Good morning. My name is Candace and I will be your conference facilitator. I would like to welcome everyone to the Gannett fourth quarter 2015 earnings conference call. This conference call is being recorded at the request of Gannett. Should you have any objections, you may disconnect at this time. All participants have been placed on mute to prevent any background noise. There will be a question-and-answer period after the speakers' remarks. [Operator Instructions]. Thank you. I will now turn the call over to your host, Mr. Michael Dickerson, Vice President of Investor Relations for Gannett. You may begin your conference.

Thank you, Candace. Good morning, everyone and welcome to Gannett's fourth quarter 2015 earnings conference call. I'm Mike Dickerson, Vice President of Investor Relations at Gannett. Joining me this morning are Bob Dickey, our President and Chief Executive Officer; Ali Engel, our Chief Financial Officer; John Zidich, President of Domestic Publishing; and Barbara Wall, our General Counsel. Many of you have already seen the copy of the press release that we issued this morning. For those of you who have not, it is available on our website at gannett.com. I want to call your attention to our Safe Harbor provision for forward-looking statements that can be found at the end of our press release. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements. Our current Form 10 report and other periodic filings on file with the SEC provide further detail about the risk factors related to our business. During this conference call, we may refer to adjusted EBITDA, adjusted earnings per share and free cash flow. We define adjusted EBITDA as earnings before income taxes, equity income, other non-operating items which includes interest income and interest expense among other things, severance related, including early retirement programs, asset impairment charges, depreciation and amortization. We define adjusted earnings per share as EPS before tax-effected severance related charges including early retirement programs, asset impairment charges, acquisition related expenses and transformation items. The tax impact on these non-GAAP tax deductible adjustments is based on the estimate statutory tax rate for the United Kingdom of 20%, and the United States of 38.7%. We define free cash flow as cash flow from operating activities less capital expenditure. These non-GAAP Company defined measures are provided because management believes they are useful in analyzing the Company's operating performance and cash flow before the impact of various reorganization and other charges. A reconciliation of adjusted EBITDA to GAAP net income, adjusted EPS to GAAP EPS and free cash flow to cash flow from operating activities are included in our press release. For any periods prior to the third quarter 2015, the accompanying results of operations have been derived from the consolidated financial statements and accounting records of the Company's former parent and presented as if the Company were a separate entity. The most significant changes from the publishing segment results reported by the Company's former parent include adjustments for businesses retained by the parent such as Clipper Magazine and Gannett Government Media, and adjustments for corporate allocations related to equity based compensation, pensions and other various items. The format for today's call will be as follows. First, Bob Dickey will lead us off with an overview and an update of our key strategies. Next, Ali Engel will take us through the detailed financial performance for the fourth quarter. Lastly, Bob will provide some closing remarks followed by a question-and-answer period. With that, I will now like to turn the call over to Bob Dickey.

Thanks, Mike and good morning everyone. We are pleased to report that we ended 2015 on a strong note, generating $78 million in cash flow from operation on solid earnings despite an elevated tax rate that cost us an extra $0.02 a share in the fourth quarter. Importantly, trends at our national publication USA TODAY have meaningfully improved, particularly during the last two quarters. And they are now performing better than they have for several years. Also, Newsquest continues to achieve results that lead the industry in the UK. Our two most important strategic initiatives, consolidation of the local publishing industry and driving digital growth through organic and external investment, are both progressing favorably. The acquisition of Journal Media Group is expected to close in March, and our digital exposure continues to grow as we broke through the 100 million unique digital visitor barrier in the later part of the year. During the quarter the Company continued its transformation into one integrated organization as we United our local and national media brands under the USA TODAY NETWORK, serving as the largest local to national media network in the country. The network is powered by an integrated and award-winning news organization with deep roots in 92 local communities, plus USA TODAY, and with more than 3,000 journalists with a combined reach, as I mentioned, of more than 100 million unique visitors monthly. The vast portfolio of trusted local brands combined with USA TODAY positions the USA TODAY NETWORK to deliver high-quality content to more consumers than any other media organization in the country. In addition, the network provides the opportunity for advertisers to scale their messages from the hyper-hyper local to the national reach while reaching millions of consumers through a variety of our platforms. Gannett will continue to invest in…

