Here’s the entire text of the Q&A from New York Times’ (ticker: NYT) Q3 2005 conference call. The prepared remarks are here. We recognize that this transcript may contain inaccuracies - if you find any, please post a comment below and we’ll incorporate your corrections. And please note: this conference call transcript is a Seeking Alpha product, so feel free to link to it but reproduction is not permitted without the explicit permission of Seeking Alpha.
[Debra Schwartz (CSFB)]: Hi, thanks. It's Debra Schwartz on for Bill. I was wondering if you see any impact from The Weekend Journal and if there's been any change since The Weekend Journal launch versus the past few weeks.
[Scott Heekin-Canedy]: This is Scott. We've not seen an impact from the launch of The Journal's weekend edition.
[Debra Schwartz]: Thanks. Could you just comment on rising fuel costs and if you're seeing any impact on your cost line now or heading into 2006?
[Len Forman]: It's too early to tell. I mean, we expect to clearly have increased costs as a result of fuel increases but it's not a huge component of our overall cost base. So we would expect it to be relatively small.
[Scott Heekin-Canedy]: So far, we've been able to absorb it.
[Debra Schwartz]: Okay. Great, thank you.
[Brian Shipman (NYSE:UBS)]: Thanks. Wondering if you guys could talk about your thoughts for how much higher newsprint prices could go in light of the recent October 1st price hike. Are you budgeting for the price hikes into early part of 2006?
A second question, you mentioned, Janet, that at The Times you're expecting in the ABC audit, both daily and Sunday to be up. I was wondering if you could give us a breakdown between the DMN and national edition for both daily and Sunday. Thank you.
[Len Forman]: You've got a very peculiar situation right now with the two-tier pricing system, as you know and it is causing a little bit of confusion in the marketplace. Folks who watch the industry think that if the price and when the price, hits currently $650 or so, it'll probably stabilize. Hard to know whether, indeed, that will be the case because the suppliers have been very good at managing supply. But we don't expect the kind of escalation in '06 and '07 that we’ve seen in the last 12 to 18 months.
[Scott Heekin-Canedy]: We've filed the numbers with ABC that show small gains for the September ABC period similar to the gains we've seen for the past three or four ABC reports and I've not seen the exact breakdown yet on the New York NDM market versus the rest of the country. But based on the trends, the split will be similar to what it has been for the past couple years with growth in the national market offsetting decline in the New York market.
[Brian Shipman]: Do you see anything on the horizon that would lead you to believe that the declines locally might abate anytime soon?
[Scott Heekin-Canedy]: The market fundamentals, which we described in the past are very strong but we have a number of initiatives in place that are showing positive results. First of all, we continue to expand our single-copy availability and delivery through secondary wholesalers. This has proved very helpful over the past couple years. We've been piloting earlier delivery in some areas of the New York marketplace and we've seen very good results, improving both acquisition rates as well as retention rates and for the past six months we've had a fairly intensive marketing pilot on Long Island, which concentrates our tactical and strategic promotion efforts as well as our direct marketing efforts and single-copy availability, all with good results.
So we're in the process of rolling out those programs across the New York marketplace. Bottom line is we believe that we can have a positive impact on what those trends have been. We're also continuing to see very good results in the next gen market – schools and colleges – growth in particular in the college-university marketplace.
[Len Forman]: I Just have one point on newsprint, which I think is worth pointing out. Even with the rapid escalation in prices, newsprint’s about 10 percent or less of our costs, because we've done a pretty good job at figuring out how to reduce tonnage per copy. So you know in the old days it used to be 18, 19 percent.
[Brian Shipman]: Could you talk about web width reductions?
[Len Forman]: Sure. We've looked at web width reduction. We're continuing to study it. Obviously with The Journal going to a lower web width, that eases our concerns on the competitive side. We've got a bit of a challenge in doing it because we've got multiple print sites across the country. But we think that in fact that's a benefit for us because they're already at 50 web just in their own papers.
[Janet Robinson]: It is under study, though, Brian, at this juncture.
[John Janedis (Bank of America Securities)]: Good morning. Can you talk about the Marketplace publication? How are you selling the advertising there? What kind of advertiser overlap and take rate is there from The Times?
