Good morning ladies and gentlemen and welcome to Gannett’s Second Quarter 2010 Earnings Conference Call. (Operator's instructions). Our speakers today will be Craig Dubow, Chairman and Chief Executive Officer; and Gracia Martore, President, Chief Operating Officer and Chief Financial Officer. At this time I would like to turn the call over to Gracia Martore. Please go ahead.

Thanks Joshua and good morning, welcome to our conference call and webcast to review our second quarter 2010 results. Hopefully you’ve had opportunity to review this morning’s press releases, you can also find them at www.gannett.com. Before we get started however I need of course 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. We’ve provided a reconciliation of those measures to the most directly comparable GAAP measures in the press release and on the Investor Relations portion of our website. As many of you know Craig and I’ve provided a fairly detailed review of the quarter in early June, so we will try to keep our comments relative brief today. Craig will start off by reviewing our quarterly results and update you on several strategic efforts, we initiated during the quarter. I’ll review the quarter in detail particularly for each of our business segments. I’ll now turn it over to Craig.

Thanks Gracia and good morning, everyone. I’m extremely pleased to announce another quarter of improving results. Advertising demand firmed during the quarter as we benefited from the strength of our local market franchises, both here and in the UK. In second quarter, our revenue comparisons were better relative to the first quarter with total revenue down only slightly. Broadcast and digital revenues were particularly strong while publishing revenues were down in the mid-single digits. Expense declines again, outpaced the revenue decline for the quarter. As a result, we increased our bottom line significantly with a 33% increase in both adjusted operating income and adjusted earnings per share. As the economy improves and ad demand strengthens, the efficiency efforts we put in place are continuing to contribute results in the quarter. We have also made great strides in transforming Gannett to a multimedia, multiplatform company. We are positioned for growth in both our core assets and our unique digital businesses. We are committed to leveraging the strength of our local brands and extending our reach particularly our digital reach in all of our markets. In the second quarter, we announced several initiatives that will help achieve that goal and today’s announcement is also significant. Our local advertising partnership with Yahoo! will further extend the digital reach for both our local publishing and several of our broadcast properties. The partnership combines our strong local brands and deep local connections with Yahoo!’s broad digital audience and audience targeting capabilities. As a result of the partnership, we will increase our digital reach to as much as 80% of the total local digital audience. That will promote greater results for our advertising clients as they will be able to reach larger audiences as well as deliver more relevant ads based on demography, geography, user interest…

Thanks, Craig. Let me go into results for our business segments in more detail and cover a few balance sheet items. Then we will open up the call for questions. As a reminder, all of our category comparisons have been included in the release this morning. Our results this quarter reflect the significant operating leverage that has been created in all of our business segments. The Broadcasting and Digital segments, both had substantially higher revenues, and we further closed the revenue gap in publishing. Expenses as Craig said, were lower company-wide as we benefited from our ongoing cost control and efficiency efforts and. were achieved even after comparing against $25 million of furlough savings in the second quarter of last year. The result, improving profitability in each of our business segments. In publishing, total revenue comparisons this quarter on a pro forma constant currency basis, were about 4% lower. But we are almost three percentage points better than the first quarter. On that same basis, total advertising revenue comparison, again we are about four percentage points better than the first quarter and we are down about 5%. Classified and Retail drove the better comparisons, and we’re six percentage points and four percentage points better than the first quarter. I should also remind you that we sold Honolulu and a small directories business `this quarter. And their results are in discontinued operations. As well, we sold a small commercial printing business in the UK last year. Those businesses had about $35 million to $40 million of revenue in the second quarter last year whereas. we are reporting no revenue in the quarter this year from those businesses. Ad revenue trends in both the US and UK improved in the second quarter compared to the first. In the US, advertising revenues were…

(Operator Instructions). So our first question comes from Edward Atorino of Benchmark.

Could you talk about the trend in newspapers, you probably were anticipating this post June? And do you see continued sequential improvement? Can you put any dimension on the trend for 2Q -- I mean 3Q?

