Welcome to the 2022 The New York Times Company Investor Day. Throughout the morning, you're going to meet leaders from all across the organization, and you're gonna hear the voices of me and my colleague. I'm Michael Barbaro, co-host of The Daily.
I'm Sabrina Tavernise, Co-host of The Daily.
Together, Sabrina and I will be guiding you through today's presentations, introducing speakers, and letting you know what's coming up next. Before we begin, please ensure that your mobile devices are silenced. Now, let's get started. Please welcome to the stage Vice President of Investor Relations, Harlan Toplitzky.
Good morning. Hi, I'm Harlan Toplitzky, Vice President of Investor Relations. Welcome to The New York Times Company's 2022 Investor Day. To both the group with us in person here at The Times Center and everyone else participating remotely, thank you for joining us. Today's Investor Day has been a long time coming, and I'm excited for what we have in store. Before we begin, let me first walk you through what we plan to share with you this morning. In a moment, you'll hear from Meredith Kopit Levien, who will detail our strategy and lay out our value creation thesis. As part of that, A.G. Sulzberger will connect how The Times' dedication to quality independent journalism makes that strategy possible. We'll follow that with a presentation that will demonstrate how we strive to drive growth through investment in our products.
We'll highlight The Athletic, the global digital subscription-based sports media business we acquired earlier this year. Following a short break, we'll share our plans for growing our subscription business, the levers we have, and how we use them. Finally, we will pull everything together in a financial overview, and then we'll open it up to questions, both from those of you with us here at The Times Center and our virtual attendees. Before we begin, let me remind you that today's presentation will include forward-looking information about our outlook, our market opportunity, and anticipated operational financial performance and goals.
These are based on our current expectations and assumptions, which may change over time, and our actual results could differ materially due to a number of risks and uncertainties that are described on our slides for today, as well as on our website at investors.nytco.com and in our SEC filings. Our presentation will also include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our slides, which are also posted on our investor relations website. I also wanna note that we provided second quarter guidance on our earnings call in May, and given that the focus of today's event is on our mid and long-term opportunity, we will not be updating that outlook today. Thank you.
Now please join me in welcoming the President and Chief Executive Officer of The New York Times, Meredith Kopit Levien.
Good morning, and welcome to The New York Times. I wanna start by saying it is so great to see so many of you in person, and I wanna offer a special thanks to those of you who traveled to New York to be here with us today. We are here today because The New York Times is flourishing, and our business has reached an inflection. In February, as many of you know, we announced the next phase of our company's strategy and a new target milestone of 15 million subscribers by 2027. Now, today is about drilling down on that strategy so that you can be as excited about it as we are. We'll talk about why we believe we are still in the early stages of penetrating a large and growing TAM with products that are in demand and highly differentiated.
We'll detail the virtuous cycle that underpins our model, and we'll demonstrate that thanks to steady and deliberate investment over many years, our dominant and our most durable revenue stream, digital subscriptions, is now at a scale that we can target sustained profit growth, even as we continue to invest to take advantage of an enormous opportunity. Today is also about introducing you to a team of leaders who will make this all happen, and let me start by properly introducing myself. I joined The Times nine years ago as Head of Advertising. I took on subscriptions a couple years later, and then I served as Chief Operating Officer for three years before becoming CEO in 2020. For nearly a decade, I have been deeply involved in the radical transformation of this place, as have all of my colleagues who you're gonna meet today.
I'm delighted to introduce you to these folks, and I have to say, I have been so proud to work alongside all of them for much of my tenure. I'll start with A.G. Sulzberger, whose family's commitment to The Times has spanned five generations. As Publisher, A.G. ensures that our journalism is independent and of the highest quality and, as Chairman, that we're on a path for sustainable long-term growth. Now A.G. led our newsroom's transformation into a thriving digital-first operation, and he's also played a huge role in stewarding The Times to get to the favorable economic position that we enjoy today. He's gonna talk to you today about the unique role that The Times plays in the world and about how our quality and our depth and our breadth are the foundation of our business success. After A.G.
I'll talk, you're gonna hear from Alex Hardiman, who's our Chief Product Officer. She's gonna share our product vision and our strategy for meeting what is now a really wide range of consumer needs. Alex has been at The Times for more than a dozen years with an intermission that included a brief stint at Facebook. Alex is gonna be followed by David Perpich, who, like A.G., is a member of the Ochs-Sulzberger family. David is now the publisher of The Athletic, which he's gonna talk about in a lot of detail. What you should also know about him is that David led the launch of our digital pay model more than a decade ago. He helped create our cooking and our games products, and he oversaw the acquisition of Wirecutter and ran it for a few years after we acquired it.
You'll also hear today from Hannah Yang. Hannah's our Chief Growth Officer. She's gonna describe the many levers that we have for subscriber and ARPU growth, including our multi-product bundle. Hannah came up through the ranks of our subscription business, and she has led it through its steepest arc of growth that we've seen so far. Roland Caputo, our CFO, who many of you know very well, will conclude with what all of this means financially. I'm very happy to say we also have a number of colleagues, other colleagues, who aren't presenting, but who will join us either for Q&A or lunch or both, and let me just name them. We have our new Head of Advertising here, Lisa Howard.
We have our CMO, David Rubin, CTO, Jason Sobel, our Chief Data Officer, Hannah Poferl, our Chief Human Resources Officer, Jackie Welch, General Counsel, Diane Brayton, and our Chief Strategy Officer, Will Bardeen. Now, most of this group has worked together for years, and what binds us as a team beyond our confidence in our ability to execute together is a deep passion for and a commitment to the mission of The New York Times, which is to seek the truth and to help people understand the world. That mission underpins our business success. It's what attracts an audience of 50 million-100 million every week, the vast majority of whom are not yet subscribers. It's why the most talented journalists wanna work here, and increasingly, it's what inspires engineers and data scientists and product managers and designers and marketers and ad people to come here too.
We have transformed our business radically over the years, but that mission has stayed the same, and it has been, and it will always be foundational to our ability to create value for our shareholders. Many of you know the story of our transformation in broad strokes, but I wanna share just a few highlights, really to give you a sense of this team's capacity to execute together. In 2016, which was about a year into the last phase of our growth strategy, The Times had fewer than 2 million digital subscriptions, and we had only two paid digital subscription products, News and Crosswords. Two-thirds of the company's revenue in 2016 still came from print. Total company revenue was shrinking. Only 30% of our two principal revenue streams, advertising and subscriptions, came from digital.
Digital advertising was actually the larger of those two streams, but its long-term prospects seemed pretty uncertain in the shadow of the big digital platforms. Subscriptions were our largest revenue stream at that point, but they were heavily weighted to print. While we had a clear vision for transforming the company, and at that point were on the path to doing so, sustainable profit growth was elusive as print declines largely offset our digital growth. Today, the picture looks entirely different. Since 2016, digital subscriptions have grown more than 400%. In addition to our core News product, we now have three products that have each amassed more than 1 million subscriptions each: Cooking, Games, and The Athletic. We have a budding subscription business in Wirecutter, which until last year was monetized primarily as an affiliate business.
Today, digital generates a significant majority of our company's revenue, and two-thirds of that digital revenue comes from our most durable work subscriptions. Digital subscriptions are not just our fastest-growing revenue stream, but they're also our largest. We also have a strong digital ad business with high-performing ad products and a continually expanding suite of first-party data. We're debt-free, we have a healthy balance sheet, and that gives us plenty of runway to advance our strategy, to weather storms, and to return capital to shareholders. Importantly, we have overcome the decade-long period in which our growing digital gains were offset by declines in print. Last year, we grew adjusted operating profit 34% to $335 million, and we're targeting sustained, attractive midterm AOP growth from a digital business that continues to scale. We set two goals for ourselves in the last phase of our strategy.
The first one was to double our digital revenue by 2020, and then to reach 10 million subscriptions by 2025. We achieved both of those goals ahead of schedule. Now we did so because of strong execution, but we also did so because our transformation into a digital-first, subscription-first market leader has coincided with a handful of market trends, long-term market trends that really play to our strengths. Let's talk about those trends. First, the global population is growing, and it's becoming more educated and affluent, and we believe this has increased the demand for high-quality news and information, and add to that the basic fact that we are living in consequential and deeply uncertain times with big global stories unfolding in virtually every aspect of society. That's the first thing. Second, more people are paying for digital news.
The percentage of Americans who say they're paying has more than doubled since 2016 from 9% to 21%. Third, the next generation, Gen Z and millennials overwhelmingly prefer to consume their news digitally, suggesting that we are still in the early innings of a great shift toward paid digital news and information and away from TV and radio and print. Finally, there's just our bedrock belief that the value of quality digital journalism is increasing as the supply of low-quality content online actually makes it harder, not easier for people to get to what they need. Together, these trends point to an enormous once-in-a-generation opportunity to deliver high-quality news and information in spaces where authority and trust really matter. Let's talk about that opportunity.
At the peak of print, approximately half of all American households subscribed to one or more daily newspapers, and tens of millions of English speakers internationally did so as well. We assume that most people didn't just get news from those newspapers. They got the recaps of last night's game, and they got recipes and puzzles and shopping advice and all kinds of guidance and inspiration. While many of those newspapers have been eroded by years of cuts or even shuttered, the needs that they met endure. In this context, our vision is to become the essential subscription for every curious English-speaking person seeking to understand and engage with the world. That's our strategy. Now, doing so will require us to execute on three key objectives. The first is to continue to win in news and be the world's best news destination.
Second objective is to create more value for more people by offering leading lifestyle products that help people make the most of their lives and their passions. Third, to put those two things I just described together in a more expansive and connected product experience that makes The New York Times indispensable in the daily lives of millions and millions of people. Now, as I said earlier, we started this next phase of our strategy with a new subscriber target of 15 million subscribers by year-end 2027. That compares to just over 9 million subscribers as of the first quarter, which includes our acquisition of The Athletic. This goal importantly reflects a shift in our emphasis from counting individual subscriptions to counting total subscribers, which focus more on our penetration of the market and do a better job of reflecting our improving economics.
It's important to say we view 15 million as another mile marker and not the finish line. Getting there means a lot of important things. It means more people consuming trustworthy journalism. It means a public armed with the facts and the context to make decisions. It means a Times newsroom with the resources to keep finding and telling really important stories that might otherwise go untold. We believe it means a larger and more profitable New York Times Company with greater long-term value for shareholders.
In addition to our subscriber goal, we're targeting compound annual growth in AOP of between 9%-12% over the next three to five years, which is more profit growth than we achieved on a CAGR basis in the last five years. The starting point for this growth target is our 2022 AOP, and we believe we can achieve this AOP target through attractive, sustainable revenue growth and increased leverage in digital, which will drive improvement in consolidated margins starting in 2023. We expect to pursue a disciplined capital return approach with the strong free cash flow that our model generates. Let's talk now about our value creation thesis, which is built on five pillars. The first is our high-quality portfolio of journalism and lifestyle products.
We have been investing to build this portfolio for almost two centuries, broadly speaking, and for more than a decade digitally. This is our competitive advantage, and it's the source of our value as a company. Second, this highly differentiated product portfolio positions us to pursue a large and a growing TAM. We're already the market leader in news, and we see a highly attractive market that we believe expands with our growing portfolio and has significant runway for further penetration. Three, our model itself is advantaged, which we're going to show you in detail today with favorable unit economics, numerous levers for value creation and multiple revenue streams. Four, based on the investments we have made to date and the scale we've begun to achieve, we believe our model will lead to increased AOP even as print continues to decline and even as we continue investing in our growth.
Finally, we believe our model is and expect it will continue to be increasingly cash generative. We're going to talk in detail about each of these pillars today. I want to start with just a few words about our product portfolio. We believe that each of our products is differentially valuable compared to its competitors, and that our whole portfolio is more valuable than the sum of its parts. Our news product has approximately twice as many digital subscriptions as the next closest reported competitor, and this is important, as much engaged audience on a weekly and monthly basis as many of the largest free news sites. News generates enormous audience and engagement, and it has the capacity to drive audience and attention to everything else we offer.
