Good day, and welcome to The New York Times Company Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to your host, Ms. Paula Schwartz. You may begin.

Thank you, Matt, and good morning, everyone. Welcome to our third quarter 2011 earnings conference call. We have several members of our senior management team here to discuss our results with you, including: 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 of Digital Operations. All of the comparisons on this conference call will be for the third quarter of 2011 to the third quarter of 2010, unless otherwise stated. Our discussion will include forward-looking statements, and our actual results may differ from those predicted. Some of the factors that may cause them to differ are included in our 2010 10-K. 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. Now we'll turn over the call to Janet Robinson.

Thank you, Paula, and good morning, everyone. We continue to execute on our strategy of transforming our business. This quarter, we made significant progress in developing a robust digital subscription revenue stream, reducing our operating cost, meaningfully improved our liquidity through the early repayment of high-interest debt and tripled our initial investment on the sale of a portion of our stake in Fenway Sports Group. Our results also reflect the current sentiment of the larger economy, as factors ranging from the European debt crisis, to weaker consumer confidence, led to a challenging advertising environment. At the same time, we achieved 6% growth in operating profit before depreciation, amortization, severance and special items through incremental subscription revenue, resulting from the launch of The New York Times digital model, as well as through continued focus on cost management. While the lack of clarity on the direction of the economy caused advertisers to exercise more caution than we saw in the first half of the year, NYTimes.com maintained its strong traffic levels and continued to fulfill its premium advertising commitments in the quarter. Our digital subscription initiatives remained our top focus in the third quarter, as The Times continued to build its pay offerings. The Boston Globe launched the new subscription site, BostonGlobe.com, and the International Herald Tribune this month announced its own digital subscription packages. These last 2 items are excellent examples of how our digital monetization efforts are evolving. We continue to position ourselves to capitalize on our digital content across many of our brands in our ongoing effort to build a meaningful, digital subscription revenue stream. Turning to our results for the quarter, with expenses down 4%, we saw GAAP operating profit grow to $33 million, from $9 million in the same period of 2010. Our operating profit before depreciation,…

Thank you, Janet. Even as we add new revenue streams across our company, in the third quarter expense controls remained a critical component of our overall strategy, and we will remain aggressive in pursuing opportunities to reduce costs and to further improve our financial flexibility. That focus on improving financial flexibility was most recently highlighted by the previously announced prepayment in August of our $250 million 14% notes, more than 3 years before their due date, which we expect to lead to expense savings of more than $39 million annually through 2015. We incurred a $46 million loss in the prepayment in the third quarter, which represents the make-whole premium and accelerated non-cash interest expense that would've been recognized over the remaining maturity period. The charge was closer to $28 million after factoring in a tax benefit. In the beginning of the third quarter we sold more than half of our Fenway Sports Group stake for $117 million, tripling our initial investment, and we continue to see robust demand for our remaining interest. In the third quarter, operating costs were down 4%, a result of lower variable compensation costs and professional fees. We remain focused on identifying further efficiencies across our operations, which through 2012 could come in the form of increased manufacturing efficiencies, further leveraging of centralized resources and lower ongoing outside printing expenses, while continuing to invest in our digital businesses. Turning to special items, our third quarter earnings were favorably affected by $0.24 per share by the $65 million gain on the FSG sale, and unfavorably affected by $0.18 per share by the $46 million prepayment charge related to our 14% notes. Severance costs were higher in the quarter at $3 million, compared to $500,000 in the prior-year period. Newsprint expense decreased approximately 3% in the quarter,…

[Operator Instructions] And at this time, we will go to Alexia Quadrani with JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: Just a couple of questions on the digital subscription rate. I think you did say you're seeing a large majority of subscribers now becoming full paying. Do you have -- can you give us a sense of what the conversion rate is from the promotions to the full paying subscribers? And staying on that topic, in terms of new subscribers going forward, do you -- is there a sort of a metric or maybe an internal goal you guys use in terms of what you look to and then hope to obtain each for going forward?

