Good day and welcome to the New York Times Fourth Quarter 2008 Earnings Conference Call. Today's call is being recorded. A question-and-answer session will follow today's presentation. (Operator Instructions). For opening remarks and introductions, I would like to turn the call over to your host, Ms. Catherine Mathis. Please go ahead, ma'am.

Thank you, and welcome to our fourth quarter and year-over-yearend earnings conference call. We have several members of our senior management team here today to discuss our results with you. And they include Janet Robinson, our President and CEO; Jim Follo, our Senior Vice President and Chief Financial Officer; Martin Nisenholtz, Senior Vice President, Digital Operations; Denise Warren, Senior Vice President and Chief Advertising Officer for the New York Times Media Group and General Manager of NYTimes.com; and Roland Caputo, who is our Senior Vice President and Chief Financial Officer of the New York Times Media Group. All comparisons on this conference call will be for the fourth quarter of 2008 to the fourth quarter of 2007 unless otherwise stated. Our discussions will include forward-looking statements and actual results may differ from those predicted. Some of the factors that may cause them to differ are included in our 2007 10-K and our third quarter 2008 10-Q. Our presentation will also include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our corporate website at www.nytco.com. An archive of this call will be available on our website as well as transcript in a version that's downloadable to an MP3 player. With that, let me turn the call over to Janet Robinson.

Thank you, Catherine and good morning everyone. The disruptions of the global economy are affecting all businesses and industry, especially companies such as ours that generate a significant portion of their revenues from advertising. In this time of unprecedented change, we are refining strategically and creatively to manage our businesses and prepare for our future, while preserving the flexibility to navigate this difficult period. You have seen that in our decision to restructure our cost base to preserve capital by reducing our dividend and to improve our financial position by completing the transaction announced last week. And you see that daily in how we are responding to the present realities of our market. For the fourth quarter, we reported earnings per share from continuing operations of $0.19, which included $0.10 for severance cost and $0.07 for the write-down of intangible asset at the International Herald Tribune compared with $0.37 earnings per share in the fourth quarter of 2007, which included $0.07 per share for severance cost and $0.07 for asset write-down for the Worcester Telegram & Gazette and for the Metro Boston. In the fourth quarter, we saw a weakening of revenues as the economy declined and advertisers pulled back on placements. Digital revenues decreased in the quarter, as online marketers reduced display ads in response to deteriorating business conditions. As we look back on the quarter, we believe it is important to highlight several items. First, the United States Presidential election and the turmoil on the world's financial markets have again demonstrated the need for the high quality journalism we provide in print and online. The continued strength of our brand was evident in the willingness of our readers to pay higher prices for our newspapers, which in turn is reflected in the growth of our circulation revenues. Second,…

Thank you, Janet. We continue to tightly manage our expenses in the fourth quarter. As Janet said, operating cost declined 8.5%, mainly as a result of lower compensation costs and benefit expense. For the year, operating cost dropped 4.7% or approximately $136 million. Severance cost was $0.10 per share in the quarter or $24 million. Of this amount, approximately $20 million was for the shutdown of C&S. In the fourth quarter of 2007, the company had $0.07 per share or $17.8 million in severance cost. For 2008, severance cost totaled $8.81 million compared to $35.4 million in 2007. At year- end 2008, our headcount was down 9% from the prior year. Depreciation and amortization decreased 23% to $36 million from $46.7 million in the fourth quarter of 2007, primarily because of various assets at The New York Times Media Group reached the end of their depreciation periods in the first nine months of 2008. Newsprint expense rose 11%, stemming from a 33% increase in prices, offset in part by a 22% decrease in consumption. The newsprint price increase added $18 million to cost in the fourth quarter and a decrease in consumption lowered costs by $12.1 million. Newsprint transaction prices peaked in November and have been trending down. Forecasters believe that prices will decrease in 2009 as the decline in newsprint demand continues. In 2008, we reduced the width of six of our regional newspapers to 44 inches, which will benefit us this year. The progress we have made on our cost reduction measures continues across the company. The closure of C&S is expected to improve our operating results by $27 million on an annual basis. This is the result of an estimated decrease in costs of approximately $112 million to operate C&S, offset in part by an estimated decrease…

Thank you, sir. (Operator Instructions). And we take our first question from Edward Atorino with Benchmark. Please go ahead, sir.