Cooking and Games are already market leaders and are early in their planned growth trajectories, and we believe both have real runway to continue to attract audience and interest as the addition of Wordle to our Games portfolio demonstrated. The Athletic, which covers virtually every major sports team and league in professional sports, is one of the largest sports journalism subscription businesses. For the majority of its existence, The Athletic had very limited access for non-subscribers, which is why only a relatively small number of people are even aware that it exists. We're beginning to change that. We more than tripled Wirecutter's audience since we acquired it in 2016, with most of the growth coming in the last few years. It's new as a subscription service with a strong value proposition in a space in which the category leader has millions of paying members.
All to say, we believe each of these products has plenty of room for further growth, and each can be appended to the others and to our unrivaled news product in an all-access bundle that offers the full promise of The New York Times. That's what our essential subscription strategy is really all about, getting millions more people to experience the full promise of our product portfolio. Doing so begins and ends with our ability to maintain our lead as the preeminent news and information destination. To talk about that, I am delighted to welcome my colleague and partner, Chairman and Publisher, A.G. Sulzberger, to the stage, and I'll be back after A.G. talks. Thanks so much.
Good morning. I'm A.G. Sulzberger, Chairman of The New York Times Company and Publisher of The New York Times. For more than 125 years, the Ochs-Sulzberger family has been proud to serve The New York Times and to safeguard its independence, integrity, and continued strength. I have the great honor of carrying that legacy forward and to ensure that we continue to provide the public with the journalism it needs without fear or favor. Today, I'm here to talk to you about that journalism. Our journalism powers our business, and our business, in turn, powers our journalism, creating a virtuous cycle that we expect to continue to propel our growth for years to come. That's especially true at a moment when the type of journalism that we do at The New York Times is increasingly rare, increasingly needed, and as a result, increasingly valuable.
This isn't just my opinion. We see the evidence in the unprecedented number of subscribers, more than 9 million today, relying on us to help them understand and engage with the world. I'd like to talk to you today about what makes our journalism so different and so powerful, and why we're so confident in its ability to drive our business. You all know the industry's troubling backdrop. Over the past two decades, we've seen the collapse of the traditional business models that supported quality journalism. Newspapers all over the country have shuttered. The number of working journalists has dropped at an even higher rate than coal miners. Many of the journalists who kept their jobs now find themselves anchored to their desks, aggregating and opining on others' work instead of doing original reporting.
This is a national tragedy, and is compounded as social media and search engines once touted as potential substitutes for trusted news providers, have flooded this damaged news and information ecosystem with a torrent of misinformation, propaganda, conspiracy, punditry, and clickbait. That, in turn, has fueled the intertwined crises that our society is reckoning with today. Declining trust, growing polarization, and an inability to even agree on the facts. If there's a silver lining, it's that these shifts have awakened new generations to the distinct and essential role of quality journalism. As readers face an increasingly untrustworthy digital ecosystem, the value of what we provide is clearer than at any other point in our lifetimes. In this context, we believe the future of our journalism and the business it fuels is especially bright.
To explain why, I want to talk about the strategy behind what you see when you open our app, visit our homepage, or unfold our newspaper. The most important part of this strategy is news. The Times provides the most authoritative coverage of the most important and interesting stories. News is not monolithic for us. Rather, we cover the world in a variety of ways. We provide expert beat reporting that allows readers to stay abreast of important subjects and storylines. We cover breaking news without sacrificing accuracy or context for speed. We produce resource and time-intensive journalistic projects that demand the public's attention. We provide commentary and criticism that helps people develop and challenge their views. We do this in every possible form, articles, graphics, photos, video, and audio, combining them into a uniquely vibrant and compelling multimedia experience for understanding and engaging with the world.
We've long set the standard in writing. Each week, we produce more words than Shakespeare did in his lifetime, but we've also become a groundbreaking leader in visual journalism, using photography and graphics to document, illuminate, and bring stories to life. Over the last few years, our audio offerings have broadened us as the fourth-largest publisher in the industry by listeners, a reminder that quality can be far more valuable than quantity in an oversaturated market. Even more recently, we've been using video, television, and film to report and tell stories in new ways. Last year alone, this work started national conversations, won two Pulitzer Prizes, two Peabodys, and our first Oscar. On nearly every big story, we use all of these muscles to create an experience far more powerful than the sum of its parts, and take our coverage of COVID-19.
In the early days of the pandemic, the need for fast, accurate, and useful information was a matter of life and death, so we rolled out a live briefing that provided up-to-the-minute news and guidance from all over the world. We also tracked every COVID case in the United States, collecting data that government and public health officials have relied on, as have tens of millions of everyday Americans just trying to go about their lives. Both resources have been used well over a billion times. At the same time, we marshaled the expertise of our beat reporters, including journalists with medical training, graduate degrees in biochemistry, and decades of experience covering healthcare, government, business, and education.
We dug into the government missteps, asked tough questions about vaccine trials and rollout, and we did all of this across six continents, from China to the Amazon, from Syrian refugee camps to suburban Wisconsin. At the same time, our commentary and criticism weighed the handling of the pandemic, debated its consequences, and explored how the crisis could serve as a force for good. Our readers didn't just need us to help them understand the pandemic. They needed us to help them live in it. We offered them guidance on how to stock pantries, wash their hands, apply for unemployment, and receive the vaccine. This broad body of work won a Pulitzer Prize for public service, our industry's highest honor, but it also drove the biggest audience in subscriber growth in our history. It's a powerful example of how good journalism makes for good business.
Doing all this across just one storyline shows the magic of The Times. I can name countless other stories, from climate to the Oscars to Ukraine, that we cover with similar breadth and ambition. It's our ability to play every single key on the piano that allows The Times to stand apart. Of course, news is only part of what we offer. We provide general interest, cultural, and lifestyle coverage that helps readers keep their finger on the pulse of society. Whether it's providing movie reviews, profiling tastemakers, or exploring the changing worlds of art, fashion, food, and literature. In recent years, we've also expanded how we more deeply serve specific passions with best-in-class products. These bring the originality, authority, and quality that readers expect from The Times to recipes, puzzles, product recommendations, and sports.
Our goal is to bring all of this great journalism together in a multimedia experience that's more trusted, insightful, and useful for people trying to understand and engage with the world than that of any other publisher or platform. Last year alone, all this journalism was collectively consumed more than 20 billion times. Let me also say a few beats about why we're able to produce this journalism. First, most important, we continue to attract the best journalists. We have lawyers covering the courts, doctors covering healthcare, veterans covering the military. In many cases, our journalists draw on decades of experience. One of our reporters covering the White House, for example, has reported on five administrations. His colleague, our White House photographer, has covered seven.
We also have the strongest leadership team in the industry, and that's never been clearer than today as Joe Kahn takes over as Executive Editor and Dean Baquet steps down after a historic run. Joe has served as Dean's closest partner, and this transition shows us how confident we are in our current path. We not only employ the best journalists in the industry, we empower them with the time and resources and support to do the best and most impactful work of their careers. That means we send our journalists to the places we cover. In a typical year, Times journalists will report on the ground for more than 160 countries. That includes maintaining a full-time presence in Afghanistan and Iraq through the entire duration of these wars and their aftermaths.
An expensive and often dangerous effort that has provided the public with essential information and accountability through these conflicts. We also give our journalists time. It took our reporters months to systematically document Harvey Weinstein's decades-long patterns of abuse. More recently, it took years of reporting, lawsuits, and on-the-ground visits to reveal the hidden toll of American airstrikes in the Middle East. Work that has already prompted pledges of reform from the Pentagon. These are just a few examples, but they're emblematic of why Times journalism is the gold standard. We also do everything we can to live up to our readers' trust. That means we continue to expand our standards department, already the largest in the industry. It means we have a defined and well-enforced ethics policy, including strict rules about conflicts of interest. It means we fact-check and edit everything we publish.
It means that in the inevitable moments when we fall short, we publicly acknowledge and correct our mistakes. At a time when we're seeing growing pressure on the free press, we're committed to leading the fight for the trust of the public, the safety of journalists, and the freedoms that protect our work. We are living in a time of profound challenge, and at a very moment when the world must come together to tackle them, people are struggling to understand basic facts and each other. Journalism can't solve the world's problems, but the world can't solve its problems without journalism. We always believed in the power of great journalism, even as others wavered. We knew that it was not only essential for society, but that it could be the heart of a thriving business.
I am proud that we have translated that conviction into such remarkable growth over this last half-decade. I want to pause here and acknowledge the team driving the growth, starting with Meredith, who's my partner in transforming The Times, and the team that she's pulled together. Many of our achievements, our subscriber growth, our product innovation, our more collaborative and inclusive culture, are tied to their vision and relentless focus on results. I'll finish where I began. This is a virtuous cycle. Great journalism brings in more subscribers, which makes for a stronger business, which in turn supports more great journalism.
As we come off the two highest growth subscription years in our 171-year history, a period in which we saw weeks in which we served as much as half of the American public, we believe this cycle will drive us to 15 million subscribers and beyond. Our mission is to seek the truth and help people understand the world. This is rooted in the belief that great journalism has the power to make each reader's life richer and more fulfilling, and to make all of society stronger and more just. I believe that mission has never been more essential for the world, and I believe that it has never represented a more promising foundation for a strong and growing business. Now I'll hand it back to Meredith. Thank you.
A.G. T alked about our journalistic mission, which is inextricably linked to our growth and shareholder value creation. Our commitment to that mission is what got us to where we are today. As free digital content flooded the information ecosystem over the last decade, we doubled down on original, independent, trustworthy journalism and experiences. That focus not only transformed our business, but it enabled us to pioneer a growing market for paid digital news and information. Let's talk about that market and our plans to continue penetrating it.
A.G. mentioned this, I'm gonna say it again. At peak news moments, as many as half of all adult Americans come to our digital news product. On a weekly basis, we attract an average audience of 50 million- 100 million, and as of the first quarter of this year, we have nearly 50 million weekly users across our lifestyle products. People don't just come, they give us their email addresses, they come back, and they convert at healthy rates. We now have more than 135 million registrations, the majority of which came in recent years, and we continue to add them at a healthy pace. As Hannah will talk about in more detail later, beyond registrations, we converted our most recent million subscribers at as high a rate as the million before them.
We're increasingly seeing people convert not just for a single product, but by adding other products or by buying our multiproduct bundle. The latest research helps explain why. Our own surveys, combined with data from the Reuters Institute, suggest that there are 135 million adults worldwide who are already paying or willing to pay for one or more subscriptions to English language, news, sports coverage, puzzles, recipes, shopping advice, or podcasting. The data also suggest that half of the TAM, this is important, is currently open to Times products in at least one of these categories, and over a third of the TAM is open to products in at least two categories. In other words, our audience behavior, our subscriber behavior, and the survey data all suggest that our target of 15 million subscribers by 2027 is eminently achievable.
Now, another factor giving us a lot of confidence that we can penetrate our TAM is our unique approach to harnessing market demand. As A.G. described, The Times delivers big, sometimes even world-changing stories seen by millions and millions of people. Unlike entertainment brands, our model isn't solely based on events like elections or wars or extreme weather. They come for all kinds of moments of economic and societal consequence. They come for big sports and culture and entertainment events, and for major holidays that require new cooking and gift ideas. They come for the daily draw of solving puzzles and playing word games, or for the simple desire to be surprised and delighted by the unexpected thing that The New York Times thinks you should care about today, tomorrow, and the next day.
Meaning we have built a uniquely powerful collection of assets, content assets and product assets that can harness a diversity of audience interest all day, every day, and that is the starting point behind our attractive unit economics. Let's talk about those unit economics. The 2,500 people in our journalism and content creation operations produce many hundreds of stories and experiences each week, which draw tens of millions of users to our products. In fact, we reach into a large portion of that TAM that I just described every week. Once they come, our product experience is designed to get them to engage more deeply by registering, by sampling our work, and by building habits with our now five products or across our portfolio. There are multiple levers to do so, and Hannah and Alex and David are all gonna talk about those in a lot more detail.
