Good day and welcome to The New York Times Company fourth quarter 2009 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 introduction I would like to turn the call over to the Assistant Director of Investor Relations, Ms. Paula Schwartz, please go ahead ma'am

Thank you Tunica and welcome to our fourth quarter and full year 2009 earnings conference call. We have several members of our senior management team here to discuss the results with you. They include Janet Robinson, President and CEO, Jim Follo, Senior Vice President and Chief Financial Officer, Scott Heekin-Canedy, President and General Manager of The New York Times and Martin Nisenholtz, Senior Vice President, Digital Operations. All comparisons on this conference call will be for the fourth quarter of 2009 to the fourth quarter of 2008 unless otherwise stated. Out discussion will include forward-looking statements and our actual results may differ from those projected. Some of the factors that may cause them to differ are included in our 2008 10-K. Our presentation will also include non-GAAP financial measures and we have provided reconciliation 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 and a version that’s downloadable to an mp3 player. With that let me turn the call over to Janet Robinson.

Thank you, Paula, and good morning everyone. We were pleased to see advertisers increase their rate of spending across our newspapers, websites and other platforms as advertising trends improved during the fourth quarter. Our fourth quarter results also reflect the positive impact of the sustained actions we have been aggressively pursuing to reposition our businesses for the evolving future of the media industry. Principals among those actions are securing strong performance on cost, focusing relentlessly on increasing productivity and efficiency, diversifying our revenue streams including increasing revenues from our digital sources, introducing an array of new products and innovations and extending our reach to new audiences. Leveraging our brand strength to grow profitable circulation revenue where we believe and have been proven right the continued strong user demand for our high quality news and information will translate into increased value. And managing and rebalancing our asset portfolio to strengthen our core operations and enhance our digital presence. Looking at the details, our operating profit excluding depreciation, amortization, severance and special items grew 11% to $157.6 million in the fourth quarter from $142.1 million in the fourth quarter of 2008. On a GAAP basis, we reported operating profit from continuing operations of $136 million compared with $63 million in the fourth quarter of 2008. Diluted earnings per share from continuing operations excluding severance expense and special items were $0.44 per share compared with $0.36 in the same period of 2008. On a GAAP basis, we reported diluted EPS from continuing operations of $0.48 compared with $0.19 in the fourth quarter of 2008. Our results included several special items which Jim will review with you. We continue to aggressively manage our expenses as evidenced in a 16% decline in operating costs in the fourth quarter. As a result of these efforts we…

Thank you, Janet. Starting with special items, our fourth quarter results are favorably affected by a $0.22 for a pension curtailment gain resulting from the freezing of benefits under various company sponsored, qualified and non-qualified pension plans and unfavorably affected by $0.07 for charge for loss on leases and fee for the early termination of third party pruning contract and by $0.01 for charge for a write-down of assets due to the reduced scope of a systems project. The lease charge includes a loss on a lease for the office space at The New York Times Media Group as well as an adjustment to the estimated loss on leases recorded in the first quarter associated with the C&S closure. EPS in the fourth quarter of 2008 have been unfavorably affected by non-cash charge of $0.07 per share for the write-down of intangible assets at the International Herald Tribune. Severance costs were $0.10 per share on the quarter were $24.6 million compared to $0.10 per share or $24.1 million in the same quarter of 2008. We continued our strong expense discipline in the fourth quarter, building on our multi-year progress to restructure our cost base. Operating cost declined 16% for the quarter as reductions occurred in nearly all major expense categories including the impact of the closure of C&S and lower newsprint expense. For the year, we achieved approximately $475 million in savings while continuing to develop innovative products based upon our high quality journalism. Our cost restructuring efforts have focused on evaluating employee related costs, implementing strategic plans at The Globe, streamlining operations and increasing efficiencies and closing businesses. We continue to reduce our headcount across the company in the fourth quarter. Since wages and benefits are the single largest component of our operational costs, we examined our benefits and…

Thank you, the question-and-answer session will be conducted electronically. (Operator Instructions). We’ll take our first question from John Janedis with Wells Fargo.

Recognizing your national advertising exposure and that it could be choppy, how much difference is your visibility versus this time last year and for the advertisers that have made longer-term commitments, what does the budget look like?

