Good day, and welcome to The New York Times Fourth Quarter Earnings Conference Call. As a reminder, 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, Tricia, and good morning, everyone. Welcome to our Fourth Quarter 2011 Earnings Conference Call. We have several members of our senior management team here today to discuss our results with you including: Arthur Sulzberger, Jr., Chairman and Chief Executive Officer; Michael Golden, Vice Chairman; Jim Follo, Senior Vice President and Chief Financial Officer; and Scott Heekin-Canedy, President and General Manager of The Times. All of the comparisons on this conference call will be for the fourth quarter of 2011 to the fourth 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 our most comparable GAAP measures in our earnings press release, which is available on our corporate website at www.nytco.com. Now I will turn the call over to Arthur.

Thank you, Paula, and good morning, everyone. Looking back at 2011, I could use a number of adjectives to describe the year: challenging, fascinating and, to a great extent, transformative. Both in terms of our past, but more importantly, in terms of where we are heading, 2011 will be remembered as the year in which we made unprecedented strides in our strategic evolution to a multi-platform organization. The launch of digital subscription models, both at The New York Times and The Boston Globe, created a robust new revenue stream, that contributed to the company's circulation revenue growth. The positive consumer response to our digital subscription packages is a strong indication of the value users place on our brands, especially our high-quality journalism, and their willingness to pay for our content and convenient access across multiple platforms. 2011 was also a year in which we continued to realign our operations in the face of ongoing economic and secular challenges and strengthened our balance sheet, while demonstrating at every turn our commitment to that special brand of journalism and high-quality information that defines The Times Company. Let me review some of those highlights. After extensive study, research and development, we launched paid digital subscriptions at our 2 largest news properties, starting with The New York Times in March followed by The Boston Globe with BostonGlobe.com in October. The International Herald Tribune also launched digital subscription packages in October. In terms of business operations, we have remained very diligent and disciplined in managing expenses while, at the same time, continuing to invest in digital initiatives across the company, and providing the resources needed to produce the high-quality journalism across a growing array of devices. We further strengthened our balance sheet and liquidity position with the early repayment of our highest interest debt in…

Thank you, Arthur, and good morning, everyone. Our fourth quarter and full year results reflect a challenging advertising marketplace, which continues to be affected by the slow economic recovery. But despite these headwinds, we achieved 3% growth and operating profit both before depreciation, amortization, severance and special items in the quarter, primarily through incremental subscription revenues, resulting from the launch of The Times new digital model, and through continued focus on cost management. Our Digital subscription initiatives remain our top priority in the fourth quarter as The Times continue to build on its digital subscriber base, and BostonGlobe.com pay site began charging for the first time. We remain confident in our ability to continue to build a robust revenue stream, centered on charging for access to our award-winning content. In the fourth quarter, overall circulation revenues continued to see a robust -- see robust growth from digital pay products, especially at The Times. Total circulation revenues were up 5% for the company and 8% for The Times Media Group. It is worth noting that The Times, in particular, has seen benefits to home delivery circulation following the launch of digital subscriptions, due to an uptick in new orders and improved retention rates relative to the period prior to the launch. The advertising marketplace remains soft in the fourth quarter. Digital advertising revenue was down 5%, driven by continued challenges at the About Group, which saw a 26% decline in advertising revenue, while digital advertising revenue across the News Media Group posted a 5% gain. Rounding out the quarterly revenue numbers. Total revenues for the company declined 3%, with advertising down 7% and circulation revenues up 5%. Print advertising trends improved slightly from the third quarter and finished down 8%. We maintained our sharp focus on managing costs in the quarter…

[Operator Instructions] We'll go first to the line of John Janedis with UBS.

Jim, I think you've had maybe 16 to 17 consecutive quarters of expense declines with the News Media. I know you spoke to some of the investments, but I think newsprint doesn't seem to be an issue. And so is the assumption that headcount will be flat, and I guess maybe how confident can you be in the About investments given the rapid change in the marketplace?

Look, I gave a little bit of color on the cost increases. Look, I think we will be adaptable, as we always are, in the cost side of the business, and as we see revenues develop, we'll adjust accordingly. But there are several factors, that will impact that cost increase. As I said, we are adding a fair amount of commercial printing markup in New England that comes with cost and revenues, marketing and customer acquisition, and investments in our digital products will be part of that as well. And we'll be adding some heads in that area as well. A little too early to make a call on headcounts overall. On About, I think you had asked about About as well, John?

Yes. Yes.