We convert those users as early as possible in their journey, and more than 80% of our subscriptions are now organically driven versus coming through paid marketing, which means in recent years, we have been able to halve our subscriber acquisition costs. The marginal cost to serve as an incremental digital subscriber after we have converted them is minimal, so even at low introductory prices, each new subscriber contributes to profit, meaning it's in our interest to convert and retain subscribers, even at the bottom of the demand curve. As you're gonna see in Alex's presentation, a core part of our strategy is moving individual subscribers up the demand curve by providing them with more value within each product and across our product portfolio.
As subscriber tenure grows, the more they engage, the more value they experience, and the more revenue we're able to generate from them. Hannah is gonna describe to you in detail how we're beginning to leverage the bundle as a catalyst to drive ARPU higher and also to maximize customer lifetime value. We already know that subscribers to our bundle, or those who buy more than one product from us, retain better and they pay more, and the early results of our increased focus on getting them to do so are really promising. As of the first quarter, we had 2.6 million subscribers paying for more than one product or for the bundle. Now, our unit economics become even more attractive when you consider the synergistic nature of our other revenue streams, particularly advertising.
As our digital registration and our subscriber base grow, and as our product portfolio has expanded, we generate more and more first-party data across more formats and more contexts, which enable our high-performing ad products. What this means is that we monetize nearly every instance of engagement across The Times and our products, even at the very top of the funnel. As our product portfolio expands, it broadens our appeal to advertisers with products like The Athletic and even Wordle, opening up new categories and new opportunities to which we can now apply a very well-honed playbook.
While advertising is more susceptible to macroeconomic headwinds than subscriptions, we're confident that our subscription-first approach will continue to make our ad business competitive for years to come, and we believe that digital advertising has real long-term growth potential and will continue to be a profitable revenue stream that can augment the growth of digital subscription revenues over the midterm. It's also worth saying Wirecutter's affiliate revenue has been a driver of our digital growth, growing five-fold since we acquired it in 2016. Now let me touch one more time on how we expect all of this to translate into financial performance. Roland is gonna do this at the end of the presentations in a lot more detail.
Based on the scale that we have achieved in digital subscriptions, we're targeting an AOP CAGR of between 9% and 12% over the next three to five years, with 2022 as the base year. This target assumes, this is important, our cash generative print product will continue to be in long-term decline, which we expect will be a headwind of 200 basis points-300 basis points on the CAGR of AOP during this period. For 2022, we continue to expect to grow AOP in our core business before the impact of The Athletic, though as we've said before, we don't expect that growth to entirely offset the dilutive impact of The Athletic on a consolidated basis. We expect the improvement I've just described in AOP to come from continued revenue growth, driven largely by digital subscriber growth and moderate ARPU expansion, augmented by digital advertising growth.
Consistent with recent industry commentary, we have factored into this forecast a lower level of economic activity in the near term and some inflationary pressure. A prolonged recessionary environment or accelerating inflationary pressure could impact our ability to achieve our AOP target. Now, given what we believe is a sizable runway for growth still ahead, we believe the best way to maximize long-term profit and to create shareholder value is to continue to invest in our product portfolio. While we do this, we're seeing the benefits of prior investments, and our midterm AOP growth targets reflect a commitment to staying disciplined in that level of investment. We expect to show improved leverage from our digital products as we go, and we're targeting consolidated margin improvement beginning in 2023, with the potential for some variability from year to year, depending primarily on advertising performance.
Beyond the midterm, we believe there is real potential to continue to scale our model and to improve our profitability by further penetrating the TAM. Given the cash generative nature of our model, we expect to be in a position to return capital to shareholders through dividends and share buybacks at a rate of between 25% and 50% over the medium term. Now, before I hand it off to Alex, I wanna leave you with a few key takeaways. The moat that we've built around our business is deep, wide, and a direct result of the strategic focus and targeted investment and clear progress that we have made over the last five years. The team that you will meet today has successfully executed to transform this business into a digital-first, subscription-first market leader. The demand for what we do and the differentially valuable way we do it is growing.
We believe we have built a sizable lead in news, but we're not stopping there, and that we have the right audience and tech and team and playbook to widen that lead in news and build leadership in large and complementary spaces, which means our runway to attract more consumers and more revenue from existing consumers is enormous. And finally, we believe we're at an inflection point as we realize more of the value that our subscription-first multi-revenue stream model can generate, and we still have a large and a profitable opportunity ahead of us. I'd like now to turn it over to my colleague, Alex Hardiman, who's gonna give you a detailed overview of our products and how they work together to create value for consumers and for shareholders. Thank you so much, and I'll see you in a little bit.
Everyone, please give a warm welcome to Chief Product Officer Alex Hardiman.
Hello, everyone. I am Alex Hardiman, our Chief Product Officer. I've been at The Times for a total of 12 years, having left for Facebook five years ago and rejoined in late 2019 to lead product development. Along with my colleagues here today, I have had the privilege of working on transformational efforts at The Times in the last decade, from our shift to mobile, to the launch of our digital subscription model, to the subscription and product growth vision that we are sharing with you today. I just wanna say it is really wonderful to be here with all of you. In my current role, I oversee key parts of our portfolio, including News, Games, Cooking, Audio, and Digital Advertising products.
Now that you've heard about our business and journalism ambitions from A.G. and Meredith, I'm really excited to talk to you today about our products and how we are making them more engaging and interconnected to create more value for subscribers, for The Times, and for shareholders by getting more and more of our audience to pay and stay. I'll touch on three key themes today. One, who our audience is, what they want, and why we believe we're well-positioned to further penetrate the market with truly differentiated value. Two, how our product levers drive engagement and subscriber growth within each product, and how we believe that will advance our market lead in each of our categories, from news to sports to games and more.
Three, why we believe a more expansive and connected family of products will help drive engagement across the bundle and help subscribers engage with everything The Times has to offer. Let's start with our audience and market opportunity. Now, as you heard from Meredith, our survey data suggests that over half of our 135 million global TAM is open to at least one Times product, and over one-third of our TAM is open to at least two Times products. What distinguishes these people? Well, beyond being English speakers, the most notable characteristics are that they tend to be college-educated, and they share traits tied to curiosity and lifelong learning, such as interest in other cultures, experiences, and perspectives.
That curiosity is primarily defined by deep interest in digital news content, which helps explain the dominant role that our news product plays in our current subscriber base and in our TAM penetration strategy. Our survey data also suggests that tens of millions of people within our TAM are willing to pay for digital products in other categories that overlap with news, such as playing digital puzzle games, discovering recipes, following sports teams, and seeking out expert product reviews. These insights directly guide our product innovation strategy as we work to penetrate the market because we're designing not just for audience engagement within each of these major categories, but also for audience engagement across our bundle given overlapping interests among our TAM. Here you can see how our products appeal to many of our TAM's top interests starting with news.
Each of these products allows us to leverage the unique competitive advantages that we have cemented through our news product over the last decade. These strengths include a trusted brand under The New York Times umbrella, meaningful audience scale and future growth potential within our TAM, best-in-class content and journalism, superior user experiences that drive engagement across the full funnel, and tech, data, and monetization expertise that we believe we can scale efficiently. Now over the years, we've tested several standalone product offerings. Some have worked, and some haven't. These four lifestyle products, Games, Cooking, The Athletic, and Wirecutter, they are emerging as market leaders in their respective categories because they share all of these strengths. I'll now quickly describe how our diversity of high quality coverage is poised to meet our audience's most important news and life needs.
Let's start with our audience's top news needs which are highlighted in yellow at the bottom of the slide. Breaking news, for example, helps fulfill people's need to get caught up quickly on what's happening as a live story is unfolding in real time. Interpretation helps people feel connected to the journalists, the voices, and the opinions that they really trust, can relate to, and admire. Our rich coverage beyond news allows us to meet even more of our audience's life needs. Culture and lifestyle, for example, this really helps enrich people so that they can escape in a way that is truly worth their time. Games help people improve, engage in smart fun, and really learn something new.
Unlike our competitors who excel in one, two, maybe three of these categories at the most, we can deliver on all of these different consumer needs because of the investments we've made in our vast and stellar coverage. We apply our product investments on top of our coverage to help subscribers discover and engage with this diversity of Times value, which in turn gives them more reasons to come to us every single day. Let's now turn to the topic of engagement. We engage our audience to help them cross multiple thresholds in our subscription funnel because engagement is a proxy for value. It converts subscribers, it retains them, and it gives them reason to pay higher prices over time.
In this chart, for example, we see that higher subscriber engagement levels, as measured by the number of active days visited the prior week, are correlated with lower subscription cancel attempts. Another way of saying this is that the more days per week a subscriber comes to us, the more likely they are to pay and stay. We see a big opportunity ahead to help build even more of a daily habit with more subscribers, both within and across our products. When we look within our products, within News, Games, Cooking, The Athletic, and Wirecutter, we've made focused investments in the features that drive both engagement and retention. Here you can see a non-exhaustive list of some of these features, like viewing live coverage, saving recipes, playing games like Spelling Bee or engaging with newsletters.
These features are powerful because they stimulate our most virtuous subscriber behaviors. I'm going to share a couple of examples that really bring to life how these investments are directly improving engagement and leading to subscriber growth. Let's start with Live. Now, over the last three years, we've entirely reshaped our Live product experience to position The Times as people's go-to source for breaking and developing stories. These product innovations follow key investments in publishing formats and tools that have made us far more competitive in the live news arena. We've seen encouraging signs that these investments in both coverage and product are paying dividends for the business. For example, in our coverage on the war in Ukraine, we've really moved past the constraints of the traditional article page with live alerts, live reporter updates, live graphics, live visuals, and more.
These features help people go deep, read more, and come back more frequently in a given day and in a given week. So far in 2022, we've seen on average 60% of on-site new subscribers read our live coverage, and 60% of them return to it each week. We also see that our journalism can become even more valuable when a person can act on it to engage with the world, when they can save, comment, share, and reference our reports. In each product, we're investing in participatory features that help build up a subscriber's personal history with The Times and help them accrue more value to their subscription, which makes them more likely to pay and stay. In Cooking, for example, subscribers who save recipes are 10% more likely to retain at least one year compared to subscribers who do not.
In Games, subscribers who play multiple games are 11% more likely to retain at least one year compared to subscribers who play only one game. We're also investing in targeting and machine learning to personalize a subscriber's experience with coverage that is most consequential and relevant to them. In this recent homepage example, we geotargeted international readers with Ukraine coverage and New York readers with details of a Brooklyn subway shooting that was unfolding. Now, what's effective about our approach is that we start with expert editorial judgment to curate the most important and interesting story packages. We apply targeting and algorithms to better scale that editorial judgment to readers who are most likely to engage and find real value with that coverage. This approach really works.
We've seen that geotargeting readers can drive a significant lift in the share of subscribers who click on Home, which is a metric strongly correlated with retention. We also offer tailored experiences to give subscribers more control. In The Athletic on the right here, for instance, subscribers are encouraged to sign up for push notifications for their favorite teams and leagues so that they never miss an update. As a result, following at least one league is one of our strongest predictors of retention. Now I'd like to share one more example of inter-product engagement, which is tied to our belief that shifting more value and more exclusive benefits to subscribers will drive greater retention. One of our first big bets in this space was the launch of subscriber-only newsletters in fall 2021, featuring a mix of news, opinion, culture, and service journalism.
Our subscriber-only portfolio now includes about 20 newsletters and retention data is promising. In Q1 2022, subscribers who added a subscriber-only newsletter were 20% less likely to churn. Even m ore encouraging is that early tenure subscribers, meaning those who subscribed in the last three months who added a subscriber-only newsletter, were 44% less likely to churn. We're still growing our portfolio of newsletters, and we plan to continue scaling to an even larger share of our subscriber base. As you can see, we have command of many levers at the product level that we know drive engagement and lead to greater subscriber growth and retention, and we're very pleased with the results of these investments so far. I'm excited now to talk about bundle engagement.
Now, in addition to optimizing engagement within each product, we are aiming to grow engagement across our bundle for three core reasons. First, multi-product subscribers engage the most. As you can see in this bar chart here, digital bundle and multi-product subscribers engage more with our products than any single product subscriber population. As we upsell more single product subscribers to the bundle, we expect to see meaningful growth of bundle subscribers ahead. Second, they retain the best. Bundle subscribers currently churn at rates approximately 40% lower than news-only subscribers. Third, they pay the most. In moving more subscribers to the bundle, our aim is to give them more everyday value and increase their willingness to pay more over time.