[Scott Heekin-Canedy]: We're having a very good experience. It's about, I guess, in the marketplace about four months so far. We upsell classified ads into Marketplace and we've been placing display ads as well. The display ads are advertisers who run in The Times as well and this is incremental advertising.
[John Janedis]: Are you seeing any advertisers out there only going to the Marketplace and not to The Times? You're not cannibalizing The Times to an extent, are you?
[Scott Heekin-Canedy]: No, this is an add-on. It's a low-cost add-on that works well for us and it improves the response rate to the ads that are placed overall.
[John Janedis]: Okay. And, Janet, can you clarify your comments for October? I think in the release you suggested that business accelerated somewhat in late September, but October looks like September. I don't want to split hairs but does that mean that you've seen somewhat of a slowdown here in October or are you just trying to be conservative.
[Janet Robinson]: No. What we did see is a slower start in September with the late Labor Day, but the last two weeks in September accelerated very nicely. We are continuing to see that nice acceleration in the first two weeks of October with some of the categories performing very nicely for us, John.
[John Janedis]: All right, thank you.
[Janet Robinson]: You're welcome.
[Michael Kupinski (A.G. Edwards)]: Fourth quarter, I was just wondering if you can talk about how retail's looking like heading into the holidays and also if you can talk a little bit more about the national advertising category. I know that you mentioned about entertainment being a little stronger. I was wondering if you have any other particular categories that you might shed some light on.
Then finally I was wondering: the television revenues, I know it's a small component of the overall company, but television revenues were actually a little bit better than what we thought and was wondering if you can give us any outlook in terms of what you're seeing in terms of pacings on television even though you face a little bit of a difficult comp there as well.
[Janet Robinson]: Yes, the pacings in October are in the height of single digit, but the fourth quarter is probably down the mid-single digits right now. They are performing better even though they are up against those tough comps of political and Olympics. Very aggressive pursuit of automotive business in particular is helping them do better than we expected as well.
[Scott Heekin-Canedy]: Your question on the fourth quarter was to The Times?
[Michael Kupinski]: Yes.
[Scott Heekin-Canedy]: Retail is looking strong, as it has been throughout the year. The luxury high end of the market is expected at this stage to perform well through the fourth quarter helped by the continuing strong performance of the magazine, the Thursday Style section, the Sunday Style section as well as other products. If I can put your question about studios in some context, year to date our overall advertising base, which as you know is a portfolio of almost three dozen categories, 60 percent of that base is growing at approximately 5 percent. There have been three or four categories that have offset that growth. We've talked about it all year long: technology, telecom, travel, the agate categories, studios have been flat to slightly down year to date. Janet talked about the release lineup for the fourth quarter, which so far it seems to be performing very strong. We've learned over the last two years that studios are very much have become week to week, the decision makers on their advertising.
Based on what we know about the releases for the fourth quarter and the way those decisions have been made so far into October, we're expecting studios to be in the mid-single-digit growth rate for the fourth quarter. So in terms of that overall performance, that 60 percent 40 percent split that I described, I would expect that the studio performance to favorably impact overall performance.
Telecom, we're going to start to cycle past the AT&T Wireless comps that have been so difficult for us all year. That'll happen in the mid to late part of November. Technology will continue to be very uneven, we think, into the end of the year for all the reasons it's been uneven so far this year. Travel, we're seeing some positive signs. Hotels, which were down very dramatically in the first three or four months of the year, started to show some signs of growth through the summer, are going to perform very well for us we think through the fourth quarter. And the transportation part of the travel category is starting to show some signs of ameliorating the clients if not even a little bit of growth.
So there are categories that have been offsetting the overall fundamental growth in our base advertising I think are we are going to swing toward the positive side for us in the fourth quarter.
[Michael Kupinski]: Can you tell me, if you can remind me, what the entertainment category might be in terms of total revenues in the third quarter from The Times?
[Scott Heekin-Canedy]: The entertainment category is roughly 15 percent of our revenue base.
[Michael Kupinski]: And that was in the third quarter as well?
[Scott Heekin-Canedy]: That's annually. It skews a little bit to the fourth quarter because of the holiday season.
[Scott Heekin-Canedy]: Okay, thank you.
