REVENUE

We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our print and digital products (which include our news product, as well as our Crossword and Cooking products) and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

Advertising revenues are derived from the sale of our advertising products and services on our print and digital platforms. These revenues are primarily determined by the volume, rate and mix of advertisements.

Other revenues primarily consist of revenues from news services/syndication, building rental income, affiliate referrals, digital archive licensing, NYT Live (our live events business), commercial printing, and retail commerce.

Revenue is recognized when a performance obligation is satisfied by transferring a promised good or service to a customer. A good or service is considered transferred when the customer obtains control, which is when the customer has the ability to direct the use of and/or obtain substantially all of the benefits of an asset.

Proceeds from subscription revenues are deferred at the time of sale and are recognized on a pro rata basis over the terms of the subscriptions. Payment is typically due upfront and the revenue is recognized ratably over the subscription period. The deferred proceeds are recorded within “Unexpired subscription revenue” in the Condensed Consolidated Balance Sheet. Single-copy revenue is recognized based on date of publication, net of provisions for related returns. Payment for single-copy sales is typically due upon complete satisfaction of our performance obligations. The Company does not have significant financing components or significant payment terms as we only offer industry standard payment terms to our customers.

When our subscriptions are sold through third parties, we are a principal in the transaction and, therefore, revenues and related costs to third parties for these sales are reported on a gross basis. We are considered a principal if we control a promised good or service before transferring that good or service to the customer. The Company considers several factors to determine if it controls the good and therefore is the principal. These factors include: (i) if we have primary responsibility for fulfilling the promise, (ii) if we have inventory risk before the goods or services are transferred to the customer or after the transfer of control to the customer, and (iii) if we have discretion in establishing price for the specified good or service.

Advertising revenues are recognized when advertisements are published in newspapers or placed on digital platforms or, with respect to certain digital advertising, each time a user clicks on certain advertisements, net of provisions for estimated rebates and rate adjustments.

We recognize a rebate obligation as a reduction of revenues based on the amount of estimated rebates that will be earned related to the underlying revenue transactions during the period. Measurement of the rebate obligation is estimated based on the historical experience of the number of customers that ultimately earn and use the rebate. We recognize a reserve for rate adjustments as a reduction of revenues based on the amount of estimated post-billing adjustments that will be claimed. Measurement of the rate adjustment reserve is estimated based on historical experience of credits actually issued.

Payment for advertising is due upon complete satisfaction of our performance obligations. The Company has a formal credit checking policy, procedures, and controls in place that evaluate collectability prior to ad publication. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts do not include a significant financing component.

Subscription, advertising, and other revenues were as follows:



	For the Quarters Ended				For the Six Months Ended
(In thousands)	July 1, 2018		June 25, 2017		July 1, 2018		June 25, 2017
Subscription	$	260,629	$	250,037	$	521,222	$	492,412
Advertising	119,201		132,234		244,848		262,262
Other ⁽¹⁾	34,730		24,803		62,438		51,204
Total	$	414,560	$	407,074	$	828,508	$	805,878

⁽¹⁾ Other revenue includes approximately $6 million and $4 million of building rental income for the second quarters of 2018 and 2017, respectively, and approximately $10 million and $8 million for the first six months of 2018 and 2017, respectively, which is not under the scope of Topic 606.

The following table summarizes digital-only subscription revenues, which are a component of subscription revenues above, for the second quarters and first six months of 2018 and 2017:



	For the Quarters Ended				For the Six Months Ended
(In thousands)	July 1, 2018		June 25, 2017		July 1, 2018		June 25, 2017
Digital-only subscription revenues:
News product subscription revenues⁽¹⁾	$	93,549	$	79,300	$	184,125	$	152,161
Other product subscription revenues⁽²⁾	5,194		3,243		10,030		6,199
Total digital-only subscription revenues	$	98,743	$	82,543	$	194,155	$	158,360
⁽¹⁾Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category.
⁽²⁾Includes revenues from standalone subscriptions to the Company’s Crossword and Cooking products.

Advertising revenues (print and digital) by category were as follows:



	For the Quarters Ended
	July 1, 2018						June 25, 2017
(In thousands)	Print		Digital		Total		Print		Digital		Total
Display	$	60,803	$	41,443	$	102,246	$	68,499	$	44,485	$	112,984
Classified and Other	7,367		9,588		16,955		8,557		10,693		19,250
Total advertising	$	68,170	$	51,031	$	119,201	$	77,056	$	55,178	$	132,234



	For the Six Months Ended
	July 1, 2018						June 25, 2017
(In thousands)	Print		Digital		Total		Print		Digital		Total
Display	$	131,608	$	80,140	$	211,748	$	140,126	$	87,461	$	227,587
Classified and Other	15,506		17,594		33,100		17,287		17,388		34,675
Total advertising	$	147,114	$	97,734	$	244,848	$	157,413	$	104,849	$	262,262

Performance Obligations

Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price.

In the case of our licensing contracts, the transaction price was allocated among the performance obligations, (i) the archival content and (ii) the updated content, based on the Company’s estimate of the standalone selling price of the performance obligations as they are currently not sold separately.

As of July 1, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $29 million. The Company will recognize this revenue as control of the performance obligation is transferred to the customer. We expect that approximately $9 million, $10 million, and $10 million will be recognized in the remainder of 2018, 2019, and 2020, respectively.

Contract Assets

We record revenue from performance obligations when performance obligations are satisfied. For our licensing revenue, we record revenue related to the portion of performance obligation (i) satisfied at the commencement of the contract when the customer obtains control of the archival content or (ii) when the updated content is transferred. We receive payments from customers based upon contractual billing schedules. As the transfer of control represents a right to the contract consideration, we record a contract asset in “Other current assets” for short-term contract assets and “Miscellaneous assets” for long-term contract assets on the Consolidated Balance Sheet for any amounts not yet invoiced to the customer. As of July 1, 2018, the Company had $2.9 million in contract assets recorded in the Condensed Consolidated Balance Sheet. The contract asset is reclassified to “Accounts receivable” when the customer is invoiced based on the contractual billing schedule. The increase in the contract assets balance for the six months ended July 1, 2018, is primarily driven by the cumulative catch-up adjustment recorded by the Company on January 1, 2018, of $3.5 million as a result of adoption of Topic 606, offset by $0.6 million of consideration that was reclassified to “Accounts receivable” when invoiced based on the contractual billing schedules for the period ended July 1, 2018.

Significant Judgments

Our contracts with customers sometimes include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. We use an observable price to determine the standalone selling price for separate performance obligations if available or when not available, an estimate that maximizes the use of observable inputs and faithfully depicts the selling price of the promised goods or services if the entity sold those goods or services separately to a similar customer in similar circumstances.

Practical Expedients and Exemptions

We expense the cost to obtain or fulfill a contract as incurred because the amortization period of the asset that the entity otherwise would have recognized is one year or less. We also apply the practical expedient for the significant financing component when the difference between the payment and the transfer of the products and services is a year or less