Now, one of the most important ways that we are getting more subscribers to pay and stay for the bundle is by connecting our family of products so that more subscribers find and engage with everything we offer across The Times. While we're early in the journey and expect much growth ahead, we're already efficiently cross-promoting our product funnels in several ways. Because news is our number one value proposition in attracting and retaining subscribers, it's our most powerful funnel for audience and subscribers for the bundle. We leverage our 50-100+ million weekly news audience and 6.9 million news-entitled subscriptions to drive engagement across Games, Cooking, Wirecutter, and soon The Athletic. In Q1 2022, this approach helped us drive a substantial volume of upsells to our all-access bundle subscription.
Going beyond News, our other products, like Games or The Athletic, are large and growing funnels in their own right, with the capacity to draw in entirely new subscribers to The Times brand and bundle. Let me share a couple of examples of what this looks like today. In News, our home screen proves how a surface can be a window into the most important news stories and the front door to the bundle in order to unlock subscriber growth and improve ARPU. If you look here, should be a pretty familiar scene for those of you who use our app. We always start with news stories like this vaccine booster piece seen here. We move to areas beyond News, like culture and lifestyle. We highlight our best newsletters and podcasts, and then display packages for Cooking, Wirecutter, Games, and soon The Athletic.
Our lifestyle products are additional entry points into The Times bundle, and a great example of this is Wordle. Since its acquisition in January this year, Wordle has brought tens of millions of new users to The Times, many of whom are engaging with other Times products and experiences. In Q1 2022, Wordle more than doubled our weekly average users for non-Wordle games, leading to our best quarter ever for new game subscribers. The Athletic, Wirecutter, and Cooking also have large and growing funnels that draw in new audiences and subscribers to The Times. Another way that we are connecting our products is by integrating our most retentive features, like gameplay. Right now in our News app, we're currently testing a new Games tab called Play to increase gameplay initiations across the bundle since, as we saw earlier, subscribers who play multiple games are more likely to retain.
We're also doing this to grow the volume of subscribers who engage with news and games and who see economic value in upselling to the bundle. In the future, we plan to test more integrated experiences between our products across the full portfolio. To that end, I'll quickly illustrate a blueprint of what this future state might look like, a future where we expand our product to better showcase the many types of value that we offer subscribers while making it much more seamless to engage across the bundle. Let's start with a familiar destination, the home screen of our news product. This remains the center of our experience, and it's where we will continue to deliver much of the powerful journalism that we've covered here today.
We're also working to build a more flexible framework, one that goes beyond the single feed, an expansion that creates more destinations to showcase to our audience the full richness and diversity of our news report and our bundle. Moving to the right, we can increase our products canvas and expose our news breadth like a new place to dive deeper on really important live storylines. We can expand the space we have for our best opinion writers or focus on the depth of our culture and lifestyle reports. Beyond news, we believe our home screen can also be a powerful asset in driving more engagement across the breadth of products in our bundle. Moving to the left, our audience can discover lifestyle and passion areas like Audio, Games, Cooking, Wirecutter, The Athletic.
In each of these examples, our goal is to increase discovery and sampling of the bundle within news with deliberate links back to each dedicated product. As you can see, we want to make it simpler and more compelling to engage with everything The New York Times has to offer, to guide subscribers across a connected family of products unlike any other, to help our subscribers make the most of every day and feel truly compelled to pay and stay. To recap, I want to leave you with three key points. First, our TAM is made up of curious, educated people, many of whom are open to The Times and willing to pay for news and other lifestyle categories. Second, product engagement is a growth driver within each product.
We know how important healthy engagement is to a healthy business in each of our subscription categories, and we have command over the product levers that drive it. We do believe that there is a lot of growth runway ahead. Then third, product engagement is also a growth driver across our bundle. Our digital bundle allows The Times to provide more everyday value to subscribers, and it drives higher engagement, retention, and ARPU. Thank you. I'll now hand it over to David to provide an overview of The Athletic.
Now please welcome to the stage Publisher of The Athletic and Wirecutter, David Perpich.
Hello. I'm excited to be talking to you here today about The Athletic. As Meredith mentioned, I've played a big role in the growing and scaling of all of our digital subscription products at The Times. I helped launch our core new subscription business. I oversaw the creation and the scaling of our Cooking and Games products. I have overseen Wirecutter almost since we've acquired it. It has helped me acquire lots of things, and I hope many of you as well. Now these experiences have given me and the leadership team here the pattern recognition to spot opportunities and a playbook to unlock them in service of our enterprise strategy. It's why we believe The Athletic can help us penetrate our TAM and achieve the financial targets we've outlined here today.
Let me jump in to provide more detail on why we feel so confident. Our plan suggests The Athletic will enable us to further penetrate our addressable market as we accelerate its growth and profitability. Today, I'm gonna cover three big topics to share why we believe in this plan. Number one, the opportunity in sports. Sports is a massive space, both domestically and internationally, with a significant organic demand engine attached to it. We see that in audience figures, search trends, and a packed calendar of significant events throughout the year. Two, the role of The Athletic. The Athletic is already a 1+ million subscriber business that differentiates itself from the rest of the market with its commitment to quality.
This, plus its quick ascent and strong rates of engagement, demonstrate both a strong product market fit as well as the fit with The New York Times as a whole. Three, our plans. We plan to bring the best of The Times' digital growth playbook to The Athletic, from optimizations within its current funnel to new subscriber growth avenues via the bundle to highly appealing digital advertising opportunities. We believe there's a clear path to meaningful growth and profitability by 2025. What this all adds up to is we believe The Athletic will enable us to achieve our enterprise-wide strategic ambitions by expanding and further penetrating our addressable market, thereby enabling The Athletic and The New York Times as a whole to grow and scale in profitability.
Let's talk more about the opportunity in sports. Sports as a category presents a highly attractive opportunity for TAM penetration for The New York Times. Our research tells us that in the U.S. there are 24 million people willing to pay for a sports journalism product, and 17 million of those are open to The Times, which is the opportunity for the bundle. We also believe there's an attractive market opportunity internationally. Approximately 27% of The Athletic subscribers are outside of the U.S. Further, in buying The Athletic, we believe we're tapping into a new subscriber base. At the time of the acquisition, we believe there were fewer than 150,000 subscribers overlapping between The Athletic and The New York Times. Search volume supports our optimism on market size and durability.
For News, Cooking, and Wirecutter, search has proven to be a very important signal for scale of audience and an important lever for reaching that audience, and we believe the same to be true for The Athletic. This chart shows Google Trends data. It suggests that interest in sports news has been as high as interest in political news over the past year, and often far exceeds interest in business, travel, and culture news. It also reinforces Meredith's earlier point about our competitively advantaged model for audience penetration, where our products have meaningful organic demand for them already. We believe The Athletic will allow us to capitalize on a previously untapped audience funnel, driving more users into The Athletic and The Times as a whole. Let's talk more about the role of The Athletic.
The Athletic provides the ideal platform for The Times to enter the sports market due to its quality, breadth, depth, and business model. When the leadership team at The Times aligned around the fact that sports provided one of the biggest opportunities for the company, The Athletic was a natural choice for us to get into the space. The Athletic shares our commitment to high-quality, independent coverage worth paying for. It provides an engine of coverage with a robust reporting operation, producing over 4,500 stories a month. These stories provide global breadth and depth across many of the world's biggest sports leagues, enabling The Athletic to position itself as an authoritative and trusted global source, all of which creates a foundation for a robust subscription offering worth paying for, which resulted in The Athletic having 1.26 million subscribers through the first quarter.
Authoritative coverage of the English Premier League and soccer provides global reach and we believe, a large opportunity for international growth. International subscribers have been a big part of The Athletic's growth. They account for approximately 27% of our subscriber base, as I've mentioned before, and this was primarily driven by the launch of coverage of the English Premier League. To give you a sense of the role that soccer plays at The Athletic, the chart on the left shows that three of the five most followed teams among subscribers of The Athletic are Liverpool, who had a crushing end to the season, for those of you who follow the Champions League or the English Premier League, as well as Manchester United and Arsenal.
If you were to look to social platforms as a sign of interest of soccer versus other sports, the chart on the right shows that the most followed teams are far and away soccer teams. The most followed team, Real Madrid, has over five times more followers compared to the most followed non-soccer team, the Los Angeles Lakers, the LeBron-led Lakers, no less. Another statistic. While last year's Super Bowl was viewed by more than 112 million television viewers and streamers according to NBCUniversal, the 2018 World Cup was viewed by more than 1 billion per FIFA. Given our traction so far and given fan interest, we believe there is a meaningful international opportunity, either through standalone subscriptions to The Athletic or making the bundle more attractive to international audiences.
The Athletic is a highly personalized product that delivers relevance and drives engagement. The product is built for real sports fans who want in-depth coverage about their teams and coverage about the leagues that their teams play within. That's why The Athletic is highly personalized. When people subscribe, they pick which teams and leagues to follow, and this determines the content they see. I really hope I'm telling you all something you already know, and that you're all loyal subscribers already. Regardless, this customization allows us to keep subscribers more engaged. The image on the right shows an illustrative fan graph. It isn't mine. If mine were up here, the most prominent teams would be Duke men's basketball, my alma mater, and the Washington football team in the NFL. Cannot bring myself to say the Washington Commanders.
I also have become a fan of the English Premier League and found myself rooting for Brentford and powerhouse Liverpool. The stats on the left provide some context about how this plays out in engagement. Fans on average follow 4.3 teams or leagues. The majority of people read about more than one team in a given month, more than one league in a given month, and read both a local and national story within a given month. It's this diversity of coverage that creates a highly engaging and personalized product worth paying for. While we see surges of interest at given times, like the beginning of the NFL season, as an example, which creates seasonality in terms of the top-of-funnel demand, the sports calendar lends itself to year-round fan engagement. The bar chart up top shows the distribution of content published throughout the year.
What you'll see is spread fairly evenly. This is driven by the fact that at any given moment, at least one team is in season, as you can see by the dark blue bars represented below. Just as importantly, the draft and training camp are important parts of coverage for sports fans, creating more news throughout the year within a given league. To put it in context, the NFL Draft is a bigger moment for The Athletic in terms of driving subscribers than the Super Bowl. The NFL Draft is a multi-month news cycle affecting all 32 teams and fan bases, driving deep fan engagement. We published over 1,000 stories related to the draft. The Super Bowl, on the other hand, is a single four-hour game affecting primarily two teams and fan bases. We published over 100 stories related to the Super Bowl.
A quick plug, if any of you wanna get a sense of our coverage, if you're NFL fans or just wanna get a feel for it, particularly around the draft, I encourage you to go download The Beast, that is its real name, and it's an official guide to potential draft picks that fans and NFL teams alike use. Okay, let's talk about our plans now. We plan to apply three levers from The Times playbook to accelerate growth and accretive profit contribution by 2025. This slide encapsulates those three levers. With audience growth, it's about growing the top of the funnel of free and registered users. With subscriber growth, it's about converting that audience from The Athletic and The New York Times into standalone Athletic subscribers or into Bundle subscribers.
With advertising revenue, it's about further monetizing the free registered and subscribed audience by launching a suite of ad products to unlock the advertising revenue opportunity. The following slides provide a double click down on each of these. We see significant opportunities to grow The Athletic's audience and gain meaningful share against the competition. The chart shows how much smaller The Athletic is than the competition. We believe that through the right execution, we should be able to jump into the top five or better, and we believe we can do so through three primary levers. First, traffic from search makes up a smaller percentage of The Athletic's audience than we see in some other products. Yet there's an extremely large audience for search, as you saw earlier. We know that search values high-quality, authoritative coverage like The Athletic.
We believe we can unlock that opportunity with the right technical and editorial search engine optimizations. Second, there is no meaningful traffic from The Times products into The Athletic yet. As Alex highlighted a few moments ago, we know that traffic from The Times home screen is a meaningful driver of traffic for our other standalone products. With Wirecutter, we saw a 35% increase in overall audience size due to a surge in readership we received by adding a Wirecutter module onto The New York Times homepage. We expect to launch The Athletic onto The Times homepage in the morning and in our social feeds in Q3 of this year, if not sooner. We believe this will lead to a meaningful increase in top-of-funnel traffic to The Athletic, while also driving engagement with our Bundle subscribers, which will be important to drive retention.