All right. Caught me off guard there. Three questions; on the sale of the distribution operation that you said that so the other line and from that business will go down $80 million on the other line basis. Is that right? Number one. And number two, you've got a $20 million savings at the Globe and $18 million saving some place else. Are there any another items or to put it in other way, what would be the '09 savings? And thirdly, would you project your interest expense for '09, given the new financing? Does it only go up for the $29 million over six years, or I would assume it would go up more than that given the financing?

Ed, let me just start with the financing and I'll walk backwards.

Thank you.

It's difficult to give precise guidance on interest expense for 2009.

Ballpark is fine.

As we are in the midst of, as we said, of negotiating a sale lease-back or potentially other financing.

Let's just do what swing this money?

Yeah, some money as you know is 14% and then the discount on the notes being amortized over six years, you can do the math and you can just divide that over six years and I think that will add a few points to the underlying interest rate of 14%.

So you charge interest expense of 11% plus the 3%.

That’s correct. Essentially there’s a discount on our balance sheet against the notes that will essentially amortize against the interest expense.

And you amortize these fees over the six years.

That’s correct. As far as the New England Media Group, the planned consolidation we referred to an annual run rate of 20 million and we get about half of that this year, which is at the second half of the year. The other issue you talked about was the revenues that we will be losing from the C&S shutdown. About $10 million of that will go against circulation revenues and the remainder will go against other revenues.

So the remainder is what, 70?

It's about 70.

70.

75, I think it is. I think the math is 10 million on single copy and about 75 million on other revenues.

And that was not profitable?

Well, as we said, our profitability will improve by $27 million by exiting that business. So, it was unprofitable.

Okie dokie. Next item?

And we go to take our next question from Catriona Fallon with Citi. Please go ahead.

Hi. This is actually David Rose for Catriona. Jim, with regards to the pension underfunding, is it that important as to figure out what the difference is between the funded and the... sorry not the funded, but the qualified and the non-qualified plans as to how the underfunding is split up?

Well, the number I referred to was the qualified plan only; I mean the unqualified plan as of last year which is not funded, was about $227 million. That is not impacted by changes in the stock market.

Okay. So, the qualified plan dropped from a deficit of $48 million to $625 million in 2008 then?

That's correct.

And how the mechanics work in terms of funding that? Is it straight line over seven years or is there a different type of formula that determines how much you have to pay into it each year?

Well, first of all, let me just step back. I mean that's a point and time number.

I agree, yes.

And a lot of things will happen between now and when we actually start funding. But what certainly we know is that there is no contribution that needs to be made in 2009. So if nothing were to change today, that 625 gets convinced over a six-year period, but the funding calculations are very complex. And quite frankly, I would be surprised if there wasn't some government intervention because I don't think this is a unique issue. I think you will see this is a fairly common issue. I would be surprised if there wasn't some changes in those rules, but you can't certainly count on that. But I think just broadly speaking, I think if you're thinking about that number kind of over a six year period.

But it's not exactly a straight line, is it? Whatever the number ends up being, it's not a straight line?

Not necessarily a straight line, no.

Okay. And then with regards to the C&S shutdown, I think you had originally discussed that most of the severance and lease write-offs were going to occur in Q4 and some of that was going to slip into Q1. With the $14 million lease charge you talked about today, is that the reminder of the write-offs for C&S or is there additional severance in Q1 as well?

There is little if no severance in Q1. I mean, there might be some very, very small numbers, but beyond that I think $14 million pretty much covers it. And that, by the way, is a non-cash charge, that will not be a cash charge.