[Craig Huber (Lehman Brothers)]: Yes, good morning. Janet, could you please just go through the percent changes for your seven largest advertising categories at your flagship paper here in the third quarter? And in your Worcester paper up by Boston, I've noticed for a while here you've been charging for Internet access to that newspaper up there. Are you just sort of using that up there as a test market to see how well it does as a charge model versus a free model? If it does well I assume you may roll it out to some other markets? Thanks.
[Janet Robinson]: I'll have Scott give you the rundown in regard to the categories and the performances on a percentage basis. Could you repeat the second question though, Craig? We couldn't hear you.
[Craig Huber]: I was just asking about your Worcester paper up by Boston, you've been charging for a while there for access to your newspaper Web site. I was just wondering if you're using that as a test market to see if it really shuts down the eyeballs too much and it offsets the advertising or it's actually a good model going forward and you might roll it out to some other markets: charging for Internet access?
[Martin Nisenholtz]: This is Martin. The answer to the question about Worcester is no. This was not viewed as a test market. It was simply a decision that was made locally for the publisher to do. I mean that it's a small market and they decided that they wanted to pursue that as a model.
I think the model that we're pursuing and is proving out to be a better test market is the TimesSelect model. As Janet said, it's early days but our initial view on this is very, very positive. We're seeing incredible conversion rates off of our free trial, very high: 90 plus percent conversion rates. And we're also seeing terrific cooperation from our columnists, including a new entry – Maureen Dowd will be doing a special email.
So you know this kind of highly differentiated specialized tiering approach is, I think, the approach not only that we'll be taking over the next several months and years, but we think that the newspaper industry in general will, as they did in our registration fee, follow us in this regard as well. Because I think we've hit on a model that is well-balanced to provide advertising revenue increases in the way that we've seen them over the past several years, against a new very robust and diversified revenue stream on the pay side.
[Janet Robinson]: There has also been very positive comments in regards to the packaging. Not only are they getting unique content from the columnists, the access to the archives is also a very substantial part of this package that is greatly appreciated by not only the people who are paying for this service but also by the subscribers who are receiving it as a free as part of their package. It's interesting to note in the days of TimesSelect that last Wednesday Maureen Dowd's column was the most e-mailed column on TimesSelect, which we were very pleased to see.
[Craig Huber]: Back to Worcester for a second, please, how would you categorize how the new model up there is working for paying for access to the newspaper Web site? It's my understanding just a few thousand people have signed and are paying for access to that site.
[Janet Robinson]: Are you talking about Worcester or TimesSelect?
[Craig Huber]: I'm talking about Worcester.
[Martin Nisenholtz]: We haven't, obviously, released any numbers, but I think you would expect to see in a small newspaper market that has a full gate over its Web site you know several thousand people signing up to pay. I don't think that we would view the Worcester model as anything indicative for NYTimes.com or Boston.com.
I just want to add a point to Janet's point about the archive, which I think is very important, the usage patterns on the archive are such that we don't believe that there will be any significant overlap or competition in our business-to-business markets, which is a very important market for our digital business as well. You know we syndicate our content to Lexis-Nexis, Factiva, ProQuest, and there was some concern from the community that this would begin to overlap, but we're not seeing that at all. That's very good news for us. We're seeing a distinct consumer usage pattern emerge as opposed to a B-to-B pattern.
[Scott Heekin-Canedy]: This is Scott. I'll give you the third-quarter performance for the top five categories. Studio entertainment I've already addressed: down to flat to slightly down. Telecom: down in double digits. Live entertainment is flat to slightly up. Transportation: down in double digits. Real estate is growing, both parts of it – display and agate – overall composite, high-single digits. And help wanted is, both combined, display and agate, is growing slightly.
[Craig Huber]: Thank you.
[Alexia Quadrani (Bear Stearns)]: Thank you, on The Boston Globe, when do you cycle against your efforts to reduce the other paid circulation, and if you could maybe give us some color on what you're doing to improve circulation growth there? Still on that topic, do you think your ability to raise ad rate the same level as last year will be impacted by the circulation declines this year at that paper?
[Janet Robinson]: We really started the look at paid, at bulk circulation early very late fourth quarter last year, very early this year. So it will be probably the turn of the year that we will be cycling up against that. The efforts are very pronounced in regard to increasing the footprint of The Boston Globe outside of Boston proper and we're seeing some very strong results in southern New England and western New England in regard to that kind of effort as well.