Third, right now, The Athletic mostly has a hard paywall that requires people to subscribe in order to read a story, which we believe limits its ability to build prospective subscribers at the top of the funnel. The Times, on the other hand, has had tremendous success, as you all know, with a flexible paywall approach, which Hannah will talk about more later. The flexible paywall allows us to capitalize on organic demand and build a large prospective subscriber base at the top of the funnel within our product, and where we can then apply a flexible paywall driven by machine learning and data to convert that demand into subscribers. The result has enabled The Times to grow an audience of 50 million-100 million weekly active users while successfully building a base of many millions of paying digital subscribers.
We recently began testing a flexible paywall approach at The Athletic, and we believe getting this right will be a meaningful driver of both audience growth and subscriber funnel optimization as it has been with our news product. Together, we believe all of these actions will help us meaningfully grow The Athletic and gain market share. We've run this playbook before with Wirecutter, where we approximately tripled Wirecutter's weekly active users over three years from Q1 2019 to Q1 2022. Okay. Subscribers. We plan to leverage The Athletic to increase revenue generated by the Bundle while driving The Athletic standalone subscription revenue. We see the opportunity as follows. First, New York Times subscribers. There are nearly 8 million existing subscribers who subscribe to the Bundle, News, Cooking, Games, or Wirecutter and who do not subscribe to The Athletic currently.
To capitalize on this group, we plan to add The Athletic to the Bundle. We believe this will improve retention to the Bundle overall with existing Bundle subscribers, as well as improve our ability to upsell single product subscribers into the Bundle. At the beginning of this month, we began rolling a phased rollout of providing Bundle subscribers with access to The Athletic at no additional cost and marketing this benefit to them. We plan to begin marketing it to potential future Bundle subscribers later this year, which we believe will help drive improved conversion. In addition to promoting the Bundle with The Athletic in it, we will also promote it separately, if the Bundle is not right for them. Second, the New York Times audience.
As I said earlier, and you've heard from Meredith, The Times has between 50 million and 100 million weekly active users and more in peak news moments and over 135 million registrations. Most of this audience is top of funnel, and they're not yet paying subscribers. To reach this audience, we plan to launch The Athletic on New York Times surfaces, as Alex and I have already both mentioned. We also plan to market The Athletic and the bundle to this wider audience through email promotion and using advertising opportunities within our own suite of products. Third, The Athletic's audience and subscribers.
As of the end of the first quarter, The Athletic had 1.26 million subscribers and an audience of 5 million monthly active users that we expect to grow meaningfully. We plan to leverage best practices from The Times around pricing, the flexible paywall, payflow optimization, and more to convert this growing audience, just as we've done for The Times. To improve overall retention, we plan to apply product engagement levers like newsletters, alerts, scores, live coverage, and more, and retention strategies like ML-driven price increases for subscribers on promotion, which you'll hear more about from Hannah in a bit. Collectively, we believe this will lead to meaningful subscriber revenue growth, maximizing revenue and profit for both The Athletic and The New York Times Company as a whole. Last but not least, advertising.
By launching The New York Times Company's playbook, we believe we can also unlock a significant advertising revenue stream. Today, there are no display ads. There's limited sponsorship. We don't monetize the free audience, especially during big moments of interest. We only have audio ads, and the result has been a sub-$10 million advertising business in 2021. Looking ahead, we plan to leverage The New York Times' display ad and sponsorship products. We'll be building out editorial tentpoles around key moments like the World Cup, as well as key talent like Ken Rosenthal in baseball to serve as the sound foundation for sponsorships. We believe The Athletic will enable us to tap into a new set of advertiser budgets, as well as provide additional options for current advertisers. To execute on this strategy, we brought in Seb Tomich to lead advertising at The Athletic.
Seb was previously the global head of advertising at The Times, where he built out and successfully executed the strategy. That strategy includes premium display advertising products powered by first-party data with an approach that enables large and valuable partnerships. At The Times, it's resulted in a $300 million+ digital advertising business while simultaneously allowing for a scaled subscription revenue business. All right. In conclusion, our plan suggests The Athletic will enable us to further penetrate our TAM as we accelerate growth and profitability. To recap the opportunity in sports. Sports as a category presents a highly attractive opportunity for TAM expansion and penetration globally. The role of The Athletic, the quality, depth, and breadth of The Athletic's coverage is a perfect fit with our other products and one that adds significant value in a highly personalized experience for subscribers. Three, our plans.
We have a proven playbook, and we've begun executing on the three key levers already, which we believe will make The Athletic accretive to AOP beginning in 2025. Thank you everyone. I appreciate your time.
We will now take a short break. We'll reconvene at 10:45 sharp.
Welcome back to The New York Times Investor Day. Our program will resume in five minutes.
Welcome back, everyone. Now please join me in welcoming Chief Growth Officer, Hannah Yang.
Hello, everyone. I'm so thrilled to be here with you today. My name is Hannah Yang, and I, along with my colleagues on stage with me today, am responsible for our subscription business here at The New York Times. I have been working here since we first launched the digital paywall in March of 2011 when we were told that reaching 1 million digital subscriptions ever will be a dream because only a tiny fraction of our users will ever pay for news online. Boy, were they wrong. I've been part of and leading the teams that are responsible for shattering through such expectations over and over again while putting in place a solid foundation for the next phase of growth. I will talk about that today and drill down into some of the reasons why we're so confident in our strategy and excited about the future.
I'm going to first spend some time walking you through how all of what you've heard today regarding our investments in journalism, new products, and product innovation translates to our vibrant subscription user funnels. I will highlight some of the key areas of investment that have fueled our growth and are providing a healthy runway for future growth here in the U.S. and globally. I will then speak to how the digital bundle injects strength into these funnels for getting people to subscribe and stay, which is leading to healthier economics for the business. We have a massive top of the funnel across our products. As you've heard many times today, a large share of our 50 million-100 million+ weekly active users from around the world come to us anonymously for news. With nearly 50 million using our lifestyle products in Q1.
Additionally, over 15 million engage with over 80 newsletters like The Morning and DealBook, and an average of 4 million downloaded our podcasts, like The Daily each day. Many of them have chosen to have a relationship with us, resulting in over 135 million registrations, and this number has kept growing at about 1 million new registrations a month. This growth in our users has fueled a number of subscribers, both those who pay for one product and those who are paying for more. Now, this funnel that you see here is somewhat an oversimplification of how it all works.
The news funnel is the largest and most powerful, but it is amplified by our Cooking, Games, Wirecutter, and now The Athletic funnels, each of which, as Alex and David pointed out, has its own mighty set of hooks and surfaces that draw people closer to us and across our products. I like to point out a really important dynamic that I feel makes us different, illustrated here on the slide. It is that as we've grown our audience, thanks to our amazing journalism and continued strength in search visibility, we've actually become more effective at capitalizing on that audience growth in terms of converting users to subscribers. Comparing last quarter to where we were four years ago, the number of people visiting us has almost doubled, while the number of digital subscriptions we brought in grew by 3.5 times.
Now, asking people to register and pay usually requires one to intercept that journey. As many of you know, these interruptions can cause people to abandon the journey or what we sometimes refer to as bouncing. It is a common dynamic that can make growing the top of the funnel and a subscriber base at the same time quite challenging. We've been successful at achieving this critical balance by using machine learning capabilities, conducting countless tests, and frankly, applying good judgment since we launched the pay model over ten years ago. We've gotten really smart at knowing when and where to ask people to register or pay for news and what to say at that moment that minimizes bouncing while maximizing conversion. The massive audience in news gives us a lot of running room to keep getting better at this.
We've only begun to apply these learnings and capabilities to our other products, and we believe that the opportunities there are huge. I will now go into some of the key drivers of our growth. Our success in achieving this balance has led to a giant number of registrations, as you've heard several times today. You see that inflection point after 2018 when we launched our registration model, when we require readers to register much earlier in the journey in exchange for access to additional articles. That moment has been heavily tested and optimized since then, and our growth has remained strong. Why are registrations important? For many reasons, but let me dwell on the most important ones.
First, having their email addresses allows us to reach these registered users outside of our sites and apps to bring them back through our newsletters and other emails. We do so in ways that feel relevant to them because we know their preferences, either given to us by them or derived through past behavior. Because of this, we're also able to tailor their experiences when they're back on our sites and apps, which leads them to both spend more time with us and come back more often. This rich set of data also makes our algorithmically powered paywall and our paid media marketing initiatives more effective. All of this is a reason why, on average, someone who has registered with us is about 40 times more likely to subscribe than someone who has not. 40 times.
Now, I have talked about how leveraging our data and machine learning capabilities has allowed us to maintain that essential balance between audience and conversion. I wanted to provide a bit more color as to how we're expanding these capabilities and what other important purposes they serve. To continue to drive our conversion rates, our model takes into account both user behavior, as in how much somebody's engaged with us, which signals their propensity to subscribe, along with certain aspects of the content that they're engaging with that we have found to impact this propensity. The multifaceted nature of our model gives us a lot of flexibility as to how we apply modeling to various products. Just because something worked well for News doesn't necessarily mean that it's gonna work well for Games.
For cooking, we're now working towards a model that advises which set of recipes should remain free and for which reader in order to keep the top of the funnel healthy while driving up conversion rate. We're looking at something slightly different for Wirecutter that allows us to tune between optimizing for conversion rate and optimizing for affiliate revenue at the same time. As you can see, we're taking into account the uniqueness of each product and what we've observed to be a healthy user journey for each. The other important area where we have applied machine learning effectively is when a new subscriber's promotional rate is expiring.
Most of our subscribers begin their relationship with us at a low introductory rate and are asked to pay more over time, either on the product that they are enjoying right now at the low rate or for adding more products to enrich their experience. Just like how we've applied machine learning to know when to ask people to pay from the outset, we have developed and deployed models to determine when to ask people to pay more. If we see that you have been less engaged than the norm and that you may need more time to experience us, we give you what we call a step-up price before asking you to pay full price when your intro offer is about to expire. If we see that you're well engaged, we go ahead and charge you the full price at that moment.
Currently, more than half of our subscribers go into full price when their intro offers expire, and the results are impressive. Subscribers who our model indicates are ready to transition to full price indeed retain even better than those who are assigned to the step-up price. Our model allows us to apply these rules at scale and optimize not just for subscriber retention, but also for long-term revenue. This is just one of the many things that gives us confidence in our ability to modestly grow ARPU over time without sacrificing volume growth. Now, these are just two, albeit critical points in our commercial flow where we have applied machine learning to fuel our growth. We're just getting started.
Not only is there so much opportunity to apply our capabilities across products, there are a multitude of moments in each funnel and on each surface where we think machine learning would be effective, where we look to balance a key metric and its counter-metric. We plan to apply machine learning to many of these moments, beginning with those we believe to be the most impactful, and we believe that the compounding effect of all these applications will be quite powerful. The strength of our journalism, all the improvements to our product experience that Alex took you through, and the optimizations to our funnels I mentioned, all have made it more and more likely for someone who comes to us to subscribe.
These investments have helped propel our organic growth, enabling us to increase digital subscription starts more than threefold, as I mentioned before, much faster than we've grown our total marketing spend. We've also been able to maintain a good efficiency in our media spend throughout this period. In addition to the fact that folks coming to us through paid ads now encounter a stickier funnel, we've improved our data capabilities that allow us to better optimize paid channels and spend. We've also adopted a more holistic approach that looks at marketing profitability at an enterprise pan-product level, allowing us to put our money on the parts of the market that are most profitable at any given moment.
Thus, though only a small portion of our subscription starts comes from paid marketing, we've gotten more sophisticated in knowing when and where to spend those dollars to get someone profitably to subscribe, period, regardless of which product. Everything I just talked about so far has been primarily about driving growth of single product subscriptions. What's truly exciting about the next phase in our journey is in applying this engine of growth towards the bundle. The bundle essentially injects fuel into all the levers that I and others today have described. Since 2019, the number of subscribers who subscribe to more than one product has doubled, and this is without us doing much proactively to drive them towards this behavior. We began to do that at the end of last year, and the result has been quite remarkable.