Well, we don't give conversion rates out, Alexia. What we will say is that we are extremely pleased with what we have seen in regard to the conversion rate. As you know, we've had promotional programs in place, but we have been pleased to see how people are converting to full payment. The same is going to hold true also at The Globe. In regard to promotional offers, they have a 4-week, $0.99 offer that will convert to a $3.99 per week, full pay offer. So the use of promotion moving to conversion is how, really, both operating units are looking at this conversion. And in regard to projections as far as new subscribers, we don't give that out as well in regard to our expectations. But as noted, we are doing certainly a lot of promotion and marketing, and we also are adding many things in the -- what we would consider, I guess, Phase 2 of our rollout that I noted into my remarks that included corporate accounts, gift accounts, education accounts, certainly the shared accounts that I noted in regard to a multiple log ins. So there are a number of things that are part of that program to increase subscriptions. I would also remind you that, that 100,000 that was the Lincoln subscription, does that free subscription that Lincoln did pay for our most engaged users, does expire at the end of the year. Those are highly engaged users, and we expect that those people will look positively upon a paid subscription to The Times, particularly because of our experience in print. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: So we might see a particular bump probably at the start of the year, is that what you are suggesting?

That expires -- that program expires at the end of the year. We're starting to market to those people. But as I noted in my remarks, if our experience on the print side is any indication with these very engaged brand loyalists, when indeed we do market, we are hopeful that they will indeed convert to full payment. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: And just a follow-up question on the comment you made earlier in your remarks about the broader business, I think you said that August was the strongest month in the quarter. Was the -- I don't know if you have the monthly data with you, but if not, was the, I guess a little bit of a decline in September, relative decline to August, was it significant or was it really just a month-to-month seasonality, that jumping around is not that big of deal.

It was jumping around. It was a very volatile quarter. As I noted, a lot of that was due to a lot of the negative sentiment out there in regard to the economic climate that we did see, to be quite frank, all during the quarter, July, August and September.

And the next question will be from Craig Huber with Access 3:42.

42, LLC: A couple of questions on the digital front, last quarter you said that e-readers of replica editions were like 57,000, what is that number this quarter, please? That's embedded in this 324,000 number, it's not in the text.

It's about the same, Craig. There's some modest growth.

42, LLC: Okay, and then also you talked about the benefits in the circulation front for your flagship paper. I believe in the 6 months in the last ABC statement ending more to the year-over-year basis, your daily circulation was down 3.5%. What is that tracking here for this latest 3-month period here? I mean, the benefits that you're talking about, is it down what, less severe, closer to flat, or is actually up?

Your question is specifically about print?

42, LLC: Yes, print for the daily, is it...

The print circulation continues to decline, but those decline -- declines particularly on Sunday, moderated in Q3.

42, LLC: Okay. Can you talk further, if you would, Janet, about what you’re seeing in October? I mean, in this also -- can you maybe just quantify for us how September did for your News Media Group, the advertising?

Yes. From a -- as far as October, we've given guidance that we see modest improvement. But as you can well understand, it's very early still in the quarter for us to give more color on that. In regard to September, as we've noted, it was an extremely volatile quarter in regard to the ad commitments, primarily because of the economic conditions. There are categories, as we've said that did extremely or did well, I should say, during the quarter and show gains during that quarter, particularly the luxury segment that we've noted often. But from a standpoint of the fourth quarter, it's usually a very heavy luxury category quarter, in addition to heavy retail quarter. But, and there's also a lot of branding that's usually done during this quarter as well, so we're looking at those categories that would be affected very carefully of course, in regard to their performance in the fourth quarter.

42, LLC: And then over the last 4 years, you guys, have taken about 30% of your costs, and obviously a very brutal environment here. If the economy doesn't cooperate here for say, the next 2 years, do you feel you can take out another 10% to 15% of your total cash costs?