There also is a strong promotion campaign that's going on in regard to the increase of readership, both single copy and home delivery. With the introduction of Sidekick, which has been a very interesting quick read that has spurred on single copy, we've seen some very nice results in circulation growth there as well.
[Alexia Quadrani]: In terms of your ability to raise ad rates the same rates as this year given the circulation decline, do you think that's going to be impacted at all?
[Janet Robinson]: We are always very cognizant of evaluating our increases appropriately, Alexia, and we, with The Boston Globe in particular, feather in the increases during the course of the year. For example, retail increases are at a different time in classified and national. But we are going to be careful in regard to what those increases are going to be, and we are also going to make our advertisers well aware of the readership numbers that are extremely important in regard to how people are evaluating newspapers now.
As I think you well know, there is a very strong industry effort in place in regard to something that was announced just a few weeks ago called NADBase, which is being given to media buyers that really does show total readership of all newspapers in the top hundred markets. Certainly The Boston Globe benefits from that, in regard to the increased readership on readers per copy, as does The Times and every other newspaper in that marketplace.
[Alexia Quadrani]: Given the weakness in the stock price, do you think it’s an allocate more of your cash flow to share buybacks in the fourth quarter?
[Len Forman]: Our cash position is used for pretty much what we've said all along for investment purposes, dividends and stock for purchase. We are cognizant of the opportunity, but we're also cognizant of the balancing that goes on with how we use our cash. So we have stepped up our purchases to the extent that our purchases are greater than the amount of options that have been issued, which was our plan all along, so that we've seen a net reduction in stock out there, so you'll probably see that kind of pattern continuing.
[Alexia Quadrani]: Thank you.
[Fred Searby (J.P. Morgan)]: Yes, thanks. Couple of questions. One is if you could give us an update on the impact you see from Federated/May and the retail category, what your thoughts are heading into the fourth quarter and 2006, and just to clarify what your expectations and our expectations should be for the November ABC on the circulation side? Thank you.
[Scott Heekin-Canedy]: The impact of the Federated-May merger for The New York Times is overall positive. The question mark that we're waiting to get an answer on is the future of Lord & Taylor, which could significantly change that outcome. But overall we're seeing increased spending, and the national presence of the Macy's chain of stores works very well in The New York Times. We understand that they're shifting dollars from local television into newspapers, and we expect that to benefit us as well.
[Janet Robinson]: What we are seeing in Boston, Fred, in regard to the Globe is that we are not seeing the significant cutbacks in the fall from Filene's. They have not materialized as we had thought they may.
That said, we will see certain reductions next year in 2006. One of the interesting things however in regards is the fact that the Filene's location will be sold to a retailer we believe, that could provide us with upside in regard to retail money coming into the marketplace.
In addition we have seen three stores really increase their store coverage in that market. IKEA is in that market now with one store, Cohoes is in that market with three new stores, and Modell's is in that market with 12 new stores. So we are seeing, on the plus side, new retailers entering the market, even though we are predicting that we will experience declines certainly with Filene's leaving the market in the new year.
As far as the ABC period for the Globe, we are going to see continued declines we believe in the ABC statement for both daily and Sunday. It should be about 35,000 on the daily and about 50,000 on Sunday. At The Times we are seeing increases both on daily and Sunday – the exact numbers, Scott.
[Scott Heekin-Canedy]: The numbers we've filed with ABC show growth, daily growth of about 5,000 and Sunday growth of a little over 2,000.
[Fred Searby]: Thank you.
[Lauren Fine (Merrill Lynch)]: Thank you. A couple of quick questions. One, I'm wondering if you could help us understand the, first of all just in a way I might understand it, what was the increase in wages and benefits year-over-year, excluding the unusual items?
Secondly, could you discuss why you're willing to incur the higher distribution and printing costs? Are you getting a good return on that National Edition expansion? Then if you could discuss whether you think your pension expense could go up materially or much at all in 2006?
[Len Forman]: The last question really is dependent on what happens overall with interest rates, but we don't expect it to go up materially. It's been, as you know, the way pension works, it's amortized over a period of a couple of years and we've been seeing pension expense increases the last couple of years because of the way it's feathered in. But we don't expect big, big numbers in pension expense. Sort of where we are in the current year. We've got a $45 t-$55-million contribution, which has a positive impact on expenses.
