Good day, everyone and welcome to Gannett's second quarter 2008 earnings conference call. (Operator Instructions) Our speakers today will be Mr. Craig Dubow, Chairman, President, and CEO; and Gracia Martore, Executive Vice President and CFO. At this time, I would like to turn the call over to Gracia Martore. Please go ahead.

Thanks, Cynthia and good morning. Welcome to our conference call and webcast to review Gannett's second quarter 2008 results. We hope that you’ve had the opportunity to review our press releases this morning. They can also be found at www.gannett.com. With me today are Craig Dubow, Chairman, President, and CEO; and Jeff Heinz, our Director of Investor Relations. Clearly we’ve been busy since we last talked to you at the Deutsche Bank Media and Telecom Conference in early June. Our announcements earlier this month about our ad serving network and Shop Local are two additional parts of the puzzle we have been assembling over the last couple of years as we transform Gannett. Our plan today is for Craig to put the pieces together, give clarity to the overall picture and update you on our progress, despite the very challenging economy. He also will discuss the results we announced this morning and touch on some of the items that affected them. Then I will get into more detail about the results, our segments, and how we are reshaping our operations as part of our transformation. We hope in the end to have given you a clearer view of where Gannett is heading in this unsettled media landscape and what these various strategic efforts will do for our businesses. Craig.

Thanks, Gracia and good morning, all. Our results for the quarter reflect, frankly, all the different forces weighing on the media sector at this time, not the least of which is a softening economy, both here and in the U.K. Unfortunately, the economy is tough at the moment and could be for the foreseeable future, but we have been in down cycles before and know how to manage through them, so we are concentrating on the initiatives that will change the game for all of us. These initiatives I believe ultimately will bolster our top line while at the same time recast our cost structure to position Gannett for a future we believe is filled with huge opportunity. Two years ago, we began this strategic transformation. We told you that our plan was to grow a world-class digital business while enhancing our profitable core operations, newspaper and television. That remains our plan today, adjusted for the unexpected, the economy softening and certainly the credit crunch, and the ever evolving consumer and advertiser landscape. Our core operations this year will see the results of Olympics in August as well as political revenues until election day. But we also are expecting much, much more of them. Our advertising -- or our newspapers and television stations are dramatically evolving the way they operate through the information center initiative for content development of our significant web presences in our communities, finding new sources of revenue and through centralizing and, in some cases, outsourcing routine functions to significantly reduce redundancies and manage costs. To live up to the pledge in our strategic plan, to enhance our core we must change the way we have operated for the past 100 years. We are doing that and expect to have made strong progress by the end of…

Thanks, Craig. First I need to remind you that our conference call and webcast today may include forward-looking statements and our actual results may differ. Factors that might cause them to differ are outlined in our SEC filings. This presentation also includes certain non-GAAP financial measures and we have provided a reconciliation for those measures to the most directly comparable GAAP measures in the press release and on the investor relations portion of our website. I’ll cover the following items this morning; some additional detail on the impairment charges, I’ll follow that up with a brief summary of our segment results for the quarter, including some detail on the curtailment gain and severance expenses, and finally I’ll cover some balance sheet items before we open the call for questions. As Craig noted and we have previously discussed with you, we will incur non-cash impairment charges in the quarter that will range from $2.6 billion to $2.9 billion pretax and $2.4 billion to $2.7 billion after tax. We have fine-tuned those numbers since we first reported them. As Craig mentioned, business conditions softened after the end of 2007 and the resulting pressure that put on our stock price required us to update our impairment testing. The impairment charges will impact three components of the financial statements: one, they will reduce the book value of newspaper publishing goodwill and other intangible assets, including goodwill; two, they will include accelerated depreciation for the write-down of the carrying value of certain newspaper property, plant, and equipment -- this is as a result of some of our cost restructuring efforts; and three, they will impact the carrying value of certain of the company’s investments in newspaper partnerships and other businesses. As we’ve stated before, much of the impairment is related to our operations in the…

(Operator Instructions) We will take our first question from Peter Salkowski with Goldman Sachs. Please go ahead.

Thank you. Good morning, everybody. Gracia, a quick question on expenses, if you could kind of dive a little deeper into the newsprint expense; I know there’s been several price increases that have occurred in the first half of the year and others announced here for the second half. You mentioned something about negotiating with producers. What are your expectations going into the second half of the year on newsprint prices and newsprint expenses?