The general sense from our advertisers is certainly much more positive then a year ago this time. we have said in our statement that the visibility is still very limited, but we do know of advertiser intentions to improve their spending this year considerably, but they are very guarded in the way that they talk about it and trend that we saw last year of last minute commitments or last minute pullback still seems to be operative this year. But I can give you a list of categories in what our sense is based on the conversations we have had with our advertisers. The financial services telecom, travel, international fashion, department stores, mass market, fine arts, based on the discussions we would expect to see those stabilize and there is a set of categories where there is potentially growth, tech, media, health care, American fashion, cosmetics, fashion jewelry, automotive. In January, we have seen growth from media, tech, automotive, healthcare, packaged goods, the mix of performance within our portfolio of categories is definitely different than it was throughout most of last year when it just seemed like every single category was down and we are seeing maybe a third of the categories showing flat to very significant growth in some cases. The classified categories recruitment in real estate we expect continue to be in a steep decline this year although not nearly what it was last year, we think that it will moderate considerably relative to the steep declines we saw in 2009.

I would just add that from a Boston Globe perspective, in the fourth quarter we did see on the national scale growth and an uptick in national auto manufacturers, financial services and pharmaceuticals and in the first quarter we are seeing improvement in national auto, pharmaceuticals and in financial services. It's also important to note that many contracts and many sales are being made across platform, both print and online that is increasing needless to say as we go to market in a more integrated fashion.

Janet, you’re acknowledging the comments on the Red Sox, are you still optimistic that you can actually reach a deal?

Yes, we are. It is more complicated, as you can well imagine there’s a lot of due diligence with perspective buyers that needs to be done. It is in a way multi-faceted buy because it’s not just the Red Sox Ball Club, it’s also Fenway Park and real estate holdings and NESN and certainly major league baseball plays a part in this as well. So it is quite complex, but we are certainly moving ahead in regard to selling this part of our portfolio.

Can you help us think about the incremental costs associated with the setting up of the metered model for the online content and directionally should we expect the margins there to be materially different from print?

I will just start and I am going to have Martin jump in here, from a standpoint of the decision to go to the metered model, I think we feel as though this is a an elegant solution in regard to providing our user base with free content and a proper mix of free and paid, but we did want to wait the year and make sure that indeed as I noted in all my remarks that indeed we were well prepared to make sure that this user experience was frictionless. And when indeed we are dealing with home delivery systems as well as digital systems with the digital use, we felt it was very important for us to get this right and that’s exactly what we will do. It is taking time certainly to prepare, but the talent in the house is well prepared to do so.

With respect to the costs, there is a modest operating cost to deploy the technology and we are hiring a handful of people to do that as well as a modest capital expenses well but I wouldn’t say that these are materially different to our cost base.

On the capital side that what ever we spend on that as well within the $40 million to $50 million we talked about.

We’ll take our next question from Alexia Quadrani with JPMorgan.

At The New York Times in the fourth quarter, was the national advertising category actually positive in December or is it trending positive in January or is it just a lot less bad?

The declines were significantly more modest than previous quarters, clear cut sequential improvement and a handful of categories that actually showed quite robust growth, automotive display, healthcare packaged goods, for example in telecom was in growth column as well.

Just sort of newspaper advertising in general, Q4 versus sort of what you are seeing so far in Q1, I think you've said that it is obviously trending better so far in Q1, or the improvement has continued, but would you say it is sort of straight line from the improvement in December or more just generally from the fourth quarter?

From the fourth quarter definitely, December, the way we look at the holiday spend ordinarily is to average together in November and December because the way advertisers spend around the Thanksgiving and Christmas holidays moves with the calendar and it is always captured in the calendar month, but in a fiscal month.

Then you guys have obviously done such an impressive job on the cost side in 2009. You gave a little bit of color on sort of how you hope to continue that into 2010. But is there a sort of a range that can you give us in terms of a dollar range of savings you hope to attain, incremental savings I should say in 2010?