In just one quarter, we tripled the percentage of subscribers who purchased the bundle, with most of them coming in at a higher price than on a single product. We achieved this while maintaining our strong conversion rate and without spending incremental marketing dollars. In fact, we've improved our conversion rate on some surfaces. Now, we know that higher prices are almost inversely correlated with conversion rate. The fact that they move together like this shows us that there's a clear demand for the bundle. People are eager to experience all that The Times has to offer. It's not surprising that the bundle drives a higher average revenue per user. The list price of a single product can range from $5-$17 every four weeks, while the bundle costs $25.
This range, which is wider when you include our promotional prices, provides a path for us to move a subscriber up the value chain as experience more value over time. Right now, a sample path for someone to start their subscription at $1 a week on news, move up to full price, add a Games, Cooking, or Wirecutter subscription, and then upgrade to the bundle. Our plan is to be proactive and data-driven in constructing a path for each subscriber that feels right to them in that moment, and hence increase their lifetime value and overall ARPU over time. We view bundle subscribers' higher levels of engagement and retention as key contributors to higher lifetime value. Compared to those who subscribe to just news, for example, the percentage of our bundle subscribers that engage with our products in a given week is 10%-20% points higher.
Much of this is due to the interplay across products that Alex talked about earlier. Our powerful surfaces like the news homepage and the morning newsletter have been successful at driving our subscribers to experience content across our portfolio. We believe that this has led them to stay longer with us. As mentioned before, their churn is approximately 40% lower than that of those who subscribe to just news. We've only just started to flex our creative muscles and targeting capabilities to drive better or an awareness of the bundle. We have an abundance of surfaces in our customer's journey where we can showcase the bundle. As I mentioned, we have done so only within the news funnel, and even with just that, the portion of new subscribers choosing the bundle in a given week tripled, as I said, in the first quarter.
We plan to do this in the Cooking, Games, Wirecutter, and The Athletic funnels, all of which attract a robust number of prospects every single day. Each is unique, and we plan to test into where, when, and how to present the bundle that maximizes both the volume of new subscribers we bring in and the revenue we get from them. For example, for The Athletic, it may be best to put the bundle up against The Athletic subscription at the very beginning of the checkout flow in certain countries. For Cooking, it may be best to ask the customer to add it after they have just completed its purchase of a Cooking subscription. We will also apply such sophisticated testing to the 6.5 million subscribers who are paying for just one product right now.
Many of them have not yet even been asked to consider the bundle, and recent testing shows strong signals that a good portion of them are willing to pay for it. They just needed to be asked. Turning to my last slide, I'd like to leave you with a couple of concluding points. We have spent years optimizing and improving our subscriber growth funnels, and we believe that this work has paved the way for the next phase of our growth while creating meaningful value for both our subscribers and The Times along the way. We've grown our reach and audience and expanded what we offer. We have actually gotten more efficient at converting that audience growth into subscribers, and that is especially exciting given the bundle and the opportunity it presents for the future.
You heard me say several times today throughout my presentation phrases like just getting started. We truly believe that just as we've met and exceeded expectations in the past, we're poised to do it again. I've also used the word balance a lot. Much of what we do is about knowing how to balance what can sometimes be competing metrics to drive healthy, profitable growth for the business, audience, and conversion rate. Subscriber volume, revenue per user, single product messaging, bundle messaging. The list goes on and on. I'd like to end by pointing out the most important balance that we strive for here at The New York Times, which is to build a thriving business while ensuring that our journalism continues to flourish. It is our responsibility to make sure that these two ambitions move hand in hand.
This purpose is shared by the hundreds of engineers, data scientists, marketers, product managers, designers, and others who come to work here with me every single day, and I can't think of a more powerful propellant of growth than that. Thank you so much for spending time with me today, and I will now hand it off over to Roland.
Good morning. Please welcome Chief Financial Officer, Roland Caputo.
Good morning. I'm Roland Caputo, Executive Vice President and Chief Financial Officer. I've been in this role for over four years now, focused on balancing investment for long-term growth against the delivery of nearer term results in order to drive overall shareholder value. A 36-year veteran of The Times, having spent roughly half of those years in financial roles and the other half in various operating roles, I've had a front row seat to most of the biggest business decisions over the last three decades, including introducing color to the newspaper in 1993, charging for access to our digital news product in 2011, embarking on the digital-first, subscription-first strategy we enacted in 2015, and now the strategy to become the essential subscription for every curious English-speaking person seeking to understand and engage with the world.
I've never been more excited about the prospects for this company than I am right now. You've heard from Meredith, A.G., Alex, David, and Hannah. I will connect that with our financial metrics to demonstrate how this company has already successfully transformed from a print-dominant, advertising-dependent business into a digital-first, subscription-first leader with healthy cash flow generation and a strong balance sheet that has consistently delivered on its promises. I will describe how the next phase of this digitally-focused strategy is expected to drive attractive revenue and AOP growth, resulting in margin improvement over the midterm. I will also describe our balanced approach to capital allocation, including the expectations around returning capital to shareholders. I'd like to start by highlighting how some of the dramatic changes we've made over the last five years resulted in the successful transformation of the underlying business.
There were two major elements to this transformation as it pertains to our revenues. The first one being the pivot from print to digital, and the second and equally important element being a change from deriving the majority of our revenues from advertising to deriving the majority of our revenues from our subscription products. The motivation behind the first element of the transformation is rather obvious as it reflects aligning the business with the long-term trend in media consumption patterns. Let me take a moment to address the second, from advertising revenue first to subscriber revenue first. Now this change in focus provided us with a few significant advantages. It made the company's biggest and fastest-growing revenue stream one that is of a recurring nature and therefore more predictable and durable.
It also aligned the entire organization around the reader, including our downstream premium advertising business, which is increasingly based on first-party data-powered offerings. As a result of our actions from 2016 through 2021, subscriptions, revenues, and profit all increased. Total subscriptions grew 25% over this period to 8.8 million, with the digital-only portion growing at a 34% CAGR to 8 million. The growth in digital subscriptions helped power both of the elements of the transformation. Digital subscription plus digital advertising revenues together grew from 30% of all subscription and advertising revenues, including print in 2016 to almost 60% in 2021. The subscription share of these digital revenues grew to over 70% from 53% over the same period.
The strong pivots from print to digital and from advertising to subscription ensured that overall revenue growth grew at a 6% CAGR despite significant reduction in market demand for print advertising and powered digital subscription plus digital advertising revenue to a combined 20% compound annual growth rate. Over this five-year period, adjusted operating profit grew at a compound average rate of 8%, and we generated nearly $800 million in free cash flow. We grew these profits while continuing to invest in journalism, product development, and marketing, thus widening our competitive advantage. As we transform the business and with it the P&L, we also were transforming our balance sheet. Cash, net of debt, grew from less than $500 million in 2016 to over $1 billion by the end of 2021.
Strong operating cash flows allowed us to pay down debt while building cash, and the strategic management of our qualified pension plans helped reduce these liabilities by more than $300 million and more than fully fund the plans. The strong cash flows generated over this period also enabled us to make the all-cash acquisition of The Athletic in February of this year. This strong balance sheet positions us well to continue targeting opportunistic acquisitions and weather macroeconomic headwinds. Now, in the midst of transforming the business, we set two long-term targets. The first in 2015 when we set a goal to double digital revenue by 2020, and then in 2019 when we set a goal of 10 million subscriptions by 2025. Did we deliver? Yes, indeed.
We had doubled digital revenue by 2019 over a year early, and we crossed the 10 million subscription mark earlier this year, more than three years early, with the acquisition of The Athletic. Back in February, we set the first target for the next phase of our strategy to achieve 15 million subscribers by 2027. As you have had already heard Meredith announce, today we are setting additional targets, delivering 9%-12% compound annual growth rate in AOP over the midterm, which we're defining as the next three to five years beginning in 2022, and returning 25%-50% of free cash flow to investors. We also expect to improve consolidated profit margins starting in 2023. We're confident in our ability to grow AOP in this range.
You've heard Meredith, Alex, David, and Hannah explain our strategy and how we believe its execution will lead to healthy increases in digital subscription revenue, our primary revenue growth stream, driven both by growing subscribers and modestly improving ARPU. Let me take a moment to highlight some of the other sources of attractive and sustainable revenue in our multi-stream portfolio, beginning with our secondary revenue driver, digital advertising, which Meredith also touched on briefly. Over the last several years, we have built out a suite of high-margin, first-party data-powered digital advertising products. These products represented approximately 25% of digital advertising revenues in Q1, and their sales more than doubled from the previous year. We've built out a portfolio of popular audio shows that have also been key to propelling growth in digital ad revenues.
You've heard from David how excited we are to expand on this by building out the advertising business at The Athletic with offerings that are expected to both draw in a new set of advertisers and attract more dollars from current advertisers. These two major sources of revenue are augmented by affiliate revenue provided by Wirecutter, the selective licensing of our IP, revenues generated by ownership of the headquarters building, and our College Point commercial printing work. With growth in these revenues, we expect to see increased leverage in the digital business as expense growth is expected to moderate despite continued investment in the key areas of journalism and product development intended to expand our moat against the competition.
Along with increase in dollar AOP, we expect consolidated AOP margins to improve over the period, though there is a potential for some variability due to the uneven nature of our advertising businesses, and we expect strong free cash flow generation. Finally, we plan to follow a disciplined approach to the return of capital to shareholders, which I will detail in a few moments. First, let's get underneath the drivers that support the 9%-12% AOP CAGR target. We expect digital revenues to continue growing throughout the midterm, with subscription revenue growing faster and more consistently over the timeframe than advertising, which is by its nature, more variable. Print revenues are expected to continue their slow decline, with home delivery subscription revenue holding up better than print advertising revenue over the timeframe. Overall cost growth is expected to moderate.
Investment into journalism and product development will continue, but for product development in particular, we expect to be able to decelerate the pace of growth over the time frame. Hannah has already described how subscriber acquisition costs have improved by over 50% compared to 2018 due to investments we have made in machine learning and reader registration, just to name a few. We also see the opportunity to slow the growth of our marketing spend further beginning in the back half of this year as investments that you've heard Alex describe begin to take hold, as we expect them to make a real difference in readers engaging with and accruing value from our digital products. Direct variable print costs are expected to ramp down, but not at a pace sufficient to fully offset continuing print revenue losses.
Now we factored into our mid-term targets a somewhat lower level of economic activity and some inflationary pressure consistent with recent industry commentary. However, a prolonged recessionary environment or accelerating or persistent inflationary pressure could impact our ability to achieve our AOP target. Now, taken all together, we expect these revenue and expense dynamics to drive 9%-12% compound annual growth in AOP, with 2022 as the base year. For 2022, we continue to expect to grow adjusted operating profit in our core business before the impact of The Athletic, though we do not expect that growth to entirely offset the dilutive impact of The Athletic on a consolidated basis. Let me make two points before leaving the topic of dynamics supporting our AOP growth targets.
You've heard David describe the great potential we see in The Athletic and how we've begun to apply the playbook for subscriber growth that has been honed over the years at The Times, as well as how we believe The Athletic to be a critical component of our bundled subscription offering and the confidence we have in our ability to build out its advertising business. As this plays out, consistent with our previous guidance, we expect losses at The Athletic to moderate and the business to be accretive to consolidated AOP beginning in 2025. Now turning to the print newspaper. We manage the print portion of our operations with an eye towards cash flow, as exemplified by our premium pricing strategy and our ability to utilize spare production capacity, commercially printing other publications. We expect print to be cash generative well beyond our midterm guidance range.
Now, it's also important to note that the 9%-12% target CAGR for AOP accounts for print being in long-term decline and assumes that print provides a drag of approximately $30 million per year on gross profit growth. That equates to approximately 200 basis point-300 basis points of drag that is built into the 9%-12% AOP compound annual growth assumption. In other words, our midterm target for the non-print portions of the business is higher than the 9%-12% adjusted operating profit CAGR. Unlike some other subscription businesses, this is one that generates cash. The costs associated with the creation of approximately 150 new pieces of content every day are reflected in our operating expenses in the period they occur.
