Good day, everyone, and welcome to The New York Times Company's Second Quarter Earnings 2012 Conference Call. As a note, today's conference is being recorded. And now at this time, it is my pleasure to turn the conference over to your host, Ms. Paula Schwartz. Ma'am, you may begin.

Thank you, and good morning, everyone. Welcome to our second quarter 2012 earnings conference call. We have several members of our senior management team here to discuss our results with you including Arthur Sulzberger, Jr., Chairman and Chief Executive Officer; Jim Follo, Senior Vice President and Chief Financial Officer; Denise Warren, Senior Vice President and Chief Advertising Officer of The New York Times Media Group and General Manager, NYTimes.com; and Roland Caputo, Senior Vice President and Chief Financial Officer, The New York Times Media Group. All of the comparisons on this conference call will be for the second quarter of 2012 to the second quarter of 2011, 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 2011 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 I'll turn the call over to Arthur Sulzberger.

Thank you, Paula, and good morning, everyone. Our second quarter results reflect the ongoing progress we have made in repositioning The Times Company for the future, led by another quarter of solid circulation revenue growth, driven by digital subscriptions. And while total advertising revenues declined due in part to macroeconomic headwinds, we did see sequential improvement in digital ad trends in the quarter, particularly at The About Group. At this time last year, we provided you the first full quarter of results for paid digital subs to The Times, which then totaled approximately 281,000. Since then, paid digital subscriptions for The Times Media Group have almost doubled and are now over 0.5 million as of the end of the 2012 second quarter. We were very pleased with the initial numbers and are even more pleased to see that growth continue beyond the first anniversary of our launch. With the launch of BostonGlobe.com and the digital packages at the International Herald Tribune, as well as a long list of products, technology and marketing initiatives across all of our properties, we have made significant progress over the past year in growing our new consumer revenue stream and positioning our company for an increasingly multi-platform future. A great deal of exciting work continues, as we remain focus on diversifying our revenue streams, strengthening our digital businesses and pursuing new ways to extend our brands. We believe there is more opportunity for further growth in these -- this revenue stream and our subscriber count. Last month, The Times launched a Chinese language website, which can be found at the URL cn.nytimes.com. The site is designed to bring Times journalism to an audience that is educated, affluent and increasingly connected to the rest of the world. We have seen strong interest from advertisers and launched…

Thank you, Arthur, and good morning, everyone. Our second quarter results highlight the significant contributions our digital circulation revenue stream is making to our business early in just the second year of a new subscription model. In the midst of a challenging advertising market, the digital packages drove another quarter of strong revenue growth at The New York Times, offsetting the advertising decline and leading to overall revenue growth of the company. These solid circulation results, combined with continued attention to cost management, led to our operating profit before depreciation, amortization, severance and special items to increase 7% for the quarter. Our success in creating a robust revenue stream, based on charging for digital access to our award-winning content, is evident in the growth in both digital circulation volume and circulation revenue we recorded in the second quarter. The total circulation revenues were up 8% for the company and 11% for The Times Media Group, driving the fifth straight quarter of total revenue growth at The Times Media Group. The Times also continues to benefit from improved retention rates for home delivery circulation following the launch of digital subscriptions, despite the price increases implemented at the beginning of the year. To update our digital subscription volume numbers, at the end of the quarter The Times Media Group had 509,000 paid digital subscribers, up 12% from the March anniversary number, continuing solid growth even into The Time's second year of the digital subscription strategy. This number includes subscribers to The Times and the International Herald Tribune digital packages. Separately, The Boston Globe had about 23,000 paid digital subscribers as of the end of quarter. The advertising environment remained difficult in the second quarter, although the overall digital advertising trend improved sequentially from the first quarter as revenue trends at the About…

[Operator Instructions] And we'll go first to Alexia Quadrani of JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: Just a couple of questions. The first one, could you give us a little bit of detail on what you saw monthly in terms of newspaper advertising trends? I heard there's still a lot of volatility. I'm curious how the quarter ended for you.

Well, Alexia, the -- just to recap. I touched a little bit on this. It was an extremely volatile quarter, with total advertising in April declining about 6%, May was down about 2% and June was down about 12%. So we continue to see significant volatility. We are, however, not seeing kind of that -- we're seeing better performance as we get into the early part of the third quarter relative to June. But as we've said, we're expecting to see total advertising better in the third quarter, but we would expect most of that to be driven by better digital performance. But the volatility month-to-month continues unabated, and I think we expect to see that going forward. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: And when you say better digital performance, is that largely from About or also better digital performance on your News Media Group?