We haven’t done that Alexia, we are still early in the year. I think plans tend to be pretty fluid at this time of year as we kind of size up the advertising market as we got forward and we want to leave in the flexibility in our model to do that on the cost side. We’ve regularly mentioned some of the initiatives and I think we put the numbers out there which at least directionally should help you understand at least the base magnitude of what we are talking about here. The pension breeze will be about $20 million, some of the net full year initiatives up in Boston will be another $20 million, we did have some salary reductions late last year at The New York Times Media Group will help that as well. We have some things going the other way as well and newsprint prices have bottomed out and we think those are on the rise although we don’t think we hit any sort of inflection point until probably midway through the year. So as of right now, we don’t see that as highly positive or negative, but that’s a pretty volatile market as well. So there’s a lot of moving pieces here, so as of right now we are somewhat reluctant to put a number out there but I would point back to last year and the aggressiveness of last year in our ability to really keep moving that number off and to add new initiatives as we go throughout the year given the trends in the business and we will continue to do that and as we firm up our plans and we get a better sense as to where the ad market is going, I think we might be better prepared to give more detail.

Much of the cost savings in Boston really took place in the second half of the year, we would be cycling of course in the first half against that as well. So it’s important to note that because of the extensive cost reduction there.

You guys talked about some additional salary cuts in the fourth quarter, but you also mentioned some additional hires on the digital side. Would you assume that headcount would be down again in 2010?

I think we would expect that to be the case yes.

You gave some early comments about how classified would continue to be weak likely in 2010, though moderating the declines, and I think that you had some more positive comments on national, but did you say anything on local in terms of how you think that that will trend in terms of advertising revenues this year?

In my rundown of outlook for categories I mentioned that department stores and mass market we see in stabilizing category, so I think that probably indicates what does the local retail would be looking like.

I think as far as the regionals and the globe, they are continuing to see softness in regard to retail for those two media groups at this point. That’s not to say that they aren’t specifics within the categories that aren’t showing some signs of improvement, but generally from a holistic perspective, they are still soft.

Next the Craig Huber with Access 342.

Your tax rate has been quite high and quite volatile here if you adjust for all of these various so-called one-time items in the last couple of years, you had roughly a 68% tax rate in 2009, adjusted as one time items, and a 49% tax rate in 2008. What do you think it will be your tax rate, for 2010, a more normalized 40% if you adjust for any upcoming potential one-time items?

We generally look in somewhere in that range, we’ve talked kind of in the 40% to 42% is kind of a long-term tax rate. This year is hard to make sense of the tax rate given the near breakeven results and permanent tax differences have a big material effect and some of that is driven by stock market performance. That is we're just not in control over. But we do think of the business kind of a long term in that sort of a tax rate I guess.

Was there a reason why in the fourth quarter you didn’t basically reverse what happened in the first quarter on the tax line, if you adjust for these one-time items, it kind of looked like you booked about $27 million of tax in the first quarter of ‘09 versus the pretax income again adjusted loss about $34 million. There's a reason why you didn’t have to adjust that in the fourth quarter to kind of true it up, if you will?

I think a lot of that first quarter reversed in the second quarter but again because our full year tax rate is so, the full year taxable income is so small that it’s really, at the end of the year I think you have to kind of look at the tax number as being somewhat of a non-factor. There's a lot of things that drove through that, FIN-48 adjustments and reserves flow through that. Changes in tax rates flow through that. So it tends to be a very difficult dynamic calculation quarter to quarter. You do get odd results but I think long term our taxes are largely on a break even business and I think that makes sense.

Okay then Janet if you could just speak a little more about your January advertising trends of the newspapers. How much was local versus national? What was the percent change there year-over-year?

As far as January is concerned?

Yes, January, yes.

We don’t give specifics and we don’t note on a monthly basis in regard to any of the trending.

What I’m trying to get out Janet, was it materially better than what you reported for the entire fourth quarter like the retail and local advertising down?

We are seeing improvement, as we noted in the press release. We are seeing modest improvement in the declines and that’s continuing in some of the categories that Scott has noted and I have noted as well and we're seeing very good performance in regard to the digital side of our business. As noted, December was an extremely good month. I noted the specific months in October and November for all of the groups but I think from a standpoint of where we see January, as we noted we are seeing improvement in the declines. We're seeing specific categories but we're not going to report on a month by month basis.

I would just add this that we have always understood January to be really a different chapter, a new page in advertiser's marketing plans and January is not a good indicator historically for the years going. So we're definitely seeing the change in attitude and a sense of sequential improvement. But that’s combined with the fact that many advertisers are launching into new annual plans and I think that we'll see this play out in the quarter consistent with the comments we have made.

Why was your corporate expense line up roughly $10 million year-over-year just for one time items?

