WHEN: Today, Thursday, October 31st
WHERE: CNBC's "Street Signs"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Mark Thompson, The New York Times Company President & CEO, today on CNBC's "Street Signs." Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000212838.
All references must be sourced to CNBC.
BRIAN SULLIVAN: It was a mixed quarter for The New York Times Company. They did post a loss because the sale of the New England Media Group – that is basically The Boston Globe – but, digital subscriptions rose about 28% and that stock has soared. It is up 67%. Let's dig in. Joining us now in studio is CEO Mark Thompson. His first interview as CEO. Julia Boorstin out on the West Coast also joining us as well. Let's get the first question on earnings to Julia. Julia, ladies first.
JULIA BOORSTIN: Mark, thanks so much for joining us. Now you made major progress in stabilizing your ad declines over the quarter. But your advertising is still declining. Even digital advertising's declined more than 3%. What'll it take to turn that around, especially considering the digital advertising is doing so well elsewhere?
MARK THOMPSON: Well, we're certainly looking hard at digital advertising. We-- have appointed-- a great new-- head of advertising. Meredith Levien has come from Forbes. And we are looking hard at ways of-- turning that-- slight decline, but it must be said, a consistent decline in recent courts of digital advertising back into growth. We're very pleased with the-- progress we've made on the print side. But it's very important that we get digital advertising back to growth.
BRIAN SULLIVAN: And how do you do that?
MARK THOMPSON: I think innovation. I think we need to recognize the--
BRIAN SULLIVAN: But people don't click on ads do they?
MARK THOMPSON: I think that we're seeing, across the entire the industry-- a shift away from what you could – what is normally called traditional display digital advertising. It's a funny word to use, but it's true-- the-- that first wave of digital advertising.
Video's incredibly important. But above all, trying to make sure that you've got whether it's through special custom advertising or whether it's through-- more effective use of programmatic advertising, accept the machine to machine buying of advertising is here to stay. We need to be more aggressive, more innovative, more effective in our digital advertising.
AMANDA DRURY: But you oversaw the digital media initiative over at the BBC. It costs about-- 100 million pounds, I believe, to sort of move everything over to the digital world. And yet, that was axed because it just wasn't working. So, how are you the best person to sort of move forward into the new media world at The New York Times?
MARK THOMPSON: Bit of a simplification there. Almost everything we did in digital worked for the BBC. And above all, the-- BBC iPlayer and the main BBC website have been a massive success at home and abroad. The New York Times has done a fantastic job in video. And you've seen how-- our digital pay model is probably working more effectively than any other pay model in the world at the moment --
AMANDA DRURY: Then why was the project axed?
MARK THOMPSON: Well-- if you-- the big--
AMANDA DRURY: Okay--
MARK THOMPSON: --New York Times pay model has not-- has not been axed. It's growing and you've seen that we posted more --
AMANDA DRURY: No, no. The BBC. The digital media initiative you oversaw.
MARK THOMPSON: Well, there's one component, not a consumer face in digital products, but a computer project which is based essentially on TV production inside the organization, which didn't work. That is perfectly true. But of -- maybe ten, 15 digital projects when I was head of the BBC, that was the only one that didn't work?
JULIA BOORSTIN: Now, Mark you eluded to--
MARK THOMPSON: And it was not about the consumer-facing side of the digital thing at the BBC.
AMANDA DRURY: Okay.
JULIA BOORSTIN: Mark, you mentioned your success in digital ad subscriptions for The New York Times. Obviously, that's been an area of strength. You're working on more subscription products, you said, you'll be rolling out in the first quarter of the year. But there's so much competition right now in terms of free content out there. We've seen the rise of sites like BuzzFeed. How will your paid products compete?
MARK THOMPSON: Well, you'll know, Julia, that many people said two years ago that The New York Times was foolish to launch a pay model because there was so much free content. But the truth is, The New York Times brand and the quality of the Times as journalism means that there's a real market.
People-- want to commit to the Times and to pay-- the subscriptions to the Times. What we want to do now is to broaden our portfolio product to have a broader range of price points-- some products which cost less than our current portfolio, some which cost perhaps a little bit more-- so, we if you like, we tap that-- demand more efficiently and find, you know, more-- new audiences alongside our existing one. So, this is really the second stage in rolling out what so far I think has been-- a very successful model.