[Scott Heekin-Canedy]: With regard to your circulation, national expansion circulation question, in almost all cases we justify expansion through print-side expansion and market ZIP code distribution expansion on a circulation profitability basis alone, without even factoring the leverage it gives us in the advertising side of the business. We continue to have unmet demand throughout the country. At any given time we have 40,000 to 50,000 subscription orders that we can't fulfill for distribution reasons.
So it continues to be a positive opportunity for us financially and from an overall copy and advertising perspective. I would remind you, I guess, of the high price of the circulation, which enables us to make this justification on the circulation economics alone.
[Janet Robinson]: The profitability of those copies, Lauren, is a very important point to remember. That's one of the, you know, the tenets of the national expansion in regard to the growth and profitability of national copy.
[Len Forman]: Lauren, I think you also asked a question about wage increases. They're up, on an apple-to-apple basis, about 3 percent.
[Lauren Fine]: Great, thank you. One last question. On the equity line, it feels like if the momentum continues that you could beat your guidance. Could you just give us any sense of what's going on there or if things are exceeding your expectations?
[Len Forman]: Sure. Part of that is seasonal. We're doing well with NESN but clearly there's no baseball played in the fourth quarter. Discovery came in better than expected. We're likely to be at the high end of the range and it's possible we could beat it a bit. So we're certainly at the high end of the range, based on performance over the last couple of months.
[Lauren Fine]: Great, thanks.
[Douglas Arthur (Morgan Stanley)]: Yes, Len, I know you haven't finished your budget for '06 yet, but there's a lot of moving parts here on the newspaper costs, which, if you take out all the noise in the third quarter, were still quite high. With the staff reductions, your comments on newsprint, any ball park sense for what kind of the non-newsprint costs trends could be in '06 at this point?
[Len Forman]: It’s too early to comment on '06. But we clearly, as I said in my opening remarks, it's our intention to grow revenues greater than expenses. That's our goal in '06. So we'll be looking to drive expense growth down.
But at the same time, Doug, we are getting benefits from both the staff reductions and the productivity initiatives, and we will use some of those expenses to drive investments in product and elsewhere. So it would be easy to drive costs down to a much lower limit, but we're also looking to drive revenue growth over the long term, so it's a balancing act.
[Doug Arthur]: Well, what inning – I know you've given your release schedule of these new print sites, but what inning in the ramp-up of expenses related to new print sites are you in at this point going through '06, '07, and the spike in promotion expenses, is that likely to continue in '06?
[Scott Heekin-Canedy]: Toronto's coming on as a new print site in November and Houston in January. So there will be the full-year effect of incremental costs associated with that, and the promotion distribution expenses will probably continue to grow at a similar rate next year. But to Len's point, we're managing our overall expense picture to achieve the results that he's described.
[Len Forman]: We're taking 700 folks out of our staffing, which will have a very positive benefit on our overall costs next year, Doug.
[Janet Robinson]: As Scott said earlier, too, Doug, on a continuing basis we constantly evaluate before putting a site on in regard to the return that we will be getting on that. As he said, Toronto and Houston will have the full effect next year. But we are evaluating what we will roll out in 2006 in regard to other sites that will be added, making sure, of course, that strong ROI is there.
[Len Forman]: Ok, thanks.
[Christa Quarles (Thomas Weisel Partners)]: Two questions just about ad rates. First, I was wondering if you could highlight what the overall ad rate realization was for The New York Times and what you expect, perhaps, for 2006. Then on an ad rate question as it relates to About.com, I know the revenue there splits between sort of CPM and search-based, and A, can you give us that breakdown, but, B, is a lot of the increase due to more aggressive maybe CPM increases now that you guys have your hands on it? Thanks.
[Martin Nisenholtz]: Just so we all understand the terms of our business model, it's basically somewhat like the newspaper business. It's rate times volume, and volume has to do with number of uniques times the visits times the pages per visit. Those numbers, the good news is that all of those numbers are up at About. Page views are up 21 percent, September '04 to '05; unique visitors are up 31 percent from 19,500,000 to 25,500,000.
So the volume numbers at About are driving the business results in large part. In addition to that, we knew when we bought the company that it was under leveraged with respect to rates. And so we have pushed very hard on the rate side. Our rates are up September over September 81 percent. So we have increased rates, but we think there's more to do.