Okay. And then the last question, maybe this is to Martin or to Janet as well. About.com's growth or I guess decline in advertising this quarter, slipped below that of the newspaper, online websites. I am just wondering what sort of pattern you see in terms of advertisers choosing About or choosing the newspaper sites in 2009 and what sort of trajectory do you see for those two separate items this year?

This is Martin. As Janet said in her introduction, the issue at About in the fourth quarter was really a deepening of an issue that we have been seeing all year, which was the softness in display advertising. And as I think I've said on other calls, the strength of the NYTimes.com business is in its display line. It is able to get premium rates based on its brand and its audience. About has a harder problem doing that. About's business is strengthened by its cost-per-click line. So to the extent that the display business goes softer, it can dip below The Times because The Times obviously has great strength on the display side relatively speaking. So with respect to the going forward, I think the idea is that we will be looking at the design of the site, optimizing it more going forward for CPC which at About, as again Janet said, remained relatively strong in the mid single-digits in the fourth quarter. That was obviously a decline off of the rest of the year. But as you saw in Google's numbers, the same thing happened in the fourth quarter. So the site will be more optimized going forward this year for CPC as that business is still growing. So that should basically answer your questions.

Okay, thank you.

And we take our next question from John Janedis with Wachovia. Please go ahead.

Hi, thank you. Good morning. Janet, obviously pressure on the retailers is growing and with the Circuit City bankruptcy, I am wondering if you created some sort of watch list or something of advertisers that you think will close down and maybe what percentage of your revenue they might represent? And then also, if you are seeing a trend where customers are they asking for a change in terms of payment or just that payment at all? Thanks.

We're watching it very carefully. I think that it's clear that the retail industry is going through some very difficult times. Circuit City did advertise in The Times, The Globe and The Regional, but the impact is minimum. And in regard to terms of payment, we're working with all of our advertisers and they are certainly is concern in regard to some of their practices. But I think from a standpoint of monitoring this very carefully John, we continue to do so as we always have and continue to watch the list very carefully in regard to the ones that maybe most vulnerable.

Where do you characterize it, is about 25% of your revenue retail?

Hold on one minute, it's 13% at The Times, 33% at The Globe, 56% at The Regional for a total of 24%. From an industry perspective, it runs around 50% industry-wide. So we're a little less vulnerable on the retail side. That has the great deal to do needless to stay with the strength of national advertising percentage at the... or the larger percentage I should say at The Times and The Globe.

Thanks, Janet and one quickie for Martin. Can you talk a bit about what you're seeing maybe a deeper dive under the same side of the businesses. We now are seeing a lot of talk about CPM pressure and I'm wondering if you can maybe give us some more color about price versus inventory sold?

Sure. And Denise Warren is here from The Times Media Group, so I'll let her comment as well. As I... again as I have been saying all year, one, the themes this year has been kind of a two-fold theme. The notion that we're seeing or we have seen an increasing amount of inventory on the marketplace and we've seen that pouring on for the last year or so through the social networks and through other what I would call, non-traditional content companies. And then the second thing that has happened this year has been the real onslaught of the advertising network business. There are over 300 ad networks in the space now. And so, the combination of those two things has put some pressure on rate. Having said that, as I said in response to the last caller, we've seen the strengthening in rate over most of the course of the year at NYTimes.com. Where you will not see that is in the less premium inventory, which is the About.com display inventory. So that's the disparity between the two businesses on the display side. You will not have the same kind of rate strength in a brand that is not as strong as The Times brand. And I think you will see that across the rest of the industry as well. You saw it in Yahoo's results yesterday. So the display business overall, and I mean from an industry perspective, from a rate perspective, has weakened this year. I don't think that you can say that the same thing from a pure CPM perspective has occurred at NYTimes.com. You would want to...?

The only two points I would add to what Martin said is the weakening that we've seen is really a direct result of the economic crisis. That is absolutely our belief, number one. Number two, it's important to just reiterate what I think we said on these calls in the past is that we have significantly and Janet said it in her remarks, significantly outperformed the marketplace on display advertising this year. So again, I think a testament to our brand and our audience of the quality of what we produce each and every day.