Thank you, Bob. Good morning, everyone. Let me begin by reminding you of an accounting item that came up in the period post-spin. Beginning with the period post-spin from the Company’s former parent and in conjunction with the execution of new agreements, we began reporting wholesale fees associated with sales of certain third-party digital advertising products and services on a net basis, as a reduction of the associated digital advertising revenues, rather than in operating expenses in our consolidated statements of operation. This change has no impact on reported operating income, operating cash flows, net income or earnings per share. Operating revenues in the fourth quarter were $739.3 million compared to $818.9 million in the fourth quarter of 2014, a decrease of $79.6 million or 9.7%. This decline is partially due to approximately $16.8 million related to the reporting of sales of certain third-party digital advertising products on a net basis, $8.8 million from the reclassification of certain customer credits, $9.1 million of prior year revenues related to exited businesses as well as $4.4 million of unfavorable foreign currency exchange rate changes. Excluding these items, revenue declined $40.5 million, or 4.9%, primarily attributable to ongoing advertiser demand shifts and the impact of the unfavorable affiliate agreement change with CareerBuilder and its impact on classified employment revenues. These declines were partially offset by positive revenue trends in Gannett’s digital products, particularly national digital advertising and mobile growth, as well as revenues from businesses acquired late in the second quarter. Weighing on the underlying digital growth rate are the unfavorable post-spin changes to the CareerBuilder affiliate agreement and the change in reporting for third-party digital revenues. Excluding digital domestic employment revenues from all periods and the effect of the change in reporting for third-party digital revenues, digital revenues increased $5 million or…

Thanks Ali. If you are not aware, recent public statements made by shareholders of Journal Media Group have suggested that Gannett's merger consideration of $12 per share may fail to adequately take into account the value of Journal Media Group’s real estate holdings. In response to these claims, we sent a letter to the President and Chief Executive Officer of Journal Media Group to reiterate our position that we strongly believe our offer delivers full and fair value to the shareholders of JMG and to emphasize that we have no intention of providing any consideration in excess of that contemplated by our existing merger agreement. The merger consideration we have offered reflects our valuation of the entirety of Journal Media Group the $12 per share consideration exceeds the value offered by any other bidder to date by a substantial margin, and represents a premium to Journal Media Group's stock price at any time prior to the announcement of our transaction. We remain very committed towards working with the management of Journal Media Group to bring this transaction to completion as contemplated by the two parties. We believe that these two great companies share a commitment to journalism and a dedication to informing and being active members in the communities we serve. Our merger will combine the best of each of our organizations to create a journalism-led, investor-focused company which will provide substantial value to the shareholders of both companies. Now I'd like to turn the call back over to the operator who will assist us in taking some questions. Thank you.

[Operator Instructions] And our first question comes from Michael Kupinski of Noble Financial. Your line is now open.

Thank you and thanks for taking the questions. A lot of moving parts in the quarter, but it looks like you guys significantly over achieved my revenue expectations, given those moving parts once you factor those out. So on that basis, congratulations on the quarter. I was wondering. How much real estate is left on Gannett's books and what are the Company's plans to further monetize real estate assets at this point?

So, Michael, good to talk to you. We do have a substantial amount of real estate. We own about 100 properties; we have about 250 leases. Selling real estate has been a part of our operating - modus operandum for many years now as we've gone to outsourcing printing and distribution, and doing different things. In a lot of the office buildings that we own, we have - we are not fully utilizing the space and we've been downsizing it to more modern, more variable cost efficient leased space. That's just part of our regular kind of ongoing what we call operating cost efficiency projects. And when those opportunities arise, we continue to take advantage of them. One of the nice things I think that we have is we are not in a position where we have to fire sale properties. We don't need cash, so we have the time to take to really make the appropriate evaluations on each location and make sure we are getting the fullest return on that investment that we can possibly get.