From 2016 through 2021, the business generated nearly $800 million in free cash flow, while also funding a one-time $120 million discretionary pension contribution in 2017 and more than $300 million in cumulative capital expenditures. Annual cash flow grew from just under $75 million in 2016 to an average of approximately $250 million across 2020 and 2021. Between 2016 and 2021, we returned 26% of this free cash flow to shareholders through a quarterly dividend, which we have increased annually since 2019.
Our already strong cash position and the cash generative nature of our business model gives the company the flexibility to reinvest in the business organically, pay a quarterly dividend, repurchase shares, and consider making acquisitions. We believe taking a balanced approach to capital allocation that includes all four of these options will maximize long-term value for all shareholders, and we're now providing targets for capital return. We expect to return 25%-50% of free cash flow to shareholders in the form of dividends and share repurchases over the midterm. As you've already heard, we expect to continue organic investment into the business to propel growth and extend our competitive advantages. We will also continue to evaluate the market for potential targeted acquisitions in service of expanding and penetrating our TAM by delivering even more value to subscribers.
I wanna be clear: any target must make sense strategically, be compatible with The New York Times brand, be synergistic or supportive of the core business, and provide expected returns that are accretive on a risk-adjusted basis exceeding our weighted cost of capital. The Athletic, Wirecutter, and Wordle are great examples of acquisitions that met all of these criteria. That said, we are currently focused on the acquisitions that we've already made. Let me leave you with a couple of key thoughts. This management team has transformed The Times into a proven leader in digital news and information that is well-positioned to continue on the successful path that's been blazed. We believe that the combination of subscriber scale, favorable unit economics, and multi-revenue business model will allow for increasing leverage even while continuing to invest for future growth.
With continuing cash flows and a healthy balance sheet, the foundation we have built is strong, allowing for consistent capital return while also supporting disciplined approach to M&A strategy. Finally, I'll remind you one more time, we have a proven track record of executing on and achieving the targets we have established, and we take them very seriously. Now I'd like to turn it back to Harlan Toplitzky.
Thank you. We'll begin the question and answer session in a moment. For those of you in the audience with a question, please form a line at one of the two microphones being placed in the aisles, and be sure to state your name and firm before asking your question. If you're participating via webcast, please submit your question by clicking on the Ask a Question link at the top right corner of the webcast portal. That we can address as many questions as possible, please limit yourself to one question and one follow-up question. You're welcome to re-queue if you have additional questions. Now, please welcome the presenters back to the stage.
As we're sitting down, you all met. You obviously know Roland. You met Hannah, you met David, you met Alex. I wanna formally introduce Lisa Howard, who's been on the job as head of advertising for, like, three months, four months. Just since the beginning of the year. Lisa joined The Times six and half years ago. I hired her. She came to work in the ad business, and she worked right under Seb Tomich, who is the head of advertising after me, who we have just sent over. I think David referenced him to be the chief commercial officer of The Athletic. Welcome, Lisa, and she's here to help answer ad questions.
Thank you.
Harlan, over to you, which I think means over to all of you.
I think we'll start with Vasily Karasyov from Cannonball Research. Go ahead, Vasily.
Yes. Hi. For the team, you made the point that you have so much engagement, 50 million-100 million weekly average users, right? How you will convert them and what a good job you're doing, which you are. I wonder if your research also asked them, those who do not convert, those who do not register, what it is that stops them from falling far, far into the funnel, and what's your plan to address that? Thanks.
It's great. Vasily, I wanna say it's so nice to see you in person.
Yeah, you too.
I say that to everybody. I think the way to begin an answer to that is to suggest you know how the access model works and how much sort of friction and how open the model is. Sometimes it's tighter, sometimes it's more open. Hannah, I may go to you on that question and ask you to talk a little bit about how we think about that and why some people don't subscribe in the moment.
Yeah. I think the funnel that I described earlier today is quite fluid. I think we have a lot of people who are engaging with us without paying us, and we have a lot of people who are paying us right now, too. I think that it's sort of a fluid funnel where people are going in and out. I think that the 100 million number that you saw really indicates the demand for our content. Whether they're paying us now or later, it's not something that we think about too often because I think at some point that they will.
Thank you. I think we'll take the next question from Ben Swinburne from Morgan Stanley.
Thank you. Good morning. Kind of a product question. You guys talked about sort of integrating some of the other apps into the News app, bringing The Athletic in a little bit. How do you think about that balance over time? Because as you expand the portfolio, you're talking about, I would think more infrastructure, more cost for each different app, each different business line versus bringing them into a single user experience. Because it seems like it's an interesting opportunity, interesting tension in the business. I'll just ask my follow-up to Roland Caputo, just on expenses. You mentioned inflation. Anything in particular you would highlight on the P&L that you're thinking about as you maybe adjusted up your costs and down your margin targets over the last couple of months? Thanks.
Yeah, both great questions, and great to see you in person, Ben. I promise I'll stop doing that. Let me just go back to something I said in my prepared remarks, and then Alex, I may ask you to talk about how the products become more connected. You know, the promise of the whole New York Times, the bundle thesis is predicated on having not just the leading news products, but having real leadership in the other products as well.
I'd say it is both important that those products in and of themselves are able to attract an audience, you know, have a rich funnel, be compelling in their own right to be something of value, and we think it is more efficient, and frankly, will be appealing to a wider audience to put them together. Alex, why don't you talk a little more about how we do that? My short answer would be both of those things, Matt.
Yeah. I'll just come in behind Meredith and say that we really want to make sure that each of our products within their respective categories are truly exceptional at bringing in more people within our TAM. Then to Meredith's point, we wanna leverage our best funnels in news and across, as you saw with Wordle, with cooking, with The Athletic. We wanna make sure that we can cross-promote discovery. The underlying kind of platform and infrastructure question, we do share a lot of those systems already, and the more we invest in commerce and identity, publishing, we will start to see more and more efficiency across the bundle. That is happening under the hood, even while we maintain distinct destinations for our products while getting more people to discover the bundle. They do work together. It's good tension.
Hannah talked about healthy tension, and that's, I think, a good example of that.
You also heard each of us say a version of tens of millions of people come every week to news, and as of the first quarter, I think the number was close to 50 million across the lifestyle products. They're each engines for the other, and particularly news is, and that's how we get to the vast majority of our subscriber starts coming organically. Just the promotion power, I think David talked about this, our ability to have the news funnel promote The Athletic and so on is enormous. Roland, why don't you talk about how we've kind of considered the interesting macroeconomic environment.
Sure. Thanks for the inflation question, Ben. I think that's on a lot of people's minds right now. We think about it in two categories. One category would be inflation on things like raw materials, and that type of inflation tends to manifest itself mostly in our print business, which, you know, as you know, is a much smaller part of our business than it once was. That is not of significant concern to us in the long term. The other category I'd put in the category of wage inflation. You know, we're a talent-driven business here, so we do expect to pay more for talent than we have in the past, and we've built some of that into our forecast that we use to inform the targets that we shared with you all today.
Thank you. I'm gonna take one from the online audience, from Doug Arthur at Huber Research, who asks, "Regarding the potential TAM, how do you frame your coverage of business, global capital markets, and finance writ large? Is that a potential area of investment slash acquisition, or do you believe you are currently well-positioned?
It's a great question, and good morning, Doug. It feels like you're with us. If you think about the slide that I presented about our sort of unique engine for harnessing market demand, there are a number, at least a few stories there that sort of get at macroeconomics and get at what's happening in business. I would say we feel good about our coverage of business and the broader economy, but in every part of our newsroom, there's always more opportunity to see even within the framework of the current investment we've made, to see that we cover things in increasingly dominant ways. I would say business is an area that only becomes more interesting.
As it does, I suspect that will be an area where we'll continue to apply the talent we have. You may remember this, Doug. We did a very big expansion in business, I wanna say in 2017 or 2018. The Times was, you know, very instrumental in the coverage that ultimately yielded the change in leadership in Uber, and there are myriad examples like that, and since then. You'll see us continuing to play a very big role, particularly on the tech story.
Great. Thank you. We'll take the next question from David Karnovsky from JPMorgan.
Thanks. Since it's included in the forecast, I'm wondering if you could talk about what you've assumed on the macro side as it pertains to revenue. Obviously how it impacts advertising, but then possible recession, how that would impact subscription since the model, I guess, hasn't been tested in a traditional recession. It was tested obviously in COVID-19. Then, Roland, you talked about the slowdown potentially in product development costs. I'm wondering if you could talk on the cost of revenue side about journalism specifically and how you think about what's necessary to kind of maintain on the journalism side to get to the kind of growth rates you're thinking about for revenue.
Yeah. Great. Why don't I start on how we thought about the macroeconomic dynamics in the ad business specifically? I've worked in and around ad businesses for a long time, as have Roland and Lisa, and I think we would all say that, you know, some kind of macroeconomic slowdown does tend to affect an ad business in the moment. It's been our experience here that the business always comes back. You know, and unless you're dealing with a moment of sort of structural decline that gets exacerbated by that, it, you know, tends to come back quite strongly. I would say in 2008, 2009, and even at the beginning of the pandemic, we were still quite exposed on print and dealing with some of the structural declines.
We're optimistic that we have the right strategy in digital advertising, that we've got an incredibly competitive product set, certainly vis-à-vis other publishers, and that we're gonna keep adding to that based on the subscription strategy we described. You know, to me, that looks like even if there's, you know, a near-term event or Roland and I both referred to the potential for some slowdown based on what we're, you know, just the mood music, it does tend to come back pretty strongly. I think the second part of your question is what do we expect and what have we assumed in subscriptions. You know, the company's 171 years old, and we've had a subscription business for, like, something close to that long. I'll say in general, it actually goes a bit back to Doug Arthur's question.
You know, The Times is known and you know drives a big audience around economics coverage, particularly when the world gets more dynamic. So far, it has been our experience that a recession doesn't really you know past recessions have not really had you know very significant effect on people wanting to subscribe and pay for their subscriptions. Certainly in 2020, we saw you know huge interest in people buying subscriptions to The Times. We saw you know we've had a very good track record of being able to bring people in at introductory prices, even at that time, and then get them to take a higher price as they engage more. Roland, I don't know if you'd add anything to that.
That is, I think the track record is pretty long on the subscription side that changes in the macroeconomic environment did not have significant negative effects on our subscription business. I'll point back to, for those of you who remember it, the 2008, 2009 Great Recession, and that affected the ad business. But on the home delivery subscription side, we actually were able to pass through not one, but two price increases to our subscribers at that point without having a significant effect on churn. It just goes to demand for our news product in times of uncertainty, you know, is gonna go up rather than go down. David, you had another question.
The question was on how you're thinking about journalism cost.
Okay.
You know, the way we think about it is, and I've said this many times on earnings calls and it's the same answer, which is we think that we continue to modestly invest in journalism. You know, good times, bad times, that is our model. That's the generator of all the value. If you kinda look at the percent increases, they're rather modest, but they're steady, consistent, and we would expect to continue that through the medium term, really regardless.
Thanks.
Thanks.
Take another one from online. If The Athletic is about a $50 million headwind in 2022, that should go to zero and maybe positive, and that's included in the 9%-12%, 3%-5% AOP CAGR, doesn't that imply 400 basis points of tailwind CAGR, and thus the core business is being guided to 5%-8% AOP CAGR?
My short answer is I think we're implying something more optimistic about the core business. Roland, why don't I ask you to give the-
Yeah, sure.
the more lengthy answer to that?
I think a couple of things I'll say to that. One is just in terms of The Athletic, we expect to make some progress this year versus the losses that we shared on earnings call in February related to 2021. We're also calculating our 9%-12% AOP CAGR with 2022 as the base year. Take that into account. The second thing is, Meredith and I both touched on this, but I'll go a slight level deeper. The 200-300 basis point drag that we think that print affects that 9%-12% CAGR, have to think about the dynamic of that over time.