I mean we're not done yet optimizing our rate structure at About.com. We had a lot of leverage in the system and we're pushing that leverage now in order to get these increases. So we're pushing both sides of the business model, volume and rate, to get the kind of number that you saw us report for the quarter up 67 percent, which is well above anything you've probably seen elsewhere.
[Christa Quarles]: How does that break down between search and CPM?
[Martin Nisenholtz]: We haven't broken it down to date, but let's just say the model is very even. In other words, we have a display line that is roughly equal to the CPC or cost per click line. We have smaller revenue streams in e-commerce and in other revenue, but the two drivers are display advertising and CPC, and both of them are growing, you know, at significant rates. So we're much more diversified in direct response or CPC advertising than most other content sites because of our strength in search and our targetability.
In other words, the About.com model is highly verticalized, so when consumers come to a page, they're typically interested very much in the content on that page and therefore are response driven back to the advertising. So the model is very robust on the direct response side, which, of course, is a very fast-growing part of the Internet advertising business.
[Scott Heekin-Canedy]: Without getting into the specifics of rate yield, we are very fully realizing our rate increases across all major categories, retail, national, classified and especially on color, which helps us in overall achieve that yield.
[Christa Quarles]: That's expected to continue, based on your outlook at this point?
[Scott Heekin-Canedy]: Into '06 we would have every expectation to continue to manage our business in that way.
[Christa Quarles]: Perfect. Thanks.
[Steven Barlow (Prudential Equity Group)]: Thank you. Len, what are your bonus accruals year-to-date this year versus last? And, Janet, can you talk a little bit about the International Herald Tribune? Thank you.
[Len Forman]: Steve, we don't go down that level on bonus accruals. It's not the kind of detail that we give out and we've clearly underperformed our own expectations, so we'll have some benefit on expenses going forward. But that's not something we generally go public with.
[Janet Robinson]: We are seeing some very nice pickup in the International Herald Tribune's advertising. In fact in the third quarter they were up 30 percent in regard to their ad revenue number. Because of the investments that we've made, the improvement in the product over the last two years, they are beginning to see the kind of advertiser response that we had expected when, indeed, you invest in a strong product.
They're also monitoring their circulation very, very carefully to make sure that they monetize their investments and promotion. So I think we're seeing some nice movement in regard to what the IHT can really contribute to the organization.
[Len Forman]: Just one clarification: bonuses and other forms of compensation, Steve, are included in our wage numbers, and so we're in a roughly 3 percent increase for the year. So all of that is imbedded in there.
[Steve Barlow]: Okay. Can those new plants that you've put on now in Toronto and Houston, can they go down to the 48-inch web width?
[Scott Heekin-Canedy]: I don't know the answer to that question. I believe it's yes, but we can look into that and get back to you.
[Steve Barlow]: Thanks.
[William Byrd (Citigroup)]: I was wondering if the color capacity came on late in the quarter, and would you expect this to have more impact in Q4? Also on costs, I was just wondering if you see any additional material structural cost reduction opportunities? Thanks?
[Len Forman]: I'll take the latter question. The answer is, the short answer is yes. As you know, we appointed our corporate comptroller to head up a company-wide effort on process mapping, and that really is accelerating and building steam. We estimated roughly in the $20-million-to-$25-million range in savings this year. We see that growing next year, and we continue to see that grow out into the future because it's the kind of effort where you have to continually go back at it every few years and recycle, as business changes. So we built this into our own structure of how we manage the business so we expect to see continued benefit to this going forward.
[Scott Heekin-Canedy]: The incremental color capacity that we've been installing was scheduled to come online in the first week of November, but it's going to start early. As of Sunday night, the Sunday night for Monday newspaper, we'll have this extra color capacity, and we've already been in the marketplace selling it.
[William Byrd]: Thank you.
[Peter Appert (Goldman Sachs)]: Couple questions for Martin. Did the incremental traffic you're seeing at About, do you attribute that to the combination with NYT Digital? Is there some cross-marketing, cross-promotion that's driving that? Number two, can you talk a little bit more about what you've done with Indeed? Is that going to be a platform for growth for New York Times Digital over the next couple of years? Does that become a national help wanted offering that could conceivably compete with Career Builder?