BRIAN SULLIVAN: Isn't it amazing, Mark, how things have changed? Because a few years ago, right, nobody thought that a pay wall would work. And when some rolled out and they didn't do well, everybody kind of like-- maybe like ObamaCare, actually, started piling on. Now, that's the way it is. However, we've also seen a rise of so-called aggregator news sites. You know what I'm talking about--
MARK THOMPSON: I do. I do--
BRIAN SULLIVAN: --right? Well, they'll put a few paragraphs and say, "Link here."
MARK THOMPSON: Yeah.
BRIAN SULLIVAN: But you read the paragraphs. Do you really need to link? What's your take on the future of pay walls and whether or not these aggregator sites can, indeed, survive?
MARK THOMPSON: Well, I think firstly, you know--
BRIAN SULLIVAN: Are they good for you or bad?
MARK THOMPSON: --the internet is a big wide world. And lots of different kinds of model will coexist. For people who want-- and they will be of the world's population, no doubt, a minority-- but still, you know, in their millions who want deep rich access to high-quality content. And they want someone to curate it for them to make sure what they're looking at is not going to waste their time, it's not going to be confusing, it's going to be clear and of high value, I think pay models work.
You have the execute very, very well. You can get it wrong on price. You can get it wrong on the offer. But if you execute well, as The New York Times Company did two years ago, they can be a real success. But it doesn't mean they're going to take over. It's too simple to imagine that the world's going to flip entirely to pay. I think you will get coexistence of different models to include--
BRIAN SULLIVAN: Do you still think people are lifting your stuff though? Based on -- let me just ask in a very blunt way, right-- is internet theft a problem still?
MARK THOMPSON: Well, I think—that we've got -- we came up with a model, which was pretty porous, which wanted-- we still got tens of millions of people coming to the site. Many people-- and we're very glad to have them-- come freely to the site and get news from The New York Times.
People who want to dig deeper and to see and read more have to pay. And actually, that -- a big funnel, lots of people coming in the front door, the most mentioned ones actually paying for it, so you have a mixed revenue model-- advertising, one revenue stream, subscription, a second revenue stream. Multiple revenue streams is the reason that cable TV is so profitable in this country. We want to make sure that we also have access to multiple revenue streams to pay for the high-quality news that the Times links.
JULIA BOORSTIN: But at the same time, while you've had the success with the subscriptions, you see BuzzFeed has surpassed The New York Times in August in terms of total views, multiplatform. How do you explain that?
MARK THOMPSON: Well, the point is, what we're trying to do is we are trying to reach-- a group of people-- who want high-quality news. You've seen in this quarter that we've-- grown our revenues-- not just grown our profitability but grown our revenues-- through a mixed model.
BuzzFeed has got-- a revenue stream essentially through native advertising. We've got multiple revenue streams. And-- our model isn't simply about getting the maximum possible number of unique views on the web. It's about a mixture of broad access that people sample at times, combined with deep access paid for by subscribers who really value most what the Times does.
AMANDA DRURY: Do you think you're be around as a print organization in five years' time?
MARK THOMPSON: I think the print platform is a great platform. And I do. Yes. I do. And what's interesting is all--
AMANDA DRURY: I like the print platform.
MARK THOMPSON: almost all of our print subscribers authenticate for digital as well. In other words, it's-- wrong to think we've got, like, print subscribers and digital subscribers. Most people who read the physical newspaper also want to access the Times, when it's convenient, on a smartphone or on a tablet.
BRIAN SULLIVAN: Well, it's also smart pricing strategy. As a weekend New York Times subscriber-- because I get up too early to get the paper in the morning-- I get the weekend version, plus it gives me nice digital access.
MARK THOMPSON: That's right.
BRIAN SULLIVAN: Last question. Follows up what Mandy asked you. But-- and not to bring up the BBC stuff. However, there have been some people that have been concerned that your ability as a CEO to run The New York Times, which arguably is in a transitional period, could be hampered by, A) the distraction, B) the travel.
MARK THOMPSON: Well, I think if you look at today's results, I think you can see that we are making progress at the Times. We're in the middle of a very big transformation, and we're going be launching some new products next year. Literally in the last few weeks, we've renamed the international newspaper. I've been hard at work at the Times. And I think, you know, to be honest, so far, we're pretty pleased with the results.
BRIAN SULLIVAN: Mark Thompson, pleasure. Thank you. Julia, thank you.
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