Our expectation is that as the revenue continues its slow decline, we don't think we can take costs out at the same rate the next five years that we did the prior five years. When you kinda put all of that together, you have to take the 9%-12% and add in, you know, say, 300 basis points and take into consideration that we did not have quite that level of drag in the business the prior five years. Taken all together, the rest of the business is growing at a pretty healthy rate. The expectation is to grow at a pretty healthy rate in the double digits over the next five years.
Thank you. I'll take another question from online. The question essentially summarizes to, it's been a couple of months since you've acquired The Athletic. What have you learned and how are things going?
I'm just gonna go right to David on that because you're learning a ton and you should share it.
Sure. Well, we're just as optimistic as we were, the day we bought it. The product, It's amazing, the team behind it is amazing. The thing that's held true to—from the moment we bought it was that the areas where The Times can truly make a difference, we are seeing with full clarity now. I talked about those three areas that The Times is gonna be leaning in. Audience growth, subscriber growth, and advertising revenue growth. Anyways, we are just as confident in our plans to reach profitability by 2024-2025 as we were the day we bought it.
Great. Thank you. I have another online question from. It's an ARPU question, and it does the midterm AOP target CAGR of 9%-12% announced today assume any changes in product prices over the next three to five years?
Yeah. I'll just start and repeat something I said in my prepared remarks, which is the AOP CAGR target assumes real subscriber growth. It assumes moderate ARPU expansion and some augmentation from digital advertising. Roland, why don't you talk about what's actually. You know, what we're assuming in that plan.
Certainly. It's, I think, helpful to unpack this, the ARPU story a little bit. You heard us discuss a lot, our desire and our belief that we can move a lot of folks, to the bundle, those folks who today subscribe, but also, folks that are new to The Times. That'll have, obviously, an accretive effect on ARPU, as we think we'll probably roll out a very similar, pricing structure to that that we have on News, but probably at a 50% premium. We also will get a tailwind from continued success, stepping people up from their promotional prices up to higher prices and up to full price.
I think we've mentioned before, on calls that currently, we step up greater than 50% of folks at the end of their promotion directly to full price. Now, it's important to note that we expect steady demand and strong demand through the midterm. As referenced, you know, I'll reference the target for our 15 million subscriber target. We expect those folks to come on promotion, so that's gonna have a bit of a dilutive effect. With The Athletic, we've added a fourth product that is list priced, you know, somewhat below that of News. So that mix effect will dilute it a bit. We do not have an outright price increase, list price increase, built into our forecast.
Thank you. I'll take the next question from the audience, from Kannan Venkateshwar from Barclays.
You got my name right, Harlan. That's great. Maybe I could just follow up on that last point, you know, on pricing. If you think about, you know, the last maybe decade or so, in general, there's been a negative correlation between sub growth and price, and that's largely because of the promotional structure. To some extent, you know, now we are implicitly, you know, expecting sub growth with pricing, and part of it could be bundling. When we look at all the other media products right now, I mean, they seem to be in the opposite phase, especially for market leaders like Netflix and so on, who are moving to advertising away from pricing growth. What gives you the confidence that you'll get that pricing strength, in this market, especially in an inflationary environment?
Yep, great question, Kannan. I'll start with the last part of my last answer. We don't have outright price increases built in. We expect that we're gonna get the accretive accretion on ARPU, and as we've described it as modest, really about moving people from single product or multi-product up to a bundle that has a heck of a lot more value at a price that we expect to be at a 50% premium. They're gonna get a lot more from it. We'll continue, you know, to invest in and continue building the value in that. Just the continuation of the folks who are already subscribers who are on promotional rates.
We believe that the machine learning algorithms that we have that pick the right people who actually have accrued a lot of value in the product and pick those people to step them up in pricing. We believe that'll continue to be successful. I would think about, you know, longer term ARPU. I'd pick two points that argue the opposite, I think, of what you're saying. One is our home delivery subscribers have been paying higher and higher prices every year for many, many years. So that's one data point. The other data point is we rolled out a price increase to our 10-year digital subscribers beginning in, I believe it was early 2020, and that was very successful. We were really happy with the results. What does that mean?
It means that we didn't get a lot of price increase churn from that. Don't have that last piece. We don't have that built in. Over the longer term, I think all sort of signals are more towards we should be able to grab more ARPU over the long term than we've actually built into our midterm assumptions.
Kannan, I'm gonna add one beat to that, which is if you listen closely to Hannah and David and Alex's presentation, they are all about how we are kind of pounding more value into these products, which I actually think is quite an important piece of the equation, and how we're getting better and better at the levers to unlock that value. And Alex's presentation in particular was about how many levers there are and how you begin to use them. If you're a subscriber to any of the individual products or to the bundle, but even just go with the individual products to start, that product is getting more valuable every passing, you know, quarter, half year.
Got it. Can I follow up on SAC?
Go ahead.
One of the benchmarks, I think in one of the slides, was a 50% reduction in SAC versus 2019 levels. The last three years have also been really unusual with respect to marketing spend. You had a lot of events. I mean, you had the elections, COVID, war. I mean, there's been a lot, which did not require the product to be marketed as aggressively. Could you just help us understand what's assumed for SAC going forward? I mean, are we talking about the 2021 base maybe becoming the new normal, or does it go up from here? Thanks.
Yeah. I'll start that, and then I think Roland and potentially Hannah should weigh in as well. You know, Roland and I have both been saying now, you know, for six months, a year, some length of time, and it has always been our thesis that the product, the digital product experience and the journalism begin to do more of the work. You're pointing as well to the news cycle. I wanna suggest that we get better and better at harnessing the demand of the news cycle and actually compelling people to subscribe and to stay and ultimately to pay more, and that's what you're hearing us describe when we talk about the marketing engine getting more efficient. You're gonna see, we've described this already. You're gonna begin to see that in the back half of the year.
Roland, you should add.
Yeah, I think for folks that may be newer to the story, it's important to note that the vast majority of our new subscribers come to us organically, so we're not driving all of that conversion through paid media. As a matter of fact, we're driving the minority of it through paid media, which allows us, when combined with what Meredith just described as the product gets better, the engagement levels get better, we get better at all that, the machine learning gets better. We don't think that SAC is going to increase.
I'm gonna add one more beat, which is we've been asked now for years about doesn't the news cycle slow down? Is there some terminal, you know, end state of it just falls off? What we keep finding is that world is getting more complex. There are many, many consequential things happening, and we've built a coverage engine. Again, it goes a little bit back to Doug's question. We have built a coverage engine that goes where the story goes. A.G. described our effort in very expansive manner of covering the pandemic and being of value to people. You know, I don't think he would have said six months before that, The New York Times is the preeminent place I think of for infectious disease cove rage.
In fact, it turns out when that becomes the giant story, we're able to mobilize to be that place. I just think that's gonna go on as long as, you know, we've got society and things happening.
Thank you.
Next question comes from online. It's a two-part question. What gives you confidence in your subscriber target? Of your 135 million addressable market, isn't there a large group of that that ideologically is not suited for our product?
Yeah. I'll start that, and if my colleagues wanna add anything, I'll welcome them to. I'd say everything we've talked about for the last two and a half hours is what gives us confidence in our subscriber target, and if I were gonna be a little more precise about it, I'd say subscriber behavior, non-subscribing audience behavior, all the research we've amassed, collected, done suggests to us there is plenty of running room left in the model, plenty. And that we believe we have growth ahead of us in news and beyond news, domestically and internationally, and we've really tried to show that today. I'm gonna point to one fact that I think is quite important, which Hannah, I think we both said a version of. You said it in more detail.
The rate at which we converted the last million subscribers who came on to pay was as high as the rate for the million prior. I think that tells you something about where we are in the penetration curve. Still, we believe, you know, early innings of this model that we believe we can bring to scale in digital. That was the first part of the question. Gonna have to make you repeat the second. I don't know, Roland or Hannah, if you wanna add anything to that.
I agree with all that.
Okay. I think there was a second part of the question.
It's the ideology of
From you, Harlan.
It was from me.
Yes.
$135 million TAM. Is there a section of that group that from an ideological standpoint, perhaps not inclined to subscribe to a New York Times reader?
Yeah. Let me say, both A.G. and I pointed to a stat that I think answers that question, which is in really big news moments, at the height of the pandemic, for example, there was a period of time where one in two adult Americans were coming to The New York Times. I wanna say that whatever you think about the array of coverage, and I could go on and on, I think A.G. did a nice job of describing the lengths we go to to see that that coverage is independent. Even with that, I wanna say we have plenty of signal in audience behavior that suggests to us there's real running room to keep growing subscribers in news and beyond.
We also have, you know, like a fast widening product set in big spaces that a lot of people care about. David's, you know, main point, I believe the main point I wanted David to land, and I think he did a nice job doing this, is the opportunity in sports is enormous, and just like on NFL fandom alone, we think there's a real opportunity. You add Premier League and soccer generally to that, we've got a big opportunity to be of value to people. Alex touched on this a little bit. I mean, Wordle has just shown us that, you know, that there's all kinds of things The New York Times can do to drive audience and interest, and we're confident we'll be able to do that. Oh, I'm sorry. Let me add one more beat.
Survey research says half the TAM is open to The New York Times, half the TAM for at least one product, and a third of the TAM for two products.
Great. Thank you. One last question from the online audience. What does the advertising revenue trajectory look like over the midterm?
I'll repeat what I said in my prepared remarks. Roland, you should add color. We expect advertising to be a growth business in the midterm. We expect it to be a growth business in the long term, obviously driven by digital advertising. We really like our strategy now. Roland, feel free to add to that.
The only thing I'd add to that is that we run it in a really high margin fashion way. That's our focus. Margin will travel along with revenue there, and agree with what Meredith said. We believe that to be a growth business for us going forward. There'll be some variability. We talked a little bit about what happens with the macroeconomic environment.
Absolutely.
Coming out of sort of recessionary periods, the history says there's robust growth on the digital side. If there's any drop, we'll expect a robust bounce back and then growth from there.
Thank you. So we have time for one quick last question we'll take from the audience. You're getting in just under the wire. It's Doug Arthur from. Go ahead, Doug Arthur.
Yeah. Doug Arthur from Langfrist in Germany. I have a question. Could you please explain a little more about the first-party data strategy in advertising and how you balance that basically with your subscription-first strategy?
I'm so glad you asked this. Lisa, why don't you take that one?
Hi. Yes. First-party data's been a real unlock for us, and I think it's built on this foundation of registrations, right? 135 million now, and so that's only made our data more powerful, and that's made our ads more attractive to the market and more performant for the market, so it's a huge focus for us. We were early to do it. We started that work in 2017, 2018. Now it's quite mature, and we're arguably the most conservative in terms of protecting our readers in the industry. So we're very proud of what we've built on this proprietary first-party data platform and gonna continue to build on that.
I'll just say on conservative, I think what Lisa's referring to is we're quite privacy forward, and that in addition to the performant nature of the products, has real appeal to marketers, and as we widen the product set, we get that much more signal. So thank you.
Exactly.
Harlan, back to you.
We're now out of time with the Q&A session. Thank you, everyone, for your questions. I'll turn it back over to Meredith for some quick closing remarks.
Great. I wanna thank all of my colleagues and for that great Q&A. I wanna say to all of you, thank you so much for being an attentive audience now for, I think, more than a couple hours. We really appreciate this. I'm gonna close with something Roland said. I have not been here quite as long as Roland, but I wanna reiterate the idea that for my, you know, almost a decade of being here, and I think my colleagues would say the same. I have never been more optimistic and excited about the future of this business as I am today. It's a huge part of why we chose to do this now.
We spent the time with you today detailing our value creation thesis and our plans to drive growth and profitability for many years to come. We believe, and I hope we showed you how much we believe, we have tremendous potential to attract and retain a larger subscriber base driven by a model that we think is fundamentally competitively advantaged and invested in to be that way, and we expect that model to drive AOP expansion even as we continue to invest for growth, and we believe we have an enormous and profitable opportunity ahead of us for years to come. Roland and I, in particular, and Harlan look forward to updating you on our progress, you know, in the coming quarters and years. In the meantime, I wanna say to folks who joined us virtually, thank you so much.
Those of you here in the room, we welcome you to join us for lunch and get to know the team downstairs. Thanks again to everybody who came with us today.