Now, Craig. We're -- we'll just -- as we've repeatedly said, we'll just continue to be aggressive, I'd prefer not to put a number out there, but we still think there's areas that we can go to take cost out, as you will have to be adaptable to the revenue environment, as I think we always have. But we've been answering the same question about is there anything more to cut for probably 4 years, and we tend to find ways to do that. The dynamics in the business changes where there are things where that maybe the opportunity wasn't there a year ago. So I think we will have to maintain a pretty adaptable view. And as we said in our outlook, we will see again kind of low- to mid-single-digit decline in the fourth quarter, and we've been pointing to back half of the year acceleration of that. So we'll have to see about -- the best we can say is, we're going to be aggressive as we need to be, and we will have to be adaptable to the revenue environment, without being precise.

And the next question will be from Leo Kulp of Citi.

Can you talk a little bit about what you saw driving the deceleration in digital growth at the News Media Group this quarter? Was it -- you sort of maxed out on the growth from the home page, or is there something else happening there? And then looking out to next year, can you help us think about how to quantify the potential impact from iPad and mobile apps sort of ramping up?

Well, on the growth question, I think the simple answer is that you saw -- as we have seen over the last couple of years now, as the economy has gotten a little bit more squirrely, advertisers are pulling back a bit. And so you saw that in 2010, and we saw that again a bit in 2011 in the third quarter. We don't think that there's anything fundamental about that. It's just simply a question of some of the very significant economic issues that have faced us in the third quarter.

This is Scott. I will just add to what Martin has said. We saw similar deceleration at the end of Q1, associated with the events in Japan, and the kind of ricochet effect it had on business and consumer confidence. And within a few weeks after that, that spend on digital came roaring back. So we do see these episodes, if you will, when things going on in the larger economy can result in advertisers hitting the brakes.

And just one final thought, the October trends that I mentioned suggest that News Media Group performance will be better in October, and that's what we're seeing in the early part. So it's fairly volatile and very tied to economic conditions.

Yes, and on the iPad, iPhone question, it's a bit too early to call next year, but I would say that as we see new entrants in the marketplace like the Kindle Fire come on stream, we think that benefits our business. We think that the more people adopt these technologies, the better. And we've seen really nice uptake in the last several weeks on the iPhone and iPad download site, particularly with the success of the iPhone 4S. So all of that's, I think, pointing to positive -- a positive future.

The next question will be from John Janedis with UBS.

Janet, just to clarify from Craig's question earlier. Is the 224,000 digital subscription package subscribers in the second quarter kind of an apples to apples basis to third quarter numbers, something like 260. Is that maybe the ballpark number?

The -- in the first -- in the second quarter, we noted 224,000 worth of paid digital subscribers. There were 57,000 added in regard to the e-reader. When you're looking at this month, we have joined the 300 -- we have joined the e-reader and replica editions with the paid subscribers, and the total is 324,000.

Okay. And then Martin, just back to digital within News Media, to what extent are you seeing any kind of pricing pressure or competition from some of the social media players?

We're not really seeing that in the News Media Group at all. Obviously, Facebook has poured billions and billions of ad impressions on the marketplace, and they are quite hot now with respect to testing and execution on the social media side of the equation. But I think that that's viewed somewhat separately from the brand-building activities that are being executed on sites like NYTimes.com. So I would suggest that they're quite separate in terms of the advertiser's overall spend. It's always very difficult to parse out where money is coming from across an advertiser's total budget. And there's no question that Facebook has grown dramatically in the last 18 months, but that money is -- it's never a 0-some gain and that money is coming from all over the marketing budget. It's not coming from the digital spend on premium brands per se.

Okay. And then Martin, we talked about this last quarter but given the ongoing changes over Google or with Google, can you talk about the environment that you need to see for the segment to actually grow revenue again?

You're talking about About.com?

Yes. About.com, yes.

Yes, well, actually, we've begun to see, as Janet noted, we've begun to see some good positive momentum on volume as the year has progressed. And I would suggest that we have not seen the kind of hit to volume on the subsequent iterations of Panda over the last several months, including the last one that was done about 2 weeks ago. So the volume trends are actually quite positive for us. And as we cycle through the more dramatic changes that happened in the first quarter of next year, we have a fairly optimistic view of the volume improving. So that, I would say, is going positively in our direction. Obviously, we can't predict what Google is going to do with its algorithms, but so far, so good, coming out of this year. In terms of the other variables, quick-through rate, cost-per-click, those are obviously harder to call, because we don't see them -- we don't have a -- we see them in -- retroactively.