No, we expect it on the News Media Group as well. I mean the first half of the year, if you look at last year, the first half of the year in the News Media Group, for example, were up 15% in both the first and the second quarter. And the growth moderated significantly in the back half of the year. We grew somewhere in the 4% to 5% range. So we'll get the benefit of some better comps, and so we'll see. News Media Group we expect to see better digital. And as we said, About, we expect second half meaningful improvements on revenue trends as well. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: I mean, if you could just -- I know your comments have been about use of cash in your outlook there and the notes, you're going to payback in the fourth quarter, I believe. But I guess, with the positive announcement of the Highway Bill, in terms of how that impacts you and your potential pension contribution. I guess any update on what you're thinking about a dividend or giving cash back to shareholders?

Well, I would say on the Highway Bill, while it gives relief and it gives more time to get fully funded, we have been pretty aggressively ahead of the required contributions. So we actually don't see the Highway Bill meaningfully impacting our strategy to get ahead of that because we do have a desire to get that fully funded as quickly as we can. Within limits, we do wait and hope and expect for a better interest rate environment, which has been pleading for sure and doesn't appear to be much of a help in the near term at least. Look, we'll continue to evaluate use of cash. As we get stronger, that issue becomes more prominent, we understand. We speak about it at our board meetings and finance committee meetings every quarter. I've nothing new to report now. But everything is on the table, and we feel good about the progress we made on the balance sheet. And we're continuing to evaluate opportunities there.

And next we'll move to John Janedis of UBS.

Jim, in the past, I think you've said you're expecting OpEx for the full year to increase modestly. I'm wondering if that's still the case. And then maybe moving to the advertising side. Is it your sense that the underlying demand for print advertising is improving? And is there any kind of impact from the Olympics?

On the OpEx side, I think the OpEx performance, I think it's likely to be under more pressure in the second half than the first half. And I think that will come from a couple different areas. We will be spending money on Olympic and election coverage. That will clearly drive costs in the second half, beyond what we saw in the first half. I would say, our spending in the digital arena will continue to increase, as we continue to explore new ways to monetize our content, whether it'd be video and all other areas. So I think that will bring some pressure. I think the About cost structure, I think we'll see some -- a little bit of growth. In part, we'll have some kind of onetime double rent in the second half of the year for About, as they move to new locations. We've got to book rent on both locations. There's a bunch of smaller stuff that adds up. And so my guidance this morning reflects that, and that's our best look at what we think the back half of the year is likely to look like.

On the advertising question, John, we absolutely have packages out and sponsorship opportunities, and we're taking advantage of that. But I don't expect that it will have a meaningful impact on our overall performance in the quarter.

Okay. Maybe -- somewhat related. Maybe tangentially, can you help us just dig in a bit more on the digital subscriptions? How, maybe, was the increase from the gate that you saw? And has the mix of digital subs changed over the past couple of quarters?

So -- as we've said in the past, we typically get the growth from a range of product and marketing initiatives and our growing expertise in the digital subscription marketing arena. And as we did say, the -- this quarter's growth did come from a few key areas, the first of which is absolutely the gateway. But the core business remains very, very healthy and retention also remains very high. In addition, we have several marketing initiatives this past quarter, including the anniversary promotion and the flash sale that drove the subscriptions. And finally, we did launch new capabilities in the corporate and education marketplaces. Just looking ahead, we really see nothing but opportunity for this business, as we have a large pool of both domestic and international prospects currently not subscribing and a range of product and marketing initiatives yet to be launched. In addition to the ones I've just mentioned, we can look forward to growth coming from reducing friction in the billing process, our propensity modeling capabilities, growth from offers made from daily deal sites and an expanded digital distribution through our NYT Everywhere strategy. We also believe that there's an opportunity to build a portfolio of niched pay products in several content areas, given the passion that our readers have shown for certain content. So as far as we're concerned and as we've said in the past, we're in the very early innings of this plan and we see nothing but opportunity ahead.

And next, we'll move to Craig Huber of Huber Research Partners.

Firstly, a broad question. At year end of last year, you obviously announced the sale of your regional papers, as we've talked about. Can you just -- your online strategy, your flagship paper clearly has been working quite nicely. But one of the big reasons, I recall from our conversations, is that one of the reasons you sold the regionals is you did not think the payroll model would work in your smaller papers. Can you explain, for the benefit of all, why that is, please?