We have been seeing is, we have said all along a build that has been moving forward month by month. And our hope is depending on this where the economy goes that we’ll continue to see with all of the additional efforts that we’re putting in place here, that to continue to grow. There are a couple of key areas that we talked about and that is specifically in the Auto area that has really taken off for us, which has been quite helpful in that not only in the publishing area but as well across the company. When you take a look at some of the other big categories for where we are going, we are seeing a couple of those with some similar opportunity as well. So I think that’s going to continue going. Gracia, anything you want to add?

No, I think as you said the economy obviously will inform some of that, but we were particularly pleased, as Craig said, to see both automotive and employment classified grow in the quarter. So and also gratified to see that June was the best month of the quarter on a pro forma constant currency basis, both in the US and the UK, so that gives us good momentum going into the third quarter.

Is June sort of a run rate going forward in terms of rate change?

Too early to say, we are only a few days into the quarter, Ed.

Our next question comes from Scott Davis of JPMorgan.

Hi, good morning. I have one clarifying question and then one actual question. So to kind of talk about the elephant in the room I guess. Your stock price is getting clobbered at the moment, I think because everyone was a bit confused when you suggested that the quarter would end with publishing revenues down in the low to mid-single digits and on a reported basis, is minus six which looks like a miss. However, I think you alluded to the fact that you sold about $35 million to $40 million of revenue. So Gracia or Craig, when you spoke of that, was that before pro forming on an apples-to-apples basis because if I do that, it looks like instead of minus six, you are at minus two, so that’s the clarification? And then I have got a question.

Yes, Scott, I think that when we talked about low to mid single digits, we were also talking on a constant-currency basis. And as we all know, the currency dropped off a bit towards the end of June and then you are absolutely correct in pointing out that there was about $35 million or $40 million of revenue in the reported revenue numbers that is simply absent because we are now reporting Honolulu and the directories business in discontinued operations and our small commercial printing business in the UK doesn’t have any reported revenues this year. I think the best number to hone in on is that 3.8% pro forma constant currency number as the number that we were focused on when we were looking and speaking about our numbers and so we feel good that we came in at the better end of that range that we talked about.

My question is, I just want to make sure I have got the right numbers because it’s nice that when you look at the sequential improvement in your growth that it improved by, as you said 400 basis points on a constant currency basis for advertising. But to me that doesn't really mean much unless I know what the comps are, because if the comps just eased by that same amount, you are not really improving. And based on my numbers, it looks like the comps actually got harder by 100 basis points as it declined from 30% to 29% in the second quarter of ‘09. So am I looking at that properly and saying that your year-over-year growth improved even though the comps got harder?

Yes, as a matter of fact, Scott, we tend to not only look at the year-over-year comps, but also the two year comps, so two years ago. And in fact our two-year comps improved virtually across the board anywhere from a couple of hundred basis points to 200 or 300 basis points. So you are absolutely spot on in your analysis.

And our next question comes from Doug Arthur of Evercore Partners. Please go ahead.

Two quick questions. On corporate expense, that number spiked up a little bit in Q1 on stock comp expense. I assume that was related to where your stock price was. It looks low. This quarter I assumed it was not as much stock comp. And then on a follow-up on newsprint, it seemed like at the end of the first quarter you were expecting less favorable newsprint comparisons in the third quarter, back then. Now, you seem like you changed your tune a little bit.

Let me start with the stock comp question. The reason why stock comp spiked up in the first quarter, is in part as you say because our stock price was significantly higher, and in the first quarter is when we issue stock option grants to a number of folks. And so, that’s typically the biggest quarter until the fourth quarter on stock comp. As I mentioned on our first quarter earnings call, we expected stock comp to be more in line with last year’s number in the second and third quarter when we’re really not issuing new shares and therefore, there’s a bit of a run-rate that’s in effect. With regard to newsprint, I would say that we continue to be pleased with the work that we’re doing, that our folks and again our supplier doing in managing our newsprint pricing and expenses. And I don't think it’s any more or less optimistic I think. It’s consistent with where we felt we were going to be. It was a little early for us in the first quarter call to really have a good handle on where we ultimately ended up with pricing at the end of the second quarter.

Thank you. And our next question comes from Michael Kupinski of Noble Financial. Please go ahead.

Craig, I was wondering if you can just go over your test in terms of the paywall for some of your newspaper websites. Can you talk a little bit about the content that might hit the paywall? And then also the terms and prices you’re testing right now?

You know as I said, we started on July 1 in the three markets. We are varying the test a bit in each, obviously so we can get larger market, mid-market kind of reactions. The pricing itself is different. So again, we can get consumer response to that, and really gauge where that will go. I think those are the critical components that really drive that and keep it together. I would also say the beautiful thing that we had, when you note the 5 million downloads that we had in composite, we have almost been given an opportunity here because the advertisers are so excited about being a part of this. The four that I noted, that are now on the site have really helped us. And it’s given us a little bit of time. Gracia, do you want to add anything?

Just going back to the paid content test that you were alluding to Mike. In Tallahassee for instance where the Seminoles are obviously a very important part of the fabric of the community. We have significantly going to be improving and adding content around that. Similarly in Greenville, South Carolina where Clemson obviously is an important part of that community’s sports interest. We are putting some content, improved and additional content. And then out in St. George, Utah where obviously religion and outdoor activities are very important to that community, we are beefing up coverage there. So as Craig said, we are trying different price points. We are trying additional content in areas that we think add value to the community. And we are going to gain a lot of insights into consumer behavior, consumer desire. So I think three to six months down the road, we will be much better informed from a consumerance perspective of where paid content and what business models are sustainable.

Mike, just to really just summarize that the key value here, is what the enhanced opportunity is for the consumer user. Because as Gracia pointed out, in each of the three markets what we are trying to really read is if there is something that we can provide of significant local value. Among all of the normal offerings, we believe there is additional opportunity in that. And that’s what we are trying to read. So, I think with the time that we’ve been given to make this happen, we should have some pretty good readings at the end of that.

You are throwing off a lot of cash flow which you have largely used to peer down data. At what point do you think you might look at other uses of cash, particularly stock repurchases? And for those of us who followed this industry for sometime you know that when your company back in the 80s and 90s had a very strong return on equity, the stock had a strong 50% premium to the market multiple, and was just wondering if stock repurchases might be a more proper use of cash at this point?

I think at this point Mike, given the uncertainty surrounding the economy, and that seems even more to be the case as we are sitting here today than it was when we had our last earnings call. We will continue to focus certainly in the short-term to keeping the balance sheet with a lot of dry powder. But certainly, share repurchases, and additional investments and potential acquisition opportunities are important uses of cash that we will continue to focus on as we get some better sense of where the economy is headed.

Just to add there Mike, I think the key part Gracia noted was to keep our powder dry. Obviously there is an awful lot going on in this digital market, and as we have told you we are committed to growing this number in a significant way. And we want to make certain if there is something there that our balance sheet will certainly support us in those efforts. So that’s why we are doing it.

And our next question comes from Jim Goss of Barrington Research. Please go ahead.

I wanted to go a little bit more into the impressive broadcasting revenue comparisons you had in the non-political broadcasting revenues. Is there any way to try to think of that in terms of say, core industry-wide trends recovery from some of the business that you probably, typically had lost over the past couple of years? And then maybe some that’s actual incremental growth for many efforts you’ve been making recently? Because the 20% sort of numbers are very aggressive, and I was just wondering if you could analyze that a little bit.

As we take a look at the categories, a couple of big things happened. And I think as you well know a lot of the pundits had suggested that probably we wouldn’t see the core staple of advertisers coming back. And that has just been the opposite. And I think when you take a look at General Motors, when you take a look at Ford, when you look at the Toyota issue and how that’s been supported, mass market television is absolutely critical. And when you see the kinds of 60 plus, 70 plus percent pays figures that go on that, it is really, I think, a strong statement from the advertising community, and the client how important all of this is. And I can say that looking under packaged goods,, I can say looking under the banking and finance area, certainly in the medical and dental, media, other areas as well are showing additional growth that when you compare this time last year. So to answer that first question, it is clearly there. The other thing is I think with some of the actions that Dave Lougee is taking on specifically on the digital side of local broadcast, you are seeing some very nice increases due to that focus and really the opportunity that we have in those sites, but those are really the critical parts. Gracia?

I would add just one thing Craig to what you said and that is that as you were enquiring, there are some new categories and a lot of new advertisers that our folks have been spending a lot of time on and I’ll give you a small example of that, here in the Washington DC market, on Sunday we are running two programs now, an energy show that’s devoted to energy and a show that is devoted to defense. Now those might play incredibly well here in Washington, it might not play that well in Topeka, but those play incredibly well here in Washington to a very important part of the community and some key decision makers that those programs are reaching and Allan Horlick and his team have generated a few million dollars of revenue on some non-traditional programming that is very important to the local community here. So, I think it’s absolutely what Craig said which is that a lot of our traditional categories like auto are coming back in a meaningful way, but also our broadcast folks are looking at non-traditional ways to generate revenue and bring new advertisers into the fold and then with this new Yahoo! partnership and also the work that they are doing with DataSphere, we are very much looking forward to reaching small to medium ad sized advertisers in a more meaningful way with extended reach, both on the digital as well as the broadcast side to create additional and new advertisers and new revenue stream. So thanks for that question.

Jim, just one last little piece on that I think probably one of the bigger differences that Dave Lougee and his team have been able to really, really work with is that over the last 12 to 18 months with I think a lot of other companies that were focused on other things more like with the business and where their balance sheets were. Dave has been able to really focus on future and I think that's what you are seeing in a lot of this new developed category business that as you are asking on incremental, that's where this will be coming from. I think each of the divisions has done a particularly good job because their eyes and attention have been focused specifically on opportunities of growth over this period of time. So thanks for the question John.

Just a couple of things about publishing. Honolulu revenues in the second half just to know what to be picking out and at what point do the sequential gains catch up with the year-over-year declines and is it too early to call an actual basing and bottoming in the coreprint publishing business.

To your first question Jim on Honolulu and the small directories business and the small commercial printing company in the UK, I think that $35 million to $40 million of revenue is a decent number, probably third quarter. Fourth quarter, we’d have to take a look at it to see some of the seasonality to things. So we’d have to focus in on that and then as to sequential growth and year-over-year comparisons, at the Gannett company, we are doing everything that we can control and we are doing a good job of coming up with new opportunities. Obviously part of that is going to be a function of where the economy goes over the next several months, but we feel very good as I said earlier about the momentum that we had first coming out of the yearend through the first quarter, through the second quarter and we’ll just have to see where that momentum takes us given that the economy is one of those variables out there that impacts that.

Thank you. And our next question comes from Alexia Quadrani of JPMorgan Chase. Please go ahead.

Hi, it’s actually Monica DiCenso for Alexia. Just a quick follow up on advertising. Is it safe to say that you haven’t seen advertisers become a little bit more trepidatious with what's going on in the market and when you think of June being better and that continuing into July, that’s the case and on travel USA Today with June being a better month than some of the others, could you see improvement in travel USA today or is that still lagging?

To take the second question first, yes, we did see improvement in travel and I think where that’s beginning to come from is some of the luxury hotels and the higher name plates and organizations seem to be seeing better occupancy rates, beginning to see better occupancy rates and we’re starting to see more travel advertisers focusing in on USA Today which is always a very, very good platform for them to be on. So, yes travel advertising is an improved category for us.

I was just curious of the market being so choppy in the last few weeks, whether you had actually seen advertisers become a little more cautious. I know you said the June was the best month recently, but is there any change in tone or is it just sort of still people are ready to spend and committing a little better than they used to last year.

So far I would say we haven’t seen that occurring, we just at USA Today in the last week had a wonderful wrap around the paper from Jeep which was combined with some of our other platforms. So far, we haven’t seen the words about the economy being manifested in more trepidation or cancellations, but obviously that’s something we are going to keep a close watch on as economic news unfolds.