[Martin Nisenholtz]: Let me take the About question first. The increases in traffic at About are largely driven, at this stage, by our expertise and continuing leverage of search engine optimization techniques. For example, these techniques, as they are applying to Yahoo! are now driving an additional 200,000 users a day over the results of last year. So we are becoming better and better at indexing our content and making it available to users through what is the primary gateway to Internet content these days, which is search.
So this is a competency that we now have not only at About, but that we are now exporting to The Times on the Web and Boston.com, as well as our other properties. I might add that although About's results sort of shine on their own, The Times on the Web has also increased its traffic dramatically. As Janet alluded to in her report, we had a record month, over 21,500,000 unique users around the world at The Times on the Web just for the month of September. That's a very large number for a news Web site.
So one of the reasons for the About acquisition was to take this capability that these guys are, in our view, the best in the world at and extend it across our digital network so that all of the properties benefit from this. So the principal driver at About is SEO at this stage, but we also continue to see more and more content created. We're creating 3,000 original content pieces a week at About. This goes into a database of over 1.1 million articles. We have the largest content trove on the Web right now. As that content gets added, mostly evergreen content, as it gets added to the archives, it gets indexed, so you continue to see better and better answers off of search and more and more volume to the Web site. That's, again, the business model that we acquired there.
The second question, I'm sorry.
[Peter Appert]: It was about Indeed, whether you envision that as a platform to compete with Career Builder.
[Martin Nisenholtz]: Indeed, just so everyone is clear, is a meta search engine. In other words, it spiders all of the job listings on the Internet and it produces results regardless of whether it's from a job board or a company Web site, and it provides a comprehensive view of the job market. If you go to About.com and you look at the job and careers path, you will see that Indeed is the job site for About.
So the strategic synergy between About and Indeed is already clear. We invested – we owned 14 percent of this company, we invested in it and now we're helping it grow through this incredible engine that we have at About.
We don't know what's going to happen to this meta search model. Part of the reason we acquired equity in the company and announced it on the board is to is to learn and to be a part of this, what we believe to be a very important trend, not only for jobs listing but for other agate or classified or listings – listings in general.
So this trend is taking place across the Internet, in jobs, in real estate, etc., and we are participating it in actively now and driving traffic to this, and looking at additional opportunities in meta search as well. So we think it's an exciting trend and we think that it could be a game-changing trend over time.
[Peter Appert]: Do you have an option to take your ownership stake higher?
[Martin Nisenholtz]: No, we don't have an option to take the ownership stake higher, but we obviously have language in the agreement that would allow us to negotiate in a favorable way if we were to want to pursue a greater
[Len Forman]: Peter, the size of the investment isn't what's critical here. It's first mover entry into this market and having the ability to integrate with what we're doing and have a seat on the board so that we can help drive the direction they go in. That's really what's critical.
[Janet Robinson]: It's the learning, Peter.
[Peter Appert]: Thank you.
[Edward Atorino (Benchmark)]: Good morning. Probably a tough question to answer, but in looking at the buyout schedule, I presume it's not going to be one-third, one-third, one-third. Would it be a little front-loaded, back-loaded?
[Len Forman]: Way too early, Edward. We said in our announcement it would take place over six to nine months and it's too early to make that call in terms of how many people are going to take it right away. But certainly within six months we expect it to be done.
[Edward Atorino]: Thanks much.
[Paul Ginocchio (Deutsche Bank)]: Yes, thank you. Just a couple questions about Boston. First, do you think the Boston Herald, with new investors, will be a tougher competitor? There was a nice article in the Globe this morning about that chance. Second, Boston help wanted looks pretty weak. Can you talk about what's going on print versus online and the relative sizes of your print revenue versus your online revenue in the relative growth rates. Finally, in TimesSelect, Martin, I think you're quoted somewhere online that you're looking for 1.5 to 2 million subscribers and I know you've significantly increased your Web ad impressions to get there. I'm just wondering how that's going and is that what's also driving the cost of your promotions? Thanks.
[Martin Nisenholtz]: I'm not sure where the 1.5 to 2 million came from? I've never suggested anything along those lines. What I said is that over the very long term we expect this to be, you know, a significant revenue driver for us. Maybe somebody extrapolated that number from those statements, but we've not put a number out there deliberately because it's still early, and what we've suggested is that it's ahead of plan and going well. But we certainly have never said anything in that range.