Look, I think we've made great progress. I mean, we're -- we've made great progress on the display side. I think we're in a good place, and we really got a fully rebuilt sales staff on the display side. I think we're beginning to execute way better, and we think we're on the right path there. And we'll see. But we're confident we've done everything we can to put us in the best place. I think on the CPC side, I think you've seen -- we saw in the fourth quarter the first time we've seen positive page view growth for the year. We started the year at about negative 10 on the page view and we're actually slightly positive. And we expect to continue to grow page view growth. I think that will be critical to turning around the CPC side. We're very focused as well on maximizing click-through on the Google ads as well, and we're taking -- we've got some significant number of initiatives to drive that as well. And then, of course, as you get deeper in the year, I think the comps get easier, so I think all those things together should put us in a better place. I think there's a lot of work to be done, but I don't think there's much more we can do than what we're doing now, and I think we still remain confident we'll be able to turn it around..

Okay. And maybe can you also -- can you provide a little more detail on the Lincoln conversions? It sounds that you should have maybe a bit more of a fairly precise estimate given the timing of the -- when those roll off?

We know quite precisely what the conversions are. We're not prepared to disclose them. The conversion program started in early December, and we had a very nice start. In terms of the growth that we saw in the fourth quarter, it's a factor but not the major factor in the fourth quarter growth we've -- that Jim reported. The significant conversions are taking place with the turn on the calendar year as you would expect because the complementary nature of that access ended on December 31. And we're progressing quite a bit ahead of where we thought we would be by the end of January. We expect it to take several months for the conversion to fully play out. And we're -- overall, those conversions are probably double of the rate of the, kind of, the next most engaged users, if you will, that we experienced in the early part of the launch.

Okay. One quick one also for Jim. Sorry for taking up so much time, but if I missed this, forgive me. Can you please give us an update on your thoughts on returning cash to shareholders?

Look, in my remarks, I said we're still dealing with an underfunded pension, which as I said, has widened this year, given the very low interest rate environment and, like we said, we're obviously very, very highly sensitive to interest rates. Interest rates going backwards this year. We have a debt maturity that comes due later in the year, $75 million. We are well prepared. As I said, we'll have post the RMG sale and then just -- we just announced the Fenway Sports Group sale. It will put us meaningfully north of $400 million and continue to grow cash. I think it puts us in a way better place. But as of right now, we'd like to see a little bit more movement, a little bit help in the interest rates, so that we can confidently address those issues.

We'll take our next question from Doug Arthur with Evercore.

Jim, just to clarify, when -- in terms of your Q1 guidance on circulation, that's for the total Media Group, correct?

Well, it's total circulation revenues, an item on our P&L, which is all -- which is all News Media Group. That would -- and that would strip out any Regional Media Group numbers, which should be relatively insignificant. But that would be ongoing operations, New York Times, Boston Globe together.

Okay. Right, right, right. So the implication then is that the -- with the pay wall momentum at The Times, one would assume then that the circulation and the price increase, hefty price increase, that circulation revenues at the Times Media Group would be probably double digit then?

Well, we're high single digits with -- on a combined basis. That would be a reasonable estimate.

Okay. And then just on one detail. I'm not sure if you said this. What were your -- what were the -- what are the FTEs now pro forma for the sale of the regionals?

Well, the regionals took about 1,700 employees out. I think, we -- prior to that, we had about 7,500 employees, so somewhere in that neighborhood is about the headcount. That was about, by the way, about 2% down year-over-year, prior to pulling out RMG. Doug, I'm sorry, that would be -- that would give you about 5,600 post RMG.

We'll go next to Craig Huber with Huber Research Partners.

A few questions. First one, just to help us clarify, if you would, how did the monthly ad revenue trends progress on a year-over-year basis for the News Media Group?

I think in my remarks, we were down about -- advertising down 7% in November, December about 2% -- October, November, negative 7%; about 2% in December. We faced some easier comps in December relative to October, November.

And then how would you say the January fared?

Look, as we said, we think the first quarter will likely be in line with what we saw in the fourth quarter on -- as an average of those 3 months. So that would, look, well, I'd say, largely suggest that what we saw in December was, I think, more comp driven than, I think, economically driven.

Well, it's definitely comp driven, and also, it was holiday season. So I wouldn't read a whole lot into that monthly improvement. What's governing the advertising climate is one, the secular shifts across platforms, and two, particularly in the second half of last year, the economic climate and the huge uncertainty that affected business conditions. And that uncertainty continues into the first quarter.

Okay. And then also on the cost front here, your guidance for about 1% to 3% in the first quarter. Can you just talk a little bit further about that? Why the upper pressure? And also, are you expecting that for the full year in that sort of range?