Well, Peter, clearly on newsprint, prices will be higher than they were last year. Our folks in Gannett supply are working diligently with, and having conversations with a number of producers who are more logically thinking about the current dynamics and the impact collectively on our best interests, both from a producer and a consumer standpoint. But given the price increases to date, clearly we’ll have higher newsprint expense, newsprint prices in the last six months but those will continue to be offset by the web width reductions and conservation efforts.

So you think on a year-over-year basis, you may still be able to keep expenses down, even -- obviously the LIFO accounting starting to, you know, come into that in the second half of the year?

We’re on FIFO accounting for our inventory and so certainly into the third quarter, we will do our very best to keep those expenses, as we indicated, in line and do a good job on that front.

All right, great. Thank you.

We will take our next question from John Janedis with Wachovia. Please go ahead.

Thank you. Gracia, looking back to 3Q04 in TV, I think you posted somewhere around $25 million to $30 million in political, and maybe $20 million or so in Olympics revenue. Can you just size your expectations in terms of what you are looking for in the budget this year? And how do you characterize your core TV categories outside of the political and Olympics? Thanks.

Let me just clarify the numbers and then I know Craig will want to comment; in the third quarter of ’04, we had about a little less than $29 million of Olympic revenue and, as you said, about $22 million of political.

John, as we look forward hear, certainly as we have suggested, the overall Olympic with the primary sponsor spenders is a little slower than we had anticipated. However, we are seeing the pick-up at this point from our political as we go across the board and certainly would anticipate that we are going to see that have some other impact to the positive as we move into the Olympics and certainly from that then into the bigger spending from September on to the election time. So as suggested in the prepared comments, the result should be a nice positive in the third quarter for the overall with the political involved, assuming that all the political comes in the way that we are currently anticipating.

But I think the good news, as Craig said earlier, is that I think we already have presidential in 13 of our stations and in fact, we are seeing a bit of an expansion to the footprint that we originally anticipated with potentially Georgia and Virginia significantly in play this go-round, so we’re feeling very good. I know the President of our broadcast division, Dave Lougee, has done a fair amount of work on this and he’s feeling very good about the political outlook.

We are seeing week-by-week accelerations at this point and we are feeling pretty good about it.

Okay, and just on the core categories, when you think about TV and the other large categories, should we be thinking those seem to be down in the double-digits then, or --

You know, it’s going to vary. Obviously, as we have suggested, auto has been the most difficult category for certainly the broadcast side but it’s going to vary month to month and we will certainly keep you updated as we move along and move forward. But it’s a very, very difficult environment right now as far as the core categories are concerned.

Thank you very much.

We will take our next question from Edward Atorino with Benchmark Capital. Please go ahead.

I was going to touch on the same questions that were already -- to the extent you have any “visibility” on some of the core retail categories for the summer, and do you think there is sort of a hold-back for the summer months, with maybe some more spending being pushed back toward the fourth quarter in the retail area?

Ed, I think the best way to put it, the visibility is extremely limited and that unfortunately I think as you look at the economy and other factors right now is really contributing to that cloudiness, if you will. But as we look forward, I don’t see that changing anytime soon. You know, we do have, when you take a look on the community publishing side, from the Wal-Marts, the Targets, and the K-Marts, I mean, there has been some pick-up but obviously at this point not enough to offset what we have seen from the full retail side.

Thanks a lot.

We will take our next question from Michael Kupinski with Noble Financial. Please go ahead.

Thank you for taking the question. In the past, USA Today seemed to benefit from special sections and advertising related to the Olympics. Can you talk a little bit about USA Today benefiting from the Olympics? And has the company decreased any of its products, particularly some of the launches that you had over the last several years that may have accounted for maybe a portion of some of the weakness in the revenues on the publishing side?

Thanks for the question, Mike. As just an answer on the USA Today Olympics, you know, that has not always been the largest piece but I will tell you from the USA Today perspective, we are continuing with the special production that we will do with USA Today and certainly the enhanced reporting, and I think between the work that Ken Paulson and Craig Moon are doing on that side, we’re pleased with where those accounts are right now and what has come in. As I said, the visibility on all of this has been much closer to the vest than we had seen in some previous Olympics, obviously, just due to the economic conditions. Gracia.

