know, expertly made journalism, other kinds of content with very sophisticated and, you know, getting better and better machine learning and data science is kind of the magic of making that organic engine better. We do that in any number of ways. The first one I've talked about a bit, which is, you know, data science helps us know when do we ask you to pay. Like, have you had enough engagement such that we ask you to pay? I was having this conversation earlier today. We used to have this, like, blunt meter where you got, you know, 20 stories and then we asked you to pay, and then it was 10, and then it was 5. Now that is all algorithmically determined. How we ask you to pay more is algorithmically determined. That's on the commercial front. We also are getting better and better at knowing what's the next most important thing to show you so that you stay engaged. On the app or the web home screen, or even an email, kind of knowing what you should see versus someone else. The best example I can give is when the new jobs data comes out in the United States or an inflation report, that's at the top of the homepage in the U.S. The war in Ukraine might be on the top of the homepage outside of the U.S. There are lots and lots of examples like that. We've gotten much more sophisticated with behavioral targeting. You know, the great thing about what we do for a living is people want us to show up in their inbox, whether that's for news or recipes or shopping advice or any number of things, and they sign up to be alerted from us when things happen. We are getting better and better at using those levers to bring people back. I'll just say they're kind of endless. Mm. At least so far, it feels like they're kind of endless. Does that mean there are incremental investment opportunities on the tech and the product development side that you still see as bearing fruit and that you wanna lean into? I would say, you know, we've had this strategy, invest in the journalism, invest in the product development, invest in the marketing. The marketing ultimately comes down. We're gonna continue to invest thoughtfully into the product development, doing what I just described, and also just making the digital product experiences much richer and more unique. The growth there of sort of the cost growth will slow. It is slowing, and you asked me about leverage. That digital product development investment creates leverage in the other two places. That's how we've gotten to leverage in the marketing investment. Even with the journalism, we are able to sort of match the thing. You know, obviously lots of human judgment goes into what you see on the homepage of The New York Times, but in many cases, as I described before, we're also now able to use our tech to show you that next most interesting thing that you should see based on what we know about you. I see. I see. Well, speaking about the newsroom, I think the scale of your newsroom has only kind of grown even as some of the other media and news companies you hear about undergoing restructuring and layoffs. Even as kind of the spending slows there, do you see opportunities to keep widening that competitive moat from a content perspective? Like, what areas of coverage do you see more opportunities to maybe expand into. Yeah Or go deeper on? My short answer is yes, with kind of modest thoughtful investment. Two things in news. One, you know, just continuing to cover the world in all of its breadth is incredibly important to us, and we're relatively well-placed. We're doing that now, you know, we're now 13 months into a war in continental Europe, and that obviously requires, you know, continuous investment to be able to cover as well as we are. Generally, I would say that investment is well-placed, and we invest more kind of thoughtfully year on year. Broadening the formats. Audio's been a big area of investment that can, you know. Hopefully, you're all listening to The Daily and Hard Fork and The Ezra Klein Show. We're investing in making sure that we get you to understanding in our journalism across, you know, data journalism, visual journalism, multimedia, often all of those things together. I'd say that's where the investment is going there and, you know, the rest of the portfolio. Sports, huge opportunity. We bought The Athletic to be a global leader in sports journalism, not, you know, not just to add 1 million subscribers. Games, we keep investing in. We just added Sudoku puzzles to the app, and we made 1,000 recipes last year. That, that's where that investment goes. Okay. Yeah, makes sense. Just wanted to touch on the advertising. Yeah Before we run out of time. I mean, the recent performance has shown some pretty strong resilience despite the broader macro uncertainty. How would you characterize kind of where we are in the current environment? Maybe speak to some of the impact you're seeing from some of the first-party data. Yeah Or initiatives around, you mentioned podcasting and audio. How is that playing into the kind of the core strengths, and what? Yeah Opportunities you see there? Look, current environment is hard. We're feeling the pressure acutely, I imagine alongside everybody else. If I step back, what I would say is we feel really good about kind of the underlying digital advertising business at The New York Times. We've now got a really rich trove of first-party data from the enormous signal we have from a huge registered user base, and also just a giant amount of pages they turn and content they see, billions of page views every month. The first-party data is really working. You know, relative to other premium publishers, we've got high-performing ads that really works. You append that to premium ad canvases. You know, The Times environment doesn't have too many ads. You know, it's the ads work. Then we've got this growing suite of audio that continues to be, you know, very enticing to marketers to be associated with. Difficult current environment. We feel good in the big picture and expect digital advertising to be a medium and long-term growth driver. That's what we're aiming for. Okay, great. You're also six months into launching advertising on The Athletic. Yes. Any key differences there in the playbook in terms of building that ad opportunity relative to kind of the core New York Times website? Yeah. What's the same is we're gonna build premium canvases, first-party data, you know, really grow the engaged audience for The Athletic, which will help us grow the ad business. It's fun, you know, and we're really optimistic about having a business in sports. There's a lot of marketer interest there, particularly in the sort of premium way we're going about it. We have already seen an ability to attract new advertisers, you know, beer, other kinds of beverages that we weren't getting on The Times. I think we're just at the beginning of that. We are attracting more money from different campaigns from the wide base of advertisers The Times already have. We're optimistic. You know, it's gonna take time to build the engaged audience on The Athletic, but we feel quite excited about the advertising opportunity. Great. Great. Maybe just squeeze one last one in. I mean, you did recently raise your guidance on returning capital. Yep Shareholders. What's your outlook on just any potential areas of opportunistic M&A, especially as you still kind of build your cash balance? Yeah Of free cash flow? Couple things. You know, balance... We take a balanced approach to, how we think about capital and capital return. You've kind of seen us exercise, it in all the ways. You know, we've taken the dividend up, the last couple of years. We've authorized to buy back stock, now twice. We bought The Athletic. I would say we do not rule out that there's more M&A to come. It is not our current focus. We are extremely focused now on this very wide, very rich, portfolio of products that we think has a lot of running room within it, and our present focus is on executing really well, across that product portfolio with many levers still to pull there. Great. Thank you so much. I think we've. Great out of time. Okay. Thank you so much for being here. Nice to be here. Thank you.