Well, look, at my remarks, I called out a few items. We are spending money to acquire digital subscriptions. You want to keep that momentum going. We're also investing in costs related to our digital initiatives and continuing to build out our content offerings there. We do reset our, kind of, performance-based programs each year, that will create a negative comparison. As I said, we're also -- we're taking on a bit of commercial framework. That comes with some revenues, but it certainly flows through costs. And I would also point out on the, kind of, the digital acquisition side, we will be recording sales of e-readers on a gross basis. And there's, as I think you all know, that there's a commission associated with that. We'll be reporting our revenues on a gross basis, and we expect to see a meaningful cost increase, just related to recording that on a gross basis going forward as well. Those are the key factors. I think -- as I said, I think we'll have to be adaptable to the revenue environment as we see fit, but right now, that's our plan. So -- and as far as -- many of those factors are kind of not necessarily isolated to the first quarter. I'm not going to get into specifics by giving forward guidance on cost, but I would suggest that those items I listed are not kind of one-time, one-quarter items but are likely to persist throughout the year.

And then lastly if I could. This 390,000 pay wall digital subscribers, it looks like it's not totally apples-to-apples with the number you've reported for the third quarter because, I guess, it now includes IHT contribution. Did IHT contribute, what, roughly, say, 10,000 subscribers to that? Or what's like the number, please?

That's a good estimate. The IHT launched -- already was in the marketplace with e-reader subscriptions and launched their subscription packages in October. So those numbers are now rolled into the total.

And then if I -- lastly on this, I'm sorry. Last quarter, I believe you guys said it was about 57,000 came from e-readers and Replicas. Was that -- how much was that number this time around, please?

Not materially different.

That's supposed to be a relatively stable number. We tend to see material changes coming out of the holiday sales of those devices, so that information lags to us from those vendors. And we'll expect to see those probably by the time we report Q1.

What would this IHT number -- I'm sorry. This IHT number, what was it in the prior 2 quarters? Do you know? Maybe I am not sure, exactly when it was launched, but...

Maybe half of that. Their e-reader base was probably about 5,000.

We'll take our next question from William Bird with Lazard.

Yes, I was wondering if we could just start with About. I was just wondering what contributes to your confidence that the business can turn in the second half? And then I guess on expenses related to About, what do you expect the expense profile for that business to look like in '12?

Look, on the expense side, we're investing in sales staff and marketing and there's a couple of other items we'll be investing in, so I think we'll see a meaningful pickup in expenses next year for About. Look, as far as the confidence, as I said, we started the year on page view down about 10%. We ended the year up 2%. I think we'll get some boost, once we cycle with some of the changes that Google made throughout 2011. So I think on the page view side, we will -- we are planning on seeing better page view growth, and I think that should help quite a bit on the CPC side. I think we're doing a lot of things around optimizing pages and optimizing click-throughs, the ads, which we expect to see some fruits of our labor as well. So I think those are the 2 primary points on the CPC side. And on the display side, I can only say we feel really good about the staff the built. I think we went through a pretty difficult period with both staff turnover and some execution issues that I think are behind us. And we're going to be watching that carefully, and we expect to see much better performance as those people gain traction in the market. That's what gives us the confidence.

And we're just a month or so into the first quarter. Have you seen any shrinkage in the rate of decline at About in the first quarter?

Like as I said, I think our total revenues including About will be about what we saw in the fourth quarter. So that would suggest we'll see maybe some modest improvement. But I think we’re really focused much more on the back half of the year to see meaningful improvement.

And just separately, I was just wondering if you have any more Lincoln-like sub promos in the works?

We're in discussions with advertisers about other types of programs, but we're not prepared to announce any at this point.

We'll take our next question from Alexia Quadrani for JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: Just a follow-up question on your comments on About. I know you enjoyed many years of good growth from that investment. But now with the structural changes, with the change in Google, is it as an attractive a business longer term? I mean, I guess I'm trying to get a sense of do you think it's sort of a core holding for New York Times?

Look, About has been and continues to be a good business for us and generates quite a bit cash flow. Our focus very much right now is to get that business moving back into the right direction. And as I said, we think we're on that path, and that's really where our focus is right now. But it has been, and we think will continue to be a good business for us. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: And then just on the Boston Globe digital subscribers, is there any you could sort of give us a framework of how we should think of that number longer term? I know it's sort of a recent initiative, but any kind of ballpark of what you think would be a good number to achieve in terms of number of digital subscribers.

This is Michael Golden. We're not making a forecast as to the numbers in the future. But we believe that this will continue to grow. The number of unique visitors coming to the combination of Boston.com and BostonGlobe.com has increased significantly. They have, like The Times, consciously built a porous pay wall. So high number of visitors and a lot of opportunity to refine the site and the subscriber acquisition programs.