And Mike, with regard to your question about products, obviously in difficult economic times, one looks at each product and revisits them and to the extent that you had a, for instance, real estate product out there that was a terrifically profitable product, and particularly in those four states that we’ve talked about and you look at where real estate is in those markets, you might want to take a breather from that product at the moment because it’s not contributing as it has before. So clearly there’s rationalization in looking at those products that’s going to impact the top line at the moment.

If I may ask just one follow-up; you have obviously a lot of free cash flow and financial capacity. I was wondering, what are your uses of cash on your balance sheet at this point? You know, you obviously could be a more aggressive buyer of your stock. There appears to be some newspapers on the marketplace and traditional media on the marketplace, not that the market is going to give you credit for that, but what are your thoughts about your uses of cash at this point?

I think at this point, Mike, we’re focused on two things; number one, as we demonstrated with Shop Local and with a number of other pieces that we’re looking at, we are very interested in doing good strong, strategic acquisitions. Shop Local is a great case in point where we had the opportunity to buy in all of the pieces of Shop Local, now combine it with our Point Roll operations and really come up with one plus one equaling four. So we will continue to make those kinds of good strategic acquisitions. But I think when you look at the current environment, particularly with the credit markets which have again become I think very difficult, I think certainly in the short to intermediate term, we’ll be focused on those kinds of acquisitions as well as paying down debt in the short to intermediate term.

Okay. Thank you very much.

We will take our next question from Jim Goss with Barrington Research. Please go ahead.

Thank you and good morning. National content appears to be increasingly commoditized. It winds up being either through a wire service, AP, or whatever, or on Yahoo! and other portals. I’m wondering what the role of the newspapers will be as you see it. Is it all local? I know you’ve talked about local local being very important. And to the extent your national content does wind up on these other sites, is that a good thing or bad thing for you, and do you have any control over it or an interest in trying to make sure that doesn’t happen so you can take advantage of your own proprietary content?

Jim, thanks for the question. First of all, let me start toward the end; yes, we certainly do control that content and certainly plan to as we look at the future. But as I have said on a number of occasions, this company has been extremely focused. Our success and track record has been on local. We have really further enhanced that into a local content environment and frankly, our view is in the way that that can play out, use it as an example for moms. There is going to be local content as well as content that will then play for us on a full national, across all of the sites that we will have up, either our owned/operated sites or those that we will affiliate, or even in other markets that would be on the outside. But our overall use of that will certainly apply I think in some very positive ways, but we will not turn our head at all on what is absolutely critical to this company and that we really enjoy, and that is the local local content that we do very successfully. We fully understand it and we’ll continue to exploit that as we move forward on both the local and national environments.

Okay, but to the extent that the content does wind up on portals, do you view that as a favorable thing or an unfavorable thing?

We like to protect the content in every way we can. Obviously there is content that we do share through other services that are out there, but in general we want to protect in the very best way we can so that we can serve that consumer through our content and then supplement that as appropriate. So the answer is we want to protect in every way we can as we go forward with our own content.

All right, thanks.

We will take our next question from David Clark with Deutsche Bank. Please go ahead.

Thank you. Good morning. We’ve read in the trade press recently that NBC had told its affiliates in May that they are going to start to seek reverse network compensation when they renew affiliate contracts going forward, and obviously you guys have strong ratings at your stations and you’ll do better than weaker NBC stations, but what sort of impact do you foresee on revenue as those contracts get renewed? And I guess also, what percentage of TV revenue currently comes from network compensation? Thanks.

David, as we look out, correct me, Gracia, but I believe our NBC contracts are through 2015 and so we are in a very solid position from that standpoint. You know, we have heard all this. There are obviously ongoing discussions with the network and certainly we will be participating in all of that. However, with these agreements going out through 2015, I think for a great period of time here we’ll be in a pretty substantial position.

And with respect to network compensation, that is a very minor, minor, minor number --

Very minor.

-- right now. Where I think we’ve talked in the past about the fact that our cash retransmission, we expect that that will get up and more than compensate for the loss of network compensation over the last few years.

That’s correct, yes.

Okay, great, that’s very helpful. And just a quick newspaper question; we saw Tribune recently declare they want to -- their target is a 50-50 news-hold to advertising ratio. I was just wondering what approximately average across all your newspapers your ratio was and what that trend has been over the last few years, and will it trend down from here? Thank you.

You know, I think if we look at it, I can’t say I have the exact number at my fingertip but it has probably been in that same range for quite some period of time and that is not something that is particularly new for us and the way that we have been operating, so I hope that’s responsive.