I think it's interesting. If you look at the declines in the fourth quarter on the advertising side of digital, half of the declines are accountable and that includes all of the lines of business we do, cost-per-click, e-com, all of the lines of businesses we do. Half of the declines are attributable to one category across the company and that's help-wanted, so it's a very targeted decline. I mean we are still cycling through that help-wanted secular decline in the marketplace. And as Denise said, it's been exacerbated by this cyclical problem. But when you consider that half of the declines were in one category, it's a pretty interesting thing to think about.

Okay. And Martin, one last thing, I am sorry. But what percentage of your inventory are you using with, and under what terms are you having them sell it for you?

Well, it really depends on the property and we don't really talk about that publicly. But I would say that from an industry-wide perspective, you are probably looking today at around 50%. Some of our properties are above that, some of them are below that, but that's about where the industry is at this point.

Thanks so much.

And we'll take our next question from Craig Huber with Barclays Capital. Please go ahead sir.

Yes, good morning. First of all, on the pension, I just wanted to get a little more clarity here. As you said, taking assumption that nothing changes here, in terms of the equity markets bing flat for this year with discount rate all that, the government doesn't change anything. What are you budgeting or thinking about what next year's 2010's contribution into your pension could be? Again, if nothing changes here. You mentioned the potential would be over six-year period, I assume it would be more front-end loaded, so just as things stand right now, what could it be potential --

I don't think it's necessarily very much front-end loaded. So I think $600 million over six year is $100 million and that's the way I would be thinking about it.

Okay.

I don't view this materially different from that number, these the calculations are extremely complicated and are hard to be more precise than that.

And also as more and more companies are curtailing their pension funds on a go forward basis, so is all the obligations historical of course. How much thought have you guys given to curtailing your own pension fund going forward? Because it obviously can get way out of hand here?

Well let me just say a couple of things. Just one, we did change the benefit of accrual formula earlier as I said in my remarks and that actually reduced our liability by about $70 million. Curtailing the pension plan does nothing to reduce obligations, which is really the heart of the issue here. I mean you got assets that perform, that support obligations. Obligations are very, very heavily weighted towards past service. That exist today and that doesn't go away. A much smaller portion of that obligation relates to future things that would be addressable through a curtailment for example. So while the issue is maybe part of that $600 million it doesn't really fully address that issue in any meaningful way to be quite frank.

Well, that's what I mean if you your employees on a go forward basis here, is there a way that you could just shutdown the pension going forward? Other companies have curtailed it going forward for employees, there is no more build up of the contributions, no obligations going forward?

Yes, I mean you could.

I just want to know how much thought have you given to potentially stopping it going forward?

Well within last four months, we adjusted the accrual formula. So obviously, we consider that issue and where we saw that was reducing the accrual formula. But again that issue what you are raising is I don't think it doesn't address the $600 million issue now.

Correct, correct.

But they were two separate issues. I just wanted to be clear.

And a totally seperat sort of question, Janet, you mentioned that January advertising trends here had a number of questions for investors. Just wanted to hear from you what has changed by the different newspaper advertising categories have gotten worse here in the month of January year-over-year versus the trend you guys saw in the month of December?

Well, I think you are seeing retail after a very dismal fourth quarter, having a much harder time and I think that they have pulled back quite dramatically. As I noted, studio advertising has pulled back as well with fewer releases that we saw in January; that continues. I also think from a standpoint of classified, that really is the biggest hit we are seeing I think in the January timeframe. Martin noted that how wanted is such a huge portion of the decline across the entire company and that is a direct result certainly of what the economic conditions are in the country. But I think it's important to note that when you talk to media buyers, they are saying that the beginning of the year that there is definitely a pull back, not to say that the second half is going to be robust. But they make it clear that indeed they are pulling back dollars the early part of the year, and it really is across the board. This is national retail and as noted, very heavily skewed towards classified. Denise, do you want to add anything to that?