Okay. And then maybe one last question. The helpline of growth that you posted was the weakest, I think you had in the first quarter of last year. And so I'm wondering to what extent do you think this is a result of the economic climate versus loss of share? And are you seeing any kind of change to start the fourth quarter?

I think it's directly related to the economic climate.

So we -- at The Times, we were seeing helpline of growth in print and digital earlier in the year.

And moving along, we'll go to William Bird with Lazard.

Jim, I was wondering if you could talk a little bit about free cash flow deployment. I guess, given the pension and just a small required debt repay next year, does that likely mean the dividend and buybacks are kind of on hold for a bit?

Well, look, we were hoping to have interest rates be more favorable this year than they have been. Obviously, this low rate environment is quite a bit of pressure. On the debt side, we're really getting much closer to what we feel kind of on a net debt basis is comfortable. We've got only one maturity we're facing, and that's in September. That's a small number, it's $75 million, easily handled by existing cash and cash from operations. I would also say that we're still -- we expect to be in this period, where CapEx will continue to run at a low level. So we do see free cash flow generation being strong as we look out. I think we'd still like to see some improvement in the funding status of the plans. As I've said in my remarks, I think we will consider some additional funding. We're not required to make any, but this is very sensitive to interest rates as I've regularly said, and rates have been moving up, I mean since they hit their low in kind of late September. We've seen some real help there. So it's pretty volatile. I think we're -- it's a little premature, but I think those issues are closer to being on the radar screen than they were certainly a year ago, and we'll continue to focus on it, and we'll leave our options open at this point.

And I apologize if I missed this number, but how much have you contributed to the plan, year to date?

Somewhere around I believe $75 million -- about $80 million, total. We have just a small amount that we're -- that we'll contribute to our guild plan between now and the end of the year, but it's about $80 million.

Okay. And then just finally on just October and Q4 outlook, you mentioned digital has gotten a bit better. I was just wondering if you could comment on print and whether you've seen any change in trend in print.

Not as of yet seeing a change in the trend on print. There are several categories that continue to be quite strong, have been strong all year. Technology has had a lights out year. We expect it to continue to grow. Based on discussions we've had with advertisers and what we see in the pipeline, our luxury segment had a very strong year. And referring back to Janet's point about the fourth quarter, we have reason to believe that they will continue to be a strong segment for us. Of late, healthcare and hotels have been quite strong as well. All of these in both print and digital -- the print -- technology and print has had just an exceptional year, and -- shed some light on the whole question of secular change, because we saw the technology category shift quite decisively toward digital a few years ago, with little expectation that it would come back to print. And in fact, it has come back into print very strongly, as part of a cost platform strategy for so many of these advertisers, and there's an important lesson that category, I believe. Telcom, live entertainment, department stores, books, all did well in Q3, and some of those categories should continue to do well into the future.

One thing I would just add to keep in mind is that BP percentage. In the third quarter, British Petroleum accounted for 2% of that decrease in print. And as I noted in my remarks, the effective minimal in the fourth quarter, 2% is quite a large percentage of a decline that should be kept in mind.

Moving along, we'll hear from Doug Arthur with Evercore Partners.

Yes, Jim, SG&A, if you adjust for severance, I'm not sure how severance breaks out between production and SG&A, but, I mean it's all on SG&A. You were down about 7% sequentially in SG&A from Q2. That's a pretty big drop. Does that partly reflect a less launch costs with the paywall? And is that kind of level sustainable?

Well, the launch costs should go the other way. We've actually spending more money year-over-year for marketing against the pay launch, obviously. We've spent several million dollars against that. That's embedded. I think a good part of that, we've got some performance-based compensation issues, some stock-based compensation. There's been some lower professions, lower professional fees. I think that's largely driven that number down. I think that if you look forward to the fourth quarter maybe that'll moderate a little, but we are expecting kind of similar performance on the cost sides in the fourth quarter as we saw in the third, as my guidance remarks would suggest.

Okay, and one last question on cost. You ended last year with about 7,400 FTEs company-wide. Is that a figure that could be around 7,000 or lower by year end?