And as well, I think what you have to look at is the content reach that we have across the community. Some of that content reach is going to be in the single daily newspaper. In addition to that, there is going to be content reached through our various niche publications, as well as our website, so I think to just simply focus in on news-hold in the single daily newspaper product is missing the content penetration we have in those communities we serve.

You know, and that is where in a number of conferences, David, we have been talking quite specifically about the audience aggregation and how we are working that through the individual markets, and frankly when you take a look at some of the results of Phoenix, Rochester, and really the high 70s, low 80% that we are penetrating in those markets, we really look at all of this across multiple mediums and how ultimately we can best serve on these multiple platforms at local constituency. So that’s what we are really working from an effort standpoint to further secure. Those are some very, very big and solid numbers.

I appreciate that color. Thank you.

We will take our next question from Alexia Quadrani with J.P. Morgan. Please go ahead.

Thank you. On the publishing side, could you just comment how July is looking, and specifically on USA Today, how July is trending there? And then secondly, if you can give us some sense of how much you think online classified declined in the quarter?

First, just on the publishing side, you know, as we are experiencing for June, or had experienced for June, the visibility, Alexia, is very, very limited and we are seeing probably more of the same as to what we have experienced. And go back to June 9th when we were at the conference in New York, we have seen not unlike the April and May, the further deceleration in June. It’s around those same type of position at this point. And then with USA Today, it’s been very interesting. I mean, certainly as Gracia has also talked about, certainly from a travel and financial standpoint, we have seen some ups but there as well, on a national platform, that visibility is extremely limited as well.

And with regard, Alexia, to the online revenue, clearly domestically we are seeing the impact of the declines in our classifieds print side impacting the online side of the equation. But we have strong retail and some auto growth as well, so that’s helped to offset it. When you look at Newsquest where they’ve really ramped up their online efforts, even though a great deal of their online revenue is generated from classified up-sells, they are still seeing strong growth, as we mentioned earlier, in that category. I think we --

Would you say that the -- would it be fair to assume though that the real estate and help wanted online classified declines are a bit more modest than the print, or are they about the same levels?

They are more modest than the print declines, clearly.

And any comments on CareerBuilder in the quarter?

You know, I don’t have those numbers in front of me. I understand that they had good traffic growth over the year-ago period but I apologize, I don’t have those numbers in front of me. But I know that if you can give Jeff a call, he’ll certainly get that information for you.

Thank you.

I think we have time for one more question.

We will take our last question from Craig Huber with Lehman Brothers. Please go ahead.

Good morning. Thank you. Just a three-part question, Gracia; this new credit facility of $280 million, how did you refinance the rest of the $1 billion convert that was put to you yesterday?

In commercial paper.

Okay, so where is your commercial paper at right now in total for your company?

It’s about at $2 billion. I can get you a more refined number but it’s right around there.

And do you think you have more room that you could tap into that if you needed to, or wanted to?

You know, we have $3.9 billion of revolving credit facilities that back-stop that, so we do have some room for strategic acquisitions but let’s all remember that we have extraordinarily strong free cash flow and we continue to have extraordinarily strong free cash flow, so that certainly provides us with capacity and capability going forward for those kinds of strategic acquisitions we’ve talked about.

And then my other two questions, Gracia; one, what was the non-newsprint cash costs percent change in the quarter, adjusting for these two one-time items?

Our non-newsprint cash costs in the publishing segment were down about almost 5.5%.

And that’s adjusted for these two one-time items?

Adjusted, constant currency, which really currency was a little bit against us this quarter but adjusted for those two items.

And then also, if I could ask, those two one-time items you mentioned in the second paragraph, the pension curtailment and the restructuring charge, how do those numbers break out between your three segments?

You know, I don’t have that detail right in front of me but I know that if you give Jeff a call, he’ll dig out the schedule and give you some information. Obviously the lion’s share of that, both the restructuring and the curtailment gain, would be in the publishing segment.

Okay, great. Thank you.

This will conclude today’s question-and-answer session. I will now turn the call back over to Ms. Martore for closing comments.

Thanks very much for joining us today. If you have any follow-up questions, please feel free to call Jeff Heinz at 703-854-6917 or me at 6918. Have a terrific day.

Ladies and gentlemen, this will conclude the Gannett second quarter 2008 earnings conference call. We do thank you for your participation and you may disconnect at this time.