[Janet Robinson]: Help wanted in the third quarter print was down in the high- single digits, and online was up in the low teens. It was a softer third quarter. They're expecting the fourth quarter to be stronger. They are still very pleased, though, with what they are seeing with Boston Works.
In regard to The Herald, I think that we always feel it's important to have a strong competitor in the market, and we certainly want The Herald to have more investment and certainly to continue to be a strong competitor. I'm going to ask Jim Lessersohn to give you a little bit more color on that.
[Jim Lessersohn]: The way we are looking at it, we just see it as more or less a continuation of the consolidation that's going on in the Boston market, and we ourselves have been very active in terms of making investments in Boston, adding new products in Boston. That's simply to make sure that we remain as competitive as we need to be, to face however many competitors we see in Boston, however strong they become.
[Paul Ginocchio]: Let's just follow up on the print versus online and help wanted. What's the relative size of the two revenue buckets?
[Janet Robinson]: We're just taking a look right now, Paul. Obviously, the classifieds in the print is much, much larger. It's probably about four times as large as the online in terms of dollars.
[Paul Ginocchio]: The number of Web ad impressions online, I think, in September was significantly ahead. I think you're one of the biggest Web advertisers, particularly regarding TimesSelect, and print circulation for The New York Times, is that something that will be maintained? Is that what's driving your increased promotion costs? Thanks.
[Martin Nisenholtz]: Yes, we did buy a significant amount of impressions online in order to launch the product, and we'll continue to support the product. But I don't think you would call that expenditure significant, no.
[Janet Robinson]: A lot of our promotion for TimesSelect, in fact, was done in paper, Paul, and online in regard to NYTimes.com to increase the visibility of what we were offering with that.
It's also important to note in regard to the competitive situation in Boston. Boston not only has done a wonderful job of really doing a great deal of redesign, new product development, they also have developed kind of a one-stop shopping mechanism for advertisers in Boston. Because of Globe specialty products, because of the regional section, because of the magazine, because of their pre-print targeted ZIP coding down to the ZIP code, they now have become really a one-stop shopping mecca for many of the advertisers in there. Those capabilities have rarely increased over particularly the past year that we think will be a good, strong move in the competitive environment.
[Jeff Sweat (UBS)]: Two questions. One is the financial status on the new building. Two, a follow-up on a previous question asked, and that is how much of a pension cost increase could be comfortably absorbed at this point, considering the difficult environment.
[Len Forman]: I'll take the pension question first. Our big increase in pensions really occurred between '03 and '04. We don't expect to have a significant increase in pension and it's going to be, certainly, in the area where we could comfortably absorb it. So that's not a major issue for us. That's why we are putting in the $45 to $55 million, in order to get a benefit on the expense side. Again, we're doing that to both maintain our 90-percent funding ratio in order to avoid any insurance premiums, as well as take advantage of the expense benefit we get for doing that. So pension, while cost increases are always something to be concerned about, pension expense is well within the realm of what we can do. On the building, your question, what specifically are you looking for on the building?
[Jeff Sweat]: Just the status.
[Len Forman]: We are up on building. We have steel going up. Nothing has really changed in terms of our forecast with regard to building expense. Occasionally there might be some slippage into '06 from '05 just simply because of timing. But we still plan to be in the building in '07 and the bulk of our capital will be in '06 and early '07.
[Jeff Sweat]: Great, thank you.
[John Janedis (Bank of America Securities)]: Just a quick one. Understanding that quality is an issue on the movie front, how much does the average wide-release movie spend at The Times versus a year or two ago?
[Scott Heekin-Canedy]: We don't talk at that level of detail about the performance. I'll just reiterate what I said before is that in the last couple of years we've seen the studios manage their advertising more on a week-to-week basis than we had previously seen, based on how the product performs in the marketplace. We try to develop – we work very closely with them. We have very good working relations with them and we try to help them develop advertising approaches that best position their product in the marketplace. For example, we are doing a lot of sneak preview placements with them, as well as out-of-environment placement of ads.
[John Janedis]: Those types of things, I'm assuming they're at the standard type of rate card numbers, they're not at a discount?
[Scott Heekin-Canedy]: Not at a discount, correct.
[Catherine Mathis]: Are there any more questions? Thank you, every one, for joining us today. If you have any other questions, please give a call. Bye now.
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