Yes. In fact, the number at the end of September was about 7,200. On a prior -- on a year-over-year basis, that's down about 1.2%, off of where we were last year at the end of September, but it's about 7,200.

We'll move now to Edward Atorino with Benchmark.

Regarding the pricing of the digital product, the Sunday package is very strong. And I hear a lot of people get the Sunday package because they get the online for free. Have you thought about charging those folks $1 a week or something? You'd get an awful lot of additional dollars right to the bottom line. Or generally, price -- charge the print subscriber a little bit to get the online.

We're very happy with our pricing program as it currently stands. And it's had, as we've already noted, a notable impact on volume trends, and we like that. We always say that we have pricing power, and we look at all of our options to exercise that power, and it's something that we think about.

And we're looking at all frequencies in regard to the orders during -- since the launch, there are people who have been looking at new orders, some in 7 days, some in weekenders, some in Sunday, Ed. And we, of course, reserve the right to your pricing advice. We also, of course, reserve the right to increase pricing, both on the print side and on the digital side if we feel like it's an appropriate time to do that. We're always evaluating that.

Would you review the paid models for -- The Boston, I believe, is up and running. Anything in the regionals?

The regionals are doing very well in regard to digital advertising growth. We have certainly that under consideration, but I think it's a little early for the regionals to take that into consideration now. Our Worcester Telegram & Gazette is a paid site, that, in fact, I think is celebrating its one-year anniversary this month. They have seen some notable success, particularly in regard to retention of the print subscribers, and they have met all of their advertising commitments as well. So it certainly is something to take into consideration for a broader group of our properties.

And you mentioned -- Martin mentioned that things look a little better about at About. Any sign of the ad business getting better along with the other improvements? Or getting much worse?

I'm going to have Martin just give you an overview in regard to what we've done with the acceleration of the ad program or ad staff down there.

Yes. Well, first, just in terms of the numbers. I think as you go into 2012 and you look at the comps, we should have some materially easier comps next year. But to Janet's point, I mean, we have completely rebuilt the sales force, beginning over the summer. Her point about the new management team is spot on, and we have a great deal of excitement about this new team, which is led by Darline Jean, and she and her team have really now fully staffed the advertising team as well. So we think that there's significant potential as we go into next year at About.com, both because we're cycling through some easier comps and because we have, I think, a much better team on the ground. I should also add just to punctuate some of the things that Janet said, we now have over 900 guide sites. We've got a, I think, much more productive relationship with the guides, based on new contract that we rolled out over the summer, and which I think we're all very excited about in terms of guide productivity and commitment. And we are -- the guide network is the centerpiece of the business, and we continue to expand it, as well as the Spanish-language portion of the business as well. One thing that I've said repeatedly on these calls, and I think some of the competition is now coming around to this perhaps, is that we are focused on quality. And we believe that over the long term, as Google adjusts these -- it's algorithms to find quality on the web and to identify and surface it, that we will be in a great position, not only at our News Media Group, where of course, that's a foregone conclusion, but at About as well, because of our focus on this guide network and the great work that they do. And so that will continue to be the focus in the business. And as I say, some of our competitors are now, seem now to be coming around to this fact.

Janet, could you sort of go over the October, of outlook, for -- quarter? You've mentioned -- about the October going forward trend. Could you just sort of summarize it again for me please?

Well, we said that, indeed, there was modest improvement going forward in October that we were seeing in the first part of October. Modest improvements particularly on the digital side, that's the guidance that we've given.

Fashion seems to be hot. Are you getting your share of fashion?

Yes, we've done very well. And in my remarks, I said that it's both international and American fashion, and also accessory manufacturers that performed very well in the third quarter. As I noted, the fourth quarter is a very active period for luxury, fashion, beauty advertisers and also for retail, so that is the category that we're keeping a very close eye on. And certainly being very proactive in regard to getting our share of market and then some.

And this does conclude the question-and-answer session. I'll turn things back over to Paula Schwartz for any additional or closing remarks.

Thanks again. Please give us a call if you have any follow-up questions.