The only thing I would add is one thing that's important to notice just looking at December in trending it from November is there is some products which is in those numbers that sometimes give you a faulty read in terms of how the numbers look. So I think Janet is right. January overall is trending very similar to the average trend of November and December. Obviously, different categories are reacting differently. I think the watch rate (ph) sector for example. I think it's no secret what's happening in that sector. They are absolutely impacted by what's happening in the retail marketplace, that we are seeing a definite decline in spending there. This is also not their biggest quarter. So again you don't want to read too much into these trends, but it's important to understand what they are. We are seeing a little bit of a lift in studio's trend as Janet said, these are difficult trends, but because it the Oscar races are going on and Golden Globes et cetera January tends to be a little bit of a better month for us as a result of that. So I just wanted to note that. We also did actually this month we are seeing a nice lift as Janet pointed out in her remarks, in an operation advertising as well both online and in print. So that's important to note as well, but again not a trend that will continue for the year.

Then one last one please. Your income from joint venturse is about $22 million in 2008. Should investors assume the Red Sox portion of that is roughly $8 million to $10 million. Obviously, you are selling that stake, but is it fair, roughly $8 to $10 million of that is from the Red Sox for last year or not that high?

Just give me a second.

Thank you.

Next question.

Yeah we'll Matthew on that, Craig.

Great. Thank you, guys.

You are welcome.

That's all I had.

(Operator Instructions) We go to our next question from Alexia Quadrani with JPMorgan. Please go ahead.

Thank you. Just following up on your earlier comments on About.com, you mentioned the investment into sort of redesigning the site to more of a CPC model. I guess, my question is sort of about the cost and how with that in consideration, what your outlook is for the cost of that business given they are up in the quarter and obviously revenues still trending down. Should we expect that cost items, that line item still to be up in the first quarter or first half of the year?

Well, as Janet said, the expenses in the fourth quarter shouldn't explicitly say they were impacted by ConsumerSearch. But we did relaunch ConsumerSearch in the quarter and that had an impact on the expenses. We also considerably improved our... some of our technical and sales infrastructure in the business over the course of the year and that has... that cost a little bit of money as well. But to answer your question now, we are looking very, very hard obviously at the cost expense side of that business now. And we'll... we expect to moderate the investments in the businesses as the year goes on. Obviously, that reflects the performance of the business, which as you can see is not consistent with the way it's performed in the past.

And then still on the cost side but on the print product, the outlook on newsprint pricing, and maybe if you can tell us, and I think your LIFO accounting, we heard news printpricing flattening and coming down. When do you expect to see the benefit of that again just relative to your cost line?

Well, certainly I think as we cycle through some increases that were occurring next year we are going to have negative comps. You have to take a point of view as to how deep the decline could get. My understanding is that resi has taken a point of view of 10% for the year. For the full year this year, print's prices were up 12% on a blended basis year-over-year. So it's certainly back half of the year, if you believe that's the kind of the range we haven't really taken a clear point of view as to whether we think that's a higher or lower number. But clearly back half of the year, we will be cycling against negative comps in the first half, and we hope that nothing is turning up over the back half. That's our expectation.

And then just one last question. I know it's a small part of your business, but the IHT, could you give an update on that. And is it still profitable?

Look we don't break it out. I don't think it's really a factor either way in the performance; it's not a material contributor either way on the performance of that segment. I wouldn't say anything more than that.

Thank you.

And we'll take our final question from Peter Appert with Piper Jaffray. Please go ahead.

Thanks. Janet, can you talk to us little bit about how you are thinking about ad pricing in '09 and whether in the context for all the turmoil in the media marketplace maybe it might make sense to experiment more with price discounting as a tool to drive unit growth?