What is the real estate on the books at this point?

I don’t have that. We don't disclose publicly just the book value of the real estate, but I think it's safe to assume that, for the buildings, many of which have been owned for many years, that they're on the books at a low dollar value because they are very fully depreciated in many cases.

Okay. In terms of the revenue guidance for the year, this would reflect a substantial improvement from what the industry trends have been. Of course, you've been kind of overachieving those trends anyway. But what assumptions are included in that guidance in terms of like for instance the biggest variable, which seems to be print retail advertising, and those types of declines? And then if you can just talk a little bit about the visibility you have in that guidance, how far in advance do national advertisers book in digital, for instance, and so forth? And are there other variables that would influence that guidance that might be considered to be big swing factors? And so in other words if you could add a little color on that revenue guidance for me?

Sure, I will and then I’ll let John Zidich to add a few comments. A couple of things that we are seeing, we have started to see at the local level some improvements in the print trends. So that's promising. We are in the process of finalizing a reorganization that puts more of our sales resources at the regional and local levels. And John's done a great job. That's been in the works for a few months, and we expect to see great benefits from that in the second half of 2016. I think one of the numbers that's helping us right now also is that preprints are still challenging, but we have seen some movement in the second half of last year improving those trends, and we think we can hold those going forward. And then the big change for us has been, to our delight, our digital performance has been - come on track faster than we had expected under Kevin. We are very pleased with that. We are seeing USA TODAY Digital revenues exceed their print decline, and we will be cycling CareerBuilder later in the year as well. But let John add a couple more comments.

Michael, to your point, the biggest change for us and what Bob just talked about is our ability to leverage our scale in the digital world. Over 100 million uniques right now with improvements we are making to our staffing and attracting top quality folks. Our story is really beginning to resonate, and we are seeing that positive momentum happen very quickly. In the fourth quarter, our display business, which includes video, includes sponsored links, includes mobile, includes national, was up 15%. So we are starting to get the momentum from all of the investment that we are making. As I said, the scale through acquisition and our own internal growth adds to our comfort that we can improve on the numbers still.

And to your point about digital Michael, it's still not a long-term planning process. But Kevin and team have started to break through and we are starting to have some very, very interesting conversations in the multimillion dollar ballpark figure for campaigns that will take a couple of months to lay out and execute against. And that for us is a big change from five, six months ago where we just weren't having those conversations.

Right. Okay, great. I'll let others ask questions. Thank you.

Thank you.

Thank you. And our next question comes from Alexia Quadrani of J.P. Morgan. Your line is now open.

Hi, thank you. I just wanted to check on two quick questions. One, your visibility on the print side, has it changed all; I guess how much visibility you have for the next couple of months in terms of the bookings for add revenue. And then secondly I guess any more color on the M&A environment, how much the competition may have changed, if at all, given sort of the more volatile economic picture. And I know you mentioned you would be surprised or disappointed if you didn't do a deal by the first half of this year. I guess any color you can give on helping us understand how you have that sort of conviction or confidence.

Sure. A couple of things. I would point to, and it's early in the quarter, but we are happy with the start to the year, slightly better than we had anticipated. Like many, we were somewhat concerned with the weather early in the year, and some of the economic volatility that's out there in the headlines. We continue to see that. Our belief is, as I just stated, our team is coming together. We are seeing them perform at higher levels than we have seen in years past and expect that to continue to grow through the course of the year. I think John and I both have a lot of confidence that we will continue to see improvements each quarter, and we are counting on that for the second half of the year. In the area of the M&A, I would just say that it's been very refreshing how many conversations we have been having of late, people reaching out to us, folks taking our phone calls, various meetings I've had with various colleagues in the business. There is an openness to talk with Gannett. Many of them see us as a very, very excellent partner, one that believes in maintaining the legacy of their journalism that they've built in their individual company. And they believe, as John pointed out, that without the scale going forward, it will be difficult. They see the technology investments that we are making, they see the various synergies that we can bring, and we share a desire to have a sustainable local journalism marketplace that we believe is incredibly important for our country. And a lot of my colleagues share that and it's leading to some very, very interesting conversations on our part.

Alexia, while I would not really comment on our competitors' ability to close a transaction, our strong balance sheet really brings us to the table in a position as a company that can get a deal done.

Thank you very much.

Thank you. [Operator Instructions] And our next question comes from the line of Doug Arthur of Huber Research. Your line is now open.

Yes, thanks. Two questions. You cited a number of the positives on the digital growth side in the fourth quarter, but I think the 3% is a slight slowdown from the third quarter growth rates. So I'm wondering, was weakness in classified or is this a year-over-year comp issue with the affiliate agreements? That's question one. And then the $8.8 million in reclassification of certain customer credits, what exactly is that? Thanks.

Okay I'll take the $8.8 million really quickly. It's some expenses that we reclassified in cost of revenue. And Mike can follow-up with you in more detail. It's kind of an accounting thing. And I'll let John talk about the digital.

The digital piece is exactly what you said. It's the change in the businesses in our classified environment.

So any other color on non-video, non-national digital in the fourth quarter in terms of growth rates?

In total, as I said earlier, our display business was up 15%. And that's across all display, including mobile, including national, including video, including local display. So, that's a combined number that we see across all of our units and USA TODAY.

We did show digital growth also on the - in automotive. Unfortunately, it is the CareerBuilder impact on recruitment that we are working hard to cycle over, cycle through, and looking at some other opportunities to enhance our recruitment advertising effort.

Okay, great. Thank you.

Just as a reminder, if you take out employment from digital advertising, we were up 7%. So, employment is really a drag on that.

Got it, okay. Thank you. Very helpful.

Thank you. And our next question comes from the line of Craig Huber of Huber Research. Your line is now open.

Yes, good morning. I have a few questions here. I want to better understand the classified number down 20.6%. Can you just break that down? What was help wanted down versus auto versus real estate, and I guess other two?

Hang on.

Thank you.

Craig, in total, our recruitment business was down in the mid-25% range. Automotive is a positive mid-single-digit. Real estate is negative in the mid to upper single-digit range, and other classified is positive in the high single-digit range.

Okay, thank you for that. Also, for the full year, what percent of your ad revenue was digital? And also, can you just break apart - I'm curious how print did in the fourth quarter. I have a follow-up too.

We are in the 23% to 25% range Craig, in total, settle in right around 24%. We have some of our metros are in the 30% range. We are happy with their transition.

How did print do in the fourth quarter?

It was down low double-digits.

Okay. And then also circulation volumes, I want to get a better understanding how daily and Sunday circulation volume did total, home delivery and newsstand, year-over-year in the quarter.

Our fourth quarter was the best quarter of the year in home delivery. Daily from the first quarter, we improved about 20%, finished down in the high single-digit range, about 8%. On Sunday in the first quarter, we have improved almost a third and are down in the 6% range in home delivery. On the single copy side…

I was actually more interested in the overall numbers if you have those, please, for daily and Sunday.

Total, we'll finish the year in the 8% range for both daily and Sunday.

Okay. And then you had a very nice number percent up here for digital-only subs. What was the absolute number of digital-only subs please?

That’s about a 125,000 Craig.

Okay. My last question, newsprint. Can you just help us understand, adjusting for acquisitions, what the percent change was for your newsprint costs and average price and volume, what those percent changes were please?

Hang on. So our newsprint for the quarter in total was down 35.5%. Our price declined about 20%. Consumption was down about 20%. I don’t have an adjusted for the acquisitions. That's all-in. But those are kind of generally we are down both in price and volume, so the expense is down significantly.

Actually, I do have one more point of clarification. In the quarter, how much did the small acquisitions at overall revenue please?

About $26 million.

And just remind us the dates when that annualizes?

It was late May, early June.

Second quarter.

Great. Thank you.

Thanks, Craig.

Thank you. And our next question comes from the line of Jim Goss of Barrington Research. Your line is now open.

Thanks. I was wondering about this, the interaction you are developing between local and national. I know it's been a several year process, but I'm wondering. How is it affecting the existing business, would you say? And what impact do you think it might have on M&A, both from a standpoint of a seller thinking that is an opportunity that could take place with their product, and you in terms of what you can probably pay since there will be added development to the property you purchase?

Yes, I think you touched on the right couple of points there. First, we have been working on this conceptually for a period of time, but we've really started to see it come together with the announcement of the USA TODAY NETWORK. And what we are seeing through pulling all of our brands under the USA TODAY NETWORK name, an entirely different conversation with our advertisers, particularly those national brand and major retailers. They are seeing the value of our content. As they struggle to find the right environment to place their advertising, their digital advertising, we have become a very interested party for them to learn more about 100-plus million uniques, how that works and such. And as a result, you saw the nice uptick that we expect in national to continue, that we experienced in the fourth quarter to continue. On the M&A side, I think I mentioned it a moment ago, you're absolutely right. Those in the business that we are talking with, one of the things that intrigues them is to be attached to the USA TODAY NETWORK. They see the value in being part of the scale. They look at the quality of the investigative piece that we just published this week on the teachers, and those violations and the poor fact checking that goes in as people move from one state to the other, background checks. That's the kind of journalism they want to be connected to. And they recognize that, in their isolated markets, or smaller markets, it's hard for them to be able to invest at the depth that they need to compete. So being part of that all of a sudden, it elevates everyone. We think it's part of the synergies that we bring, I think an important part as it relates to the consumer side of the business. Tie that to the synergies that Gannett brings on the business side which we've communicated over and over. We are able to have very, very attractive discussions with any potential acquisition out there.

All right. And with regard to circulation trends and the digital impact, if you will, you've had really good success in creating an increasing number of digital-only subscribers. Is that having somewhat of a dilutive impact on the growth and circulation revenues, however the net change in circulation revenues, or are you able to capture similar pricing for digital-only subs? It seemed like when the program was first established when you were a combined company, it was that there might be a different term to get a digital-only. Is that still true, and is that why it's somewhat of a more tempered outlook for circ revenues?

I think there are two pieces. One, we do offer a digital-only subscriber at a vastly less subscription rate that a full access seven-day, including print. We are also seeing the cycling of some aggressive circulation price increases over about a three-year period of time. So this year, as we've worked with our preprint advertisers, we are narrowing some of those price increases throughout this year to be slightly more conservative than we've done in the past. We are also experimenting with and testing some new approaches on the digital-only side, and in the coming quarterly releases, we can update you on more there. But it is less expensive to be a digital-only subscriber. Our team does a great job of upgrading them to include a Sunday subscription, which drives the subscription value up. And we are very, very proud of the fact that we have close to 70% of our subscribers today activating their digital accounts. And when you look around, a lot of - in the industry, the average would probably be more in the 40% range. So I think we are doing a really good job of continuing to build engagement with the readers we do have.

Okay. One last question. CareerBuilder model is changing somewhat. They are trying to become more of a global SaaS basis and less transactional. Does that impact your business or does that just remain as one of the components of the overall business and it continues as it has?

At this point, we don't see that having a negative impact on us. We are very much - our local markets are in the transactional business. That's where local business is trying to find their next hire. So for us, that's where we need to stay focused, and we wish CareerBuilder the best as they continue to transition.

All right. Thanks very much.

Thank you. And I’m showing no further questions at this time. I'd like to turn the conference back to management for closing remarks.

Thank you all very much for joining us today. That concludes today's call. If you have any further questions, you can reach me, Mike Dickerson, at 703-854-6185. You all have a very nice day.