Well a couple of things. Being for one up in our stock price in the fourth quarter has some variable accounting issues related to stock based comp. There were some variable compensation programs that also were affected positively this year where last year that was going the other way with it as fourth quarter they deteriorated. A lot of that stuff actually went negative. So they tend to be on a quarterly basis very lumpy. We've also year-over-year changed a little bit of the way that we allocate certain of our costs particularly in the pension area which over weighted this year. Pension cost to corporate away from the way did it last year. So it does tend to be lumpy. I think we kind of think of 45 million to 50 million annual numbers more in line with what makes sense.

And then lastly if I could what was the percent change in your daily and Sunday circulation in the fourth quarter for your flagship paper? The percent change please.

I don’t think we report out our circulation volume quarterly.

We'll go next to Edward Atorino with Benchmark.

A couple of things. The SG&A line looked a lot higher than I thought. Was there anything, is any of the severance in there that would have bumped up that number?

That definitely spreads throughout all the various categories. There were some variable accounting issues that affected the quarter and there were some variable base compensation programs that were impacted as the quarter strengthened and there were some catch up from prior quarters and that’s really likely what drove that number a little higher than you may have expected.

Secondly, production as a percent of revenues, if I'm calculating this right, really dropped off. It's only 35% of revenues, which was a lot lower than in the first three quarters. Is that just a seasonal effect that revenues dropped so much, or is there sort of catch-up on cost declines and all of that stuff?

Look again we're fairly fixed cost business and as revenues do better I said the performance in advertising which is all on the sole margin business was better than it was in prior quarters. I think might skew those ratios a little bit.

Lastly by the Janet about performance I think vindicates the purchase of About. Where is all the growth coming from? Is it any particular categories or just like a lot of search stuff right?

It’s poster at CPC and its also a very strong performance in display. As I noted in my remarks we have upgraded the sales talent at about to really go after a lot of display business that indeed has responded very favorably. But CPC has always been strong which was the main reason of course for buying About. But also it has shown continuous improvement during the second half of last year, I'm going to let Martin add some color.

To answer your question about the categories, the categories that have been strong include CPG, consumer packaged goods, travel, education and financial services as well of course as CPC. We also saw some retail strength in the fourth quarter.

Are CPGs sort of new to About?

Yes, it’s not new. Remember About is a huge website. It reaches tens and tens of million people across the country and it has the scale to appeal to the consumer packaged goods category. So as Janet noted we significantly upgraded the sales capability there. We've been talking about that in most of the conference calls and as we've upgraded that capability, execution has just gotten much, much better and so the consumer packaged goods category has really kicked in for us because in the sense it’s a natural. We reach a lot of moms and the website tends to skew a bit female as part of its demographic profile.

And we will take a follow up from Craig Huber with Access 342.

I did want to ask, this potential voluntary payment of $60 million to $80 million that you put back into your pension here, what is the timing on that? Would you wait potentially to the third quarter or the fourth quarter to put that back into pension?

We haven’t been quite that definitive but I think it could be sooner than that. We are well positioned from a data liquidity stand point to really do it at anytime given our view in liquidity situation.

And are you thinking if you did it you would just do it all in one shot or….

We look at a targeted percentage to be funded and that’s what ultimately drives the number but I think that’s a little bit more detailed and we've really fought through.

If you did make $60 million to $80 million to put into pension this year, where do you think you'd potentially be assuming nothing changes the under-funded status? What do you think you'd have to put into it for 2011, including the union portion as well?

You're asking to judgments about where the equity markets and where interest rates are going and that’s just a very….

No, no. I'm just assuming if things stay flat, that doesn't change at all, just what would your line appear to be for contributions for 2011?

Just in around numbers, if you take the unfunded numbers, subtract out what we fund, generally you have six years, five years to get fully funded. So that’s kind of the way to think about it I would think.

And we will take another follow-up from Edward Atorino with Benchmark

Yes, the joint venture sort of fell off a cliff compared to the first three quarters. Anything unusual in there?

Well any, actually is a very seasonal business obviously, once baseball season and that tends to be, not really a contributor and then on the paper mill side obviously the benefit we get on rate for news print hurts the news print mill which were 49% on or out.

And there are no further questions at this time. I will turn the conference over to Schwartz for any additional closing remarks.

Thank you for joining us today. Please give us a call if you have any additional questions.

And that does conclude today’s call. We thank you all for your participation.