I'm sorry, I'm not sure I totally followed the question.

It's fine. At your original papers, I believe one of the reasons you sold your small market papers because you did not think that digital payroll strategy would work in your small market. Just for the benefit of all, why do you feel that way?

Okay. It's just different content. I mean, New York Times is in just a unique position...

Well -- this Arthur. I think the challenges that regional newspapers face and that metro daily face, both across the globe, and then national/international newspapers, like The New York Times face are different, that we have faced different challenges and different opportunities, which doesn't mean that any one strategy will succeed or fail. They have to be adaptive. But we do believe that over time, what you're going to see is more and more newspapers moving to a pay system of some sort for their digital journalism. And we are actually seeing that taking place, so it's going to take time. But I think it's going to expand to the newspapers to the smaller newspapers.

Well look, I do think just -- I mean, The New York Times, we do view kind of in the scale of everything. We've always viewed it as probably the best position that where we find ourselves, and we feel good about that. And I think that's because people really value The New York Times' content, which you just can't get anywhere else. If you need content, then people want to pay for it.

And you didn't think that would be the case in your small market regional papers. Is that what you're saying?

Yes.

And then also housekeeping question. Maybe I missed this. But your daily and Sunday circulation volume percent changes year-over-year at your 2 main papers. What was it, please?

At The New York Times for Q2, trend was similar, slightly worsening versus Q1. The daily was down about 6%, Sunday down less than 2%. The Sunday home delivery portion was actually up about 0.5%. And just a reminder, this was all in an environment where we raised home's new prices from 3% and 4% in the beginning of the year depending on geography. And we raised the single copy price by 25%. On the Globe, remember that we put these price increases in place early part of the quarter, so these numbers are a little bit distorted on a year-over-year basis. But the daily number was a negative 9, Sunday negative 6. I think if you're going back to the first quarter, which I think is more indicative and was more consistent with the trend we're seeing, we started a daily trend of negative 7 and negative 4 on Sunday. Those are the numbers we have.

And then lastly, your comments on July newspaper ad revenue, June was down 12%. You said, I think, the whole quarter's down 6.5%. Are you seeing July as tracking down somewhere to June or closely?

No. I think I said specifically it was, in fact, I think June appears to be an aberration and we're suggest -- what we're suggesting by our overall guidance for the quarter is kind of the print market on balance appears comparable to what we saw on balance in the entire second quarter. So we don't see a repeat of June going into July. That number seems to be, we believe, somewhat of an aberration. And we would just kind of look at the overall blended number in print for July. But as I said, we're looking at much more favorable numbers in the early part of the quarter for digital.

And digital, yes, is performing much better than it had been in the second quarter.

And we'll move next to Doug Arthur of Evercore.

Yes, 3 questions. Denise, can you just expand a little bit on how you expect to monetize content everywhere? And how big could that become? Second question, Jim, this is kind of a nitpick, the other revenue category of New England was up 28%. Is that commercial printing? And then the third question is on the $250 million tied to the headquarter building, you have an option to, I guess, repurchase the floors. Do you -- does that -- if you look at this liability, is it actually really now an asset?

[indiscernible]

Okay. So the NYT Everywhere strategy has 3 legs of monetization, if you will. The first is by giving subscribers access to this content wherever they would like it, we believe that we will add value to their subscription offering and retain them better. So that's monetization lever number one. Monetization lever number two is by offering the content. In these distribution platforms, we expose ourselves to a new audience. So we hope to generate new subscribers from being in these distribution outlets. And then -- so that's lever number two. And then lever number three is our ability to sell advertising, cross-platform advertising programs across the distribution partners. I'm not going to comment on how big this is. This is early innings. It's something that we're excited about, and we do believe has some nice potential for us down the road.

On the -- you're right, Doug, the commercial printing is what drove the other revenues in New England, and we've been talking about the costs associated with that as well. So that -- we have cost increases, but we don't set revenue increases, and obviously a profit there. On the building headquarters, just to be clear, so we did a sale leaseback. And essentially what we did was, for all intents and purposes, was a financing transaction where we have a liability. We also have the asset in the books. The asset in the books far exceeds the liability, and that's consistent with financing transaction where the building essentially is collateral for the loan -- essentