Good day, everyone, and welcome to today's Gannett's Third Quarter 2011 Earnings Conference Call. This call is being recorded. [Operator Instructions] Our speakers for today will be Gracia Martore, President and CEO; Paul Saleh, Chief Financial Officer; and Jeff Heinz, Director, Investor Relations. At this time, I'd like to turn the conference over to Mr. Heinz. Please go ahead.

Thanks, Melanie. Good morning, and welcome to our conference call and webcast to review Gannett's third quarter results. Hopefully, you have had the opportunity to review this morning's press release. You can also find it at www.gannett.com. Before we get started, however, 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. We have provided reconciliations of those measures to the most directly comparable GAAP measures in the press release and on the Investor Relations portion of our website. With that, let me turn the call over to Gracia.

Thanks, Jeff, and good morning, everyone. Let me begin by acknowledging Craig Dubow, our former Chairman and CEO, who retired on October 6 due to disability from ongoing health issues. Craig and I worked hand-in-hand for many years, and on behalf of the entire management team and the board, we thank him for his leadership during an extremely challenging time for our industry and the economy more broadly. Craig and the management team all maintained a steadfast commitment to serving our customers and their ever-changing media consumption preferences and created a solid foundation for the future. The management team and I share a common vision for the future of Gannett and are passionate about the opportunities ahead. Now on today's call, I'm going to update you on some of our strategic initiatives, and we'll discuss some financial highlights for the quarter. Paul Saleh, our Chief Financial Officer, will then review our quarterly results in more detail, including the special items we noted in the release, as well as some balance sheet items. We'll then open up the call for your questions. At Gannett, we continue to focus on 2 fronts: meeting the demands of the changing media landscape while further solidifying our role as the leading source of local news and information through our unique, relevant and highly valued and engaging content. It's our mission to be the destination for consumers however, whenever and wherever they want to be informed and entertained. And to put it even simpler, we want to be there for our consumers anytime and on any device. Our strong, trusted relationships within our communities have been built over decades through an unwavering dedication to serving our consumers and businesses in these communities. As a result, we are participants in and advocates for our communities. These deep,…

Well, thank you, Gracia. I'll cover our quarterly results in more detail, particularly each of our business segments, and I will comment on some balance sheet items. Generated about $1.3 billion in revenues in the quarter. Total expenses, excluding special items, were $1.1 billion, a decline of 2% year-over-year. Company remains solidly profitable, with operating income excluding special items totaling $207 million. We generated operating cash flow of $256 million. On a GAAP basis, earning per diluted share for the third quarter were $0.41. Earning per diluted share excluding special items were $0.44, as Gracia noted. In the third quarter, we had about $11 million in pretax special items as detailed in the release. Reviewing them quickly, we had a charge of approximately $9 million on a pretax basis due to workforce restructuring, which was reflected in operating income. On an after-tax basis, this charge represents about $5 million or $0.02 per share. We also recorded a special non-cash impairment charge of almost $2 million or slightly over $1 million on an after-tax basis for an investment in an online business. This non-cash charge is reflected as a non-operating item. In the third quarter of last year, we had over $31 million in charges associated with workforce restructuring, facility consolidations and intangible asset impairments. These charges totaled about $23 million after tax or $0.10 per share. All these items are found on Table 5 of our earnings release. From a cash flow perspective, net cash flow from operating activities totaled $188 million for the quarter, and free cash flow totaled $176 million, as found on Table 10 of our release. For the first 3 quarters of this year, the company generated free cash flow of over $570 million. Turning to our segment results. Total Publishing segment revenues were 5% lower…

[Operator Instructions] Our first question comes from Alexia Quadrani with JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: On the newspaper side, could you tell us what you're seeing so far into the fourth quarter? And still on newspapers, how should we really be thinking about profitability going into the fourth quarter and then 2012, given the challenging market conditions? I guess if you could elaborate a bit on what you think you could still do on the cost side.

Sure. Alexia, obviously, it's very early in the quarter, but overall, we're not seeing anything that is substantially different than what we have seen in the prior quarters. I think there's a little bit of a slight improvement in some of our Publishing businesses but nothing substantial that we're seeing thus far. Seeing some slight improvement, obviously, in TV excluding political in some key categories like auto. But again, it's tough to say at this point given we're going to have to wait and see how the holiday season is going to unfold. I think at this point in talking to some consumer product manufacturers, they sense cautious optimism from retailers with an emphasis on cautious. They're waiting to see how the consumer is going to be spending as the holiday season begins to ramp up. Clearly, consumer confidence is going to have an impact. One area of obvious optimism is auto and how that's going to impact our various platforms, as well as TV. As you saw or read in our numbers in July and August, obviously, that was still fairly muted, but now with the Japanese production issues behind us, those issues are winding down. And in fact, in September on the TV side, we saw auto advertising up over 20%. And I think we saw new car sales in September up pretty nicely, up, I think, about 10%. And what we're hearing out of GM and others is that the consumer is still in the game despite a difficult economy. So we're optimistic on the auto side, and that should have a good impact on all of our platforms, particularly television. As to the fourth quarter and beyond, we will continue to manage as we always have at this company, aligning our expenses against the opportunities we see. I think a good example of that is what I mentioned early in my remarks on the Gannett Publishing Services side, where we have combined all of those operations. That's going to achieve additional efficiencies, but as importantly, if not more importantly, give us some opportunities to generate revenues by managing it in a consolidated and more aggressive way in going out and looking for opportunities there. I mentioned, obviously, Cincinnati where we're looking down the road at the potential consolidation there, the outsourcing of printing and some efficiencies to be realized there. So we're constantly looking at opportunities to be more efficient in what we do, and we continue to believe that, that will be helpful on the newsprint side. Those comparisons are abating as the year has progressed. And as Paul mentioned, we expect newsprint expense to be below last year, so that will be helpful as well.

Our next question comes from Doug Arthur with Evercore.

Gracia, just to be clear on the Broadcasting, when you say adjusted was up 4.7% in Q3, and you're talking high single-digit for Q4, does that include retrans or exclude retrans?

That's total television revenues. So it includes retrans, it includes core, spot, et cetera. The only thing it excludes is the incremental impact of political year-over-year because that's the biggest one-off factor.

Okay. And then just on foreign exchange, how do you see that impacting you? Because there's been a fair amount of movement in the last 60 days there. How do you see that impacting you in the fourth quarter?

Yes. In the third quarter, it really had a de minimis impact on us despite all of the gyrations that it went through. Clearly, the currency that is most impactful to us is the British pound. Last year in the fourth quarter, the British pound averaged $1.54. I think it seems to be bobbing and weaving around that range. So at this moment, we're not anticipating any significant impact one way or another.

We'll go next to Craig Huber with Access 3:42.

42, LLC: My first question, if I could. I wanted to ask a similar question here about the cost. I mean, you guys have taken out a Herculean amount of cost here since 2007. You were very well run before that. I think you've taken out here roughly 33%, 36% of costs since 3Q 2007, but by my calculations, revenues have dropped 43% in Newspaper division. As you look at and you're getting deeper and deeper into your muscle here, do you think you could take out another, say, 10% of your cash costs, putting aside Newspaper over, say, the next 2 years if the economy does not cooperate?

As I've said earlier, Craig, if the economy doesn't cooperate, we're obviously going to manage the business as we always have. But I think what we are much more focused on is creating revenue opportunities to grow the top line. A lot of the time, attention and focus of our senior management team, a lot of the focus of our strategic transformation efforts is very much on looking at opportunities to leverage those hundred-plus local, great brands, strong relationships we have with local communities, together with a great brand in USA TODAY and CareerBuilder and others. So that's where the lion's share of our focus is on, is improving that top line, irrespective of how the economy plays out over the next couple of years, to position ourselves when the economy does return to a more normalized environment, if there is such a thing these days. But from an expense perspective, we are continuously realigning, as I said earlier, our expenses to make sure they are in the areas of the most opportunity for us. Our expenses aren't going to be even quarter-to-quarter because there are going to be certain opportunities from quarter-to-quarter to invest in. But we will continue to do the good job that Gannett has always done in being fiscally disciplined. But our major focus is on our transformational initiatives and our strategic efforts.

42, LLC: And then, Gracia, as a point of clarification, you're down 9.1% constant currency Newspaper ad revenue decline in the quarter. How did that break down between the 3 months, please?

I think it was relatively in the same bandwidth, just looking at advertising versus a year ago in Publishing. August of the 3 months was probably the stronger month, but when I look at the 3 months, it was relatively, say, the same, not to say that there weren't obviously movements within categories. So as I said earlier, we would expect that auto, for instance, and television would -- was much, much better in September than it was in July and August. We expect that we may see that kind of follow through in some of our other numbers as well. But that's sort of a general sense of it, Craig.

42, LLC: Do you think then, Gracia, if September was down about 10%, that it all came out to negative 9.1% in the quarter for your Newspaper ad revenue?

No. September was not down 10%, as I said. The numbers probably were fairly consistent across the months.

42, LLC: And then my other question, if I could, on your circulation revenues, down about 1% in the quarter. I assume part of that was some selective price increases. But can you also speak about, if you would, your circulation volume decline, I guess, and perhaps in the quarter for daily and Sunday overall for the U.S.?

Sure, Craig. On the Sunday circulation, we continue to have a very, very nice story on U.S. Community Publishing, where Sunday circulation was virtually flat year-over-year. And that's on top of some great gains and good work that has been done by Bob Dickey and his team over the last couple of years on the Sunday circulation side. On the daily side, we saw about a 5% to 6% decline on that circulation. But let me remind you that from the perspective of Sunday, that's a very key and important number for us because as you well know, having covered the industry for so long, a lot of our advertising revenues are focused on Sunday. There's a disproportionate share of our advertising revenues that are generated from that Sunday product, and so that's an area that we focus on a great deal.

Next, we'll hear from John Janedis with UBS.

Just sticking with the expense theme, I think the other day, given your expense controls, how do you expect the expenses overall to come in for 2011 relative to the commentary that you have in the 10-Qs?

As I just said, John, we will continue to be very focused on expenses, as we always have. One of the factors that will help us in the fourth quarter is obviously newsprint pricing abating in terms of the comparison year-over-year. So that will be helpful. At the same time, though, as we mentioned earlier, we are investing in things like Deal Chicken, and we're going to continue to invest in those things. CareerBuilder on the Digital side had just a wonderful, wonderful top line performance. They've spent a few dollars here to invest in some things like marketing and other things that will position us extremely well as we go into 2012. So in those growth businesses on the Digital side where we're focusing more of our expenses, there's not going to be an evenness from quarter-to-quarter, and we're not going to miss out obviously on opportunities to invest in good products like Deal Chicken and in some of the good things that CareerBuilder is doing. But overall as a company, we'll continue to be very focused on the expense side, and we will not disappoint you.

Okay. And maybe 2 quick housekeeping questions. One, on the CareerBuilder number, was that plus-15 North America network only, or is that all in?

That was all in, John.

Can you give us the North America number?

The total North American?

Yes. The total was not too far from the same -- it was high, close to 13-plus percent.

And then, Gracia, one quick question on auto. In terms of the number in September of around the plus 20% or so, has that...

In TV.

Has that continued into October?

Again, it's pretty early in the quarter, but we expect to see some very, very good auto numbers in the fourth quarter for TV.

Our next question comes from Barrington Research's Jim Goss.

The conventional wisdom going into -- as publishing was moving into the Digital age, was that you're trading in live dollars for digital dimes, alluding to both pricing and cannibalization issues. As you began this call, you described how you're not really so worried about the cannibalization issue. You're going for the business as it's evolving. Can you look at the pricing side? Sort of difficult to get to that in an objective way, but I wonder if you might talk about that a little bit.

Yes. As you know, we brought on David Payne to be our new Chief Digital Officer. And one of the things that he and I have talked a lot about is the fact that we, and many others, can't just sit there and be satisfied with the theory that you turn dollars into dimes. And we see some tremendous opportunities in various areas. So for instance, in video, where we believe that there are -- there is a huge amount of consumer demand, and that is only beginning to ramp up. We see opportunities to have very attractive eCPMs in that area, attractive and growing eCPMs in the video area. We also are looking at a variety of things, as I mentioned earlier, from a product perspective to improve the user experience, the design and the functionality of a number of our websites just as we did last year when we rolled out Odyssey and saw a very nice pickup in traffic to our websites. And so we see opportunities to attract more premium pricing for that better content experience, that better ad experience on these redesigned websites. So we see some -- David and I and the entire management team see some real strong opportunities for us to continue to improve our digital opportunities and to find opportunities to impact pricing and revenue dollars in a meaningful way by doing that.

Okay. With iPads and other tablets, it seems you have an opportunity to create almost a new category of media and that you can embed video into, like, a daily paper or something of that nature. Are you doing that sort of thing quite a bit? And are you moving the iPads into other markets, the local markets as well?

David Payne has a wonderful launch schedule for moving iPhone apps and iPad apps and a variety of other great new media technologies across the Gannett platform over the next year. So absolutely, embedding video, more video content across all of our platforms is absolutely a goal. In fact, we just, in the last month or so, green-lit a video ad production capability and organization at our television station at WXIA in Atlanta, and it will serve us a hub for video production across the entire company. So we very much recognize the opportunity that video presents itself. And when you have 23 television stations that do a phenomenal job of producing video day in and day out, you understand the value, the terrific consumer experience that, that provides. And so absolutely, that is a tremendous area of focus for David and our entire team.

Okay, great. And one last thing, do you have a stance you can talk about with regard to reverse comp?

Yes. With regard to all of our retransmission fees and reverse comp, retrans, first of all, continues to be a positive development for us and we think appropriately so. We still believe there's a lack of alignment between the size of our stations' audiences and the percentage of sub fees that we're receiving. So we believe there continues to be some very good upside there. As for the networks, yes, they expect to get some of that retrans. And for us, that's more of an academic issue for now given where the dates that our network affiliation agreements go out to. But we don't disagree that with -- philosophically, that there can be a sharing. But we think that people need to understand that there's a lot of room for the pie to grow. So there's room to share. And the growth of that pie we see pretty clearly, as we are seeing deals being done in the marketplace. And we see our opportunity over the next few years, as our deals come up, to expand that pie of dollars for us. And then to the extent that those dollars are used by the networks to improve their programming and to provide better opportunities for us, we see that as actually a win-win.

We'll go next to William Bird with Lazard.

Could you talk about what might change your buyback amount? It looks like between the buyback and the dividend, you returned around 25% of your cash flow. What could change that?

When we announced the pro-grid, the reinstitution of the share repurchase program back in July, as well as the doubling of our dividend back in July, we indicated that this was a first step for us. We sized the program at that point to reflect where we thought the economy was and some of the headwinds that all of us are experiencing, both domestically and globally. I think when we see that the economy has better legs to it, I think that's another opportunity for us to relook at it. But I also think that as we look at some of the strategic initiatives that we are putting in place over the next several months, that, that is certainly something that the board will continuously look at each quarter as it weighs returning capital to shareholders to -- for the strengthening of the balance sheet, to investing in opportunities that we believe can either expand our growth opportunities or provide -- fill in some capabilities that we may think are necessary to help us to propel that Digital growth that we've been talking about. So a variety of factors will play into that. We believe it was a good first step, based on where the economy and other things are. And we'll just continuously, with the board, evaluate that quarter-to-quarter.

Great. And then could you just talk about just how acquisitions factor in as you think about repositioning for revenue growth?

Yes. We just actually hired a new fellow by the name of Tom Cox to head up our M&A activities. Dan Ehrman, who very capably served in that role for many, many years with the company, is going to be retiring. So we welcome Tom to the family. He has a terrific background in the digital world, as well as understands the media business in general. So we see opportunities to acquire capabilities and technologies in core and adjacent areas but nothing of dramatic size at this point in time. So we're always looking for those opportunities, and we're always going to be disciplined as we look at those opportunities going forward. There's a couple of things on the advertising side that we are looking at. We've announced a couple of small transactions in our sports vertical. We added a little piece. And in a couple of other areas, we're looking at some things, but nothing that is dramatically transformational.

We'll go next to Edward Atorino with Benchmark.

There have been some TV stations up for sale, the McGraw-Hill package being one that seemed to have fit your mix. Were you in on the bidding on that at all?

Well, we would never discuss whether we are in and out of any bidding, but what it appears is that those recent transactions, we've done some quick math on it. But it's a little hard to decipher all the moving pieces. But it looks like they've been going in the 10x or so to your average EBITDA range. What that says to us is it speaks to the value of the terrific portfolio of 23 stations that we already own and the total value of the total portfolio of Gannett properties. That's why we're buying back stock, because we believe those values aren't appropriately reflected in our share price. So they were interesting transactions. We love our television stations. We -- again, on the acquisition side, if there were opportunities to do duopolies that made good sense for us, we certainly would take a hard look at that.

You bought a little bit in the quarter. Are you -- well, you probably aren't going to answer this anyway. With all the cash and stock price and what you just said, are you thinking about being more, let's say, active in the buyback arena?

Well, we reinstated the program in mid-July and bought back about $28 million of stock in those couple of month period. As I said, in response to Bill Bird's question, there are a number of factors. It was a good first step when we announced that we would be doing about $100 million of share repurchases over the next year, but we will be constantly -- we, together with the board, will be constantly reevaluating that in the context of other uses of free cash flow.

I may have missed this when you were talking about circulation. Did you give a price versus volume analysis of the circulation increase?

We talked about the fact that circulation revenue in total was down about 1%. With regard to circulation, daily was down in the 5% to 6% range, but more importantly, Sunday was about flat. So I think it's more volume-driven than rate-driven.

One last question. Interestingly, SG&A was about $297 million, I think, in each of the 3 quarters. Is there a seasonal -- significant seasonal bounce in the fourth quarter?

Well, as you may recall, at CareerBuilder, they tend to do some promotion and marketing spending that they look at in the fourth quarter and into the first quarter. It will really depend on where they see the market and what opportunities there are. We don't manage our businesses quarter-to-quarter to produce a particular result. [indiscernible] to grow that business. So as you know, in the third quarter, we had expenses associated with the ramp-up of Deal Chicken. As well, CareerBuilder had a phenomenally good and strong revenue month, and so there were some expenses spent for some marketing in [ph] some other areas that would have flowed into SG&A. And I think as an overall comment, I'd say that as our business becomes more digitally focused, more of the expenses from those businesses fall in the SG&A category rather than in the cost of goods sold category.

No newsprint in Digital?

I don't think so.

We'll go next to Michael Kupinski with Noble Financial.

Gracia, this is Chris Ferris on for Michael Kupinski. I was wondering if you could talk -- I know you touched on this a little bit, but I was wondering if you can talk about the -- how Broadcast revenue trended on a month-to-month basis during the quarter. Did it improve sequentially?

Yes, it did. I'm sorry, excuse me. Yes, in the first couple of months of the quarter, while it was up, it was impacted by auto advertising which, as we all know, is an important factor in our Broadcast revenues. In September, with the Japanese supply chain disruptions pretty much behind and full production on auto jumped, I think I mentioned, about 20% in September. So we saw a nice sequential uplift in September as a result of that. And so we expect to see some follow-through, as I mentioned, into the fourth quarter.

Okay. That’s very helpful. And then I was wondering if you could drill down a little bit on the success you're seeing at CareerBuilder. I was wondering if you could elaborate a little bit on how you're taking share and then what you think the long-term growth opportunity is particularly internationally.

Yes, let me first address why we think we're taking share on the CareerBuilder side. I think as we look at the metrics -- and frankly, Monster has not obviously published its third quarter numbers. But when we look at the numbers through the second quarter, what we notice is that the share that we have compared to the #2 user, we're about 57% higher in average unique visitors. In third quarter, in the careers resources category, in the total traffic year-over-year growth, up about 14% year-over-year that we've attained. And there's just some other numbers that we look at that -- for instance, through the second quarter, CareerBuilder's North American network revenue was $310 million, which exceeded #2's North America revenue by about $66 million. So we track traffic, we track expressions of interest, we track total revenues. And on all of those metrics, our team at CareerBuilder sees good improvement over the rest of the players in the market. And then on the international side, obviously in 2009 and early 2010, there was not a lot of effort and dollars expended, given the global economic situation that prevailed at that point. But we have selectively made some small acquisitions. We've improved the results as we've been in many of the markets that we are in internationally year-over-year. And so we see -- again, with having the Microsoft exclusive on traffic overseas, we see that as a great opportunity to continue to expand upon our international offerings there. And as Paul mentioned, we saw a terrific revenue growth overseas, albeit from a small base, but that's a real area of opportunity for us going forward.

And we'll go to Bishop Cheen with Wells Fargo.

Let me ask you a balance sheet question. As you entered Q3 -- and we don't have the Q, so I don't have the granularity. But you had about $800 million maturing by April of 2012. So just can you give us some color about how you're thinking about taking care of whatever the maturities are that are left? I know you've paid some down.

Yes. The great thing about being at Gannett is that we generate an enormous amount of free cash flow, but we also have a substantial revolving credit facility in place. So we will use a combination of some of our free cash flow, as well as the significant capacity we have under our revolving credit agreements to re-fund those maturities. We have no maturities coming due in 2013, so we'll be paying down the revolver yet again, depending on what we do obviously with acquisitions and share repurchases and the like.

Right. That's the April maturity. I think that's your last hurdle for some time to come.

Yes, and it's a modest hurdle. It's a modest hurdle compared to what we generate.

And I do have a clarification follow-up with you on the retrans Q4. Talking about plus high single-digit growth Q4. As I understand it, you were talking about not including political. So it's basically your core and your retrans in both quarters. Is that correct?

Right. All revenues in television excluding the incremental benefit of political in both years.

Right. So when I just do the math, okay, we know what Q3 retrans was. We know it was up 27%. As we look at Q4 retrans, and maybe this is an offline follow-up with you, could we get some quantification of what retrans was, Q4 2010?

Sure. Paul, do you have those numbers handy, by any chance? Just bear with us. We're going to go and get you that answer, if -- it will take us a second. Yes, retrans in 2010 in the third quarter was -- let's see, about $15.7 million. And it was about $20 million in the third quarter this year. That $20 million should be a good run rate for the fourth quarter of this year as well because we don't have any significant new agreements coming up for renewal.

Right. But it must have been considerably less in Q4 of 2010.

It was probably in that $16 million to $17 million range, $16 million range in the fourth quarter of last year because we redid a significant deal at the end of the fourth quarter last year.

So all that implies that you're really expecting some very hefty core growth in Q4, the current Q4 that we're in, for TV?

As we experienced in the third quarter, when you exclude political, our underlying core business was very good. We expect it will continue to be very good in the fourth quarter. We're going to get some good help, obviously, from auto for the full quarter. We'll obviously have to see how the economy plays out, but we feel good, as I mentioned earlier, about where broadcast is headed in the fourth quarter. We appreciate everyone joining us today. And if you have any further questions, please feel free to call Jeff Heinz at (703) 854-6917, or any of us. Have a wonderful day.

And ladies and gentlemen, that does conclude today's conference. We thank you all for joining.