We are at The Times and The Globe leaving prices as it is in regard to 2008. So there are no price increases in regard to those two properties. And they are very, very minimal price increases at The Regionals in some of the markets. So we are taking the position that indeed, we are going to work with our advertisers in the current rate structure, certainly put programs together in regard to incremental advertising use of our products that put people in advantageous positions if indeed they commit to more incremental spending. But from a discount perspective, it really is not our practice to heavily discount. We feel though the audiences that we deliver to our advertisers are strong, whether it be print or online. And we want to make sure that indeed we're being paid correctly for them. And once you start down that slope, as you know Peter, it's very hard to come back. So I think we are working with our advertisers in regard to incremental things we can do for them in regard to solidifying strong contracts, but also respecting the fact that we're delivering fine products with very engaged audiences.

Thank you.

And we'll take a follow-up question from Craig Huber with Barclays Capital. Please go ahead.

Yes, hello. I just want to ask online help-wanted, how much was it down in the month of December and also for the quarter?

Hold on one moment. For the quarter, this is print and online... for the quarter at The Times, it was down 43.5%, for New England it was 39.1%, and for The Regionals, it was down 54.5%.

Do you have those percentages, I'm sorry, for just online help-wanted?

Just online was down 35.7% for the quarter.

Do you have it for the month of December, please?

I do not have that one.

Yeah, yeah. Are you talking about Craig, for the entire news group or are you just talking --?

I will take it for all three sub-sectors, sure.

Let me give you --

Online help-wanted, whatever you have.

For our news group, online help-wanted was down 36%.

For December?

Correct.

Okay.

And Craig, just to respond your New England Sports Venture, I mean that's something we actually haven't given out and that's a private company that we are not prepared. The only thing I would say is for modeling purpose, that's a very seasonal business and depending on, if you are trying to model up the joint venture line for sale, it's just very... the profits all come in the second or the third quarter, if that's not the case in the first and the fourth. So you'd have to understand that flow to model the business. But we couldn't break that out for the reasons I just gave.

Okay. And one last question, if I could. What would you say your editorial staffs at The Globe and The New York Times, what's the percent change of number of employees, editorial staffs year-over-year right now?

It's been relatively stable at The Times. As you know, we did have a headcount reduction there in the early part of 2008, but we have also added some folks. So it has not been a significant change. As you do know, we did announce headcount reductions in the editorial positions at The Globe, we did that earlier this month. So we would expect to see a decline in 2008. But that's still in the works, Craig.

Yeah, roughly maybe 8 to 10% at The Globe or not that big?

I don't believe that's correct, but I'll get back to you with the correct number.

Okay. Thank you very much.

And we have a follow up question from Edward Atorino with Benchmark. Please go ahead.

Hi and thank you. In general terms, would 2010 expenses be able to be down versus '09 as you cycle through all the stuff and got some hangover from cost savings or do you sort of run out of stuff in '09?

We are on a path as we have been for a very long time, Ed to continue to look at cost reduction. I think we've proven in the last four or five years that we are determined to restructure our business. I think we started a lot earlier than a lot of people on our peer group, and that's benefiting us and it's going to continue to benefit us going forward. I think we have been creative in regard to how we look at cost reduction.

Yes, you have.

This isn't just with reduction and section consolidation. This is closing of distribution facilities, plant consolidation, working with our unions which has benefited us both short-term and certainly will benefit us long term. I think we can say that we will continue on this path with great discipline going forward and you can count on us to do so.

One final, would your pro forma expense be up something like 20 million next year with all the new debt coming on board, is that --?

The only thing the way I can help you with that is, I am not going to talk about anything we haven't announced as being done. So the math you've done on the (inaudible) transaction, you should think about some of that being used to offset the revolver interest expense, but about a $100 million would presumably go against the November bonds, which are at about 7%. So that's how you ought to be thinking about modeling, I can't help you beyond what's been announced.

Got you. Thank you.

And it appears there are no further questions at this time. Ms. Mathis, I would like to turn the conference back over to you for any additional remarks.

Thank you all for joining us today. We appreciate your interest. Bye now.

And that does conclude today's New York Times conference call. We appreciate your participation and you may now at this time disconnect.