I think that’s very fair. I think what we are hoping for is that we are continue to have a lot of market first and I think what Dave Hunke provided with that new ramp this week is just one example of some of the things that they have been working on that really will provide from our core side other enhancements to the advertiser. As you know part of our strategy as said we want to grow and enhance that core side with a high focus to our digital, so what you are seeing really when it starts to go across the board is exactly that from each of the division president, so more to come.

And then look just on circulation, you talked last quarter about the new initiatives to try and boost that a bit and looked a little bit softer this quarter, if that just we haven’t seen the impact of that ad or is there something else going on there that we should think about for the back half of the year?

No, I think actually, when we look at our circulation numbers for the quarter in terms of volume numbers, we are actually making more progress as Bob Dickey has indicated. He has placed a real focus in US Community Publishing on Sunday circulation and in our top 31 markets or so we are seeing in the aggregate growth in Sunday home delivery circulation year-over-year and that’s about a little over 80% of our Sunday home delivery volume in those 31 markets. So we feel good about the progress we are making on that front.

Our next question comes from Craig Huber of Access 342.

Two things if I could, your daily and Sunday circulation volume in the US excluding USA Today I believe it was down 9%, 5% respectively in the first quarter. What were those two numbers please in the second quarter year-over-year and I also want to ask on the advertising pricing front of your US newspapers I think the last two quarters your pricing that was down from your commentary roughly 7% to 8%. I want to see what that was like here in the second quarter?

Yes, with regard to circulation, Craig, on Daily for the quarter we were down about 5.5% and Sunday was down about 3%, in the quarter. So obviously sequential improvement.

And then the ad revenue pricing?

Yes, on the ad revenue pricing side, I knew you would ask about that, and we are very pleased to say, Craig, that we are seeing rates firming up. I was looking at some numbers for US Community Publishing in the Classified areas and the Retail areas, and we are seeing improvement on pricing of 200 to 300 basis points. So, and then obviously on the broadcasting side, prices there are doing very well given the significant demand for television space right at the moment. And as I mentioned in the first quarter, pricing is certainly firming and increasing in some categories on the digital side. So we’re feeling good about the ad rate side.

The only other thing there, and again when you take a look at CareerBuilder, despite where unemployment is, I think Matt and his team are doing just an extraordinary job. And you are seeing the increases that we have, the numbers that we talked about a little earlier, that is an extremely important thing for us. And when you look at all this together, go back six, eight months I guess when we all talked, what we thought, what we had hoped for is really coming together and manifesting itself in a very nice way here. It is step by step, we don’t want to get ahead of it, but yet, I couldn’t be more pleased when you look from last year to this year at what we are now experiencing. And I think each of the divisions are so prepared for leveraging this pricing as we move forward. So it’s a very, very positive sign.

And Gracia when you say 200 to 300 basis points firming, do you mean on absolute basis versus a year ago, or just better than that 7% to 8% declines in the last couple of quarters?

On an absolute basis.

Okay, my last quick question. How much was your newsprint consumption down please?

Usage was down about 12% in the quarter.

Our last question comes from Bishop Cheen of Wells Fargo Securities. Please go ahead.

Balance sheet, I think it’s two or three quarters now that you have paid down more than either consensus or guidance was. And as we look to the second half of this year, can you give us some color on what you are thinking about continuing to use free cash flow to pay down the revolver? And any color you can add on your strategy for the 2012 revolver maturity?

Sure, as I mentioned a little bit earlier, in the short term given the continued uncertainty around the economy, we are going to be using a lot of that cash to pay down debt, although always looking out for great investment and acquisition opportunities that can move the growth trajectory of the company forward. But probably with the uncertainty as I said, probably going to pay down cash before we look at doing share repurchases or other activities like that. With regard to the revolver, it matures in March of 2012. As I have indicated previously we have been successfully rolling over our revolvers for about 30 years, and I suspect that I will probably have some firm information on that by the end of the quarter. But probably don't want to go further than that.

Thank you. Ladies and gentlemen, this now concludes our conference for today. We appreciate your participation. You may now disconnect your line and have a great rest of the day.