We'll take our next question from Leo Kulp with Citi.

Can you talk about -- you should have some easier comps this year because of the anniversary of BP spill. But then you also have probably a weaker technology outlook. Can you talk about sort of how you're looking at the comps by sector going into 2012?

Weaker technology meaning the comps are tough? Is that your point there, Leo?

Yes. The comps are tough because of all the tablet launches and that sort of thing.

Well, as you know, we had a terrific year last year in the technology category across print and digital. And we've got -- based on conversations with key accounts, we've got lots of reasons to believe that this coming year will be another good year in that -- for that category. The corporate sector as a whole, a number of the national accounts are off to what I would characterize as a slow start in terms of methods. But there is lots of activity in the pipeline in the corporate category itself, probably double the number of RFPs versus a year ago. So the economic climate of uncertainty that has carried over into Q1, I think, if I can make a sweeping generalization, that a lot of the categories are taking stock of the climate, at the same time preparing lots of plans for spending. So there are a couple of categories, in particular transportation, where we would expect -- where we're fully expecting those campaigns to launch in Q2, barring changes in the economic climate. So it's a slow start to the year, I guess, is the way to characterize it. But reason to believe we're going to have some good results in key categories from national.

Leo, I think you had asked the question about BP. BP was more of a Regional Media Group issue than it was a New York Times media Group issue, less than 1 point of the decline for -- in advertising revenue for The New York Times Media Group, which related to that comparison and all my comments about forward transfer, excluding regional.

Got it. And then can you also talk a little bit about what's driven this kind of meaningful slowdown in The New York Times or the whole News Media Group digital revenue, and how you plan to address that going forward?

At The New York Times, there's a tail of 2 halves last year. The first half, except for the period around the Japanese tsunami, we had very, very robust digital growth. And then in the second half, and I believe I made comments to this effect on the third quarter call, we started to see the uncertainty that was -- that are -- our print spending was so sensitive to, started to get a grip on the digital spending as well. And we're seeing that uncertainty carry in to Q1, but we can expect it to mitigate as we get into the year. So in other words, we expect digital to get -- it's got comps -- that were an issue in the first half and are a benefit in the second half. And then the economic climate as it affects the digital spend, we expect to begin to change as well.

We'll take our next question from Edward Atorino with Benchmark.

Yes, I got a couple of questions. One, could you talk about your digital pricing strategy for 2012, number one? And Jim, could you remind me when you bumped up the circulation prices at The Times last year? And then thirdly, you were talking about some categories. Could you go through the major categories, luxury, fashion, et cetera. And lastly, how are the magazines doing and are they going to be continued in 2012? Not the Sunday magazine, the other magazines.

We may have to get a recap of those questions, but I'll start with the only one that you asked me. We did not have any price increase last year for anything on the circulation side, so.

I thought you raised the cover price?

2.5 years ago. 2009 was the last time we increased our prices.

And that would be about the same for The Globe as well. We have -- last year, we had no price increases in our circulation.

Ed, your question about digital rates, was that advertising or subscription?

Subscription rates. There's a lot of giveaways, subscribers -- a lot of subscribers don't pay, et cetera. So was there any there any change in the thinking regarding the pricing of the digital product?

Our digital subscribers pay. There's an introductory offer $0.99 for the first month. But then they convert to full rate at the end of the month. And that conversion rate is very strong. Categories in the fourth quarter is a continuation of the story that we saw throughout the year. The luxury segment performed very strongly in Q4. Transportation category, primarily from airline advertising, turned into a strong positive for us whereas it had been a significant negative in the prior 3 quarters. Media became a strong performer as well in Q4. Some modest growth or flash performance from books, live entertainment, automotive healthcare. The technology category continued to be a positive factor in print, but it was negative in digital, making it negative overall. And that was a comp story, unusual strong spending in Q4 prior year. Financial category is in a negative performance to Q4 as well as corporate hotels and residential real estate. And your -- I'm sorry, your question on magazines?

Yes. The -- not the Sunday magazine but the quarterly Times Magazine.

Well, looking at the magazine in total for the year last year, we had very low single-digit declines, and we performed better than the magazine industry as a whole.

Are you going to continue maintaining those magazines?

Those are lucrative products, yes.

Yes.

That will conclude today's question-and-answer session. Ms. Schwartz, I'd like to turn the conference back over to you for any additional or closing remarks.

Okay. Thank you so much for joining us today, and please give us a call if you have any follow-up questions.

Thank you, ladies and gentlemen. Thank you for your participation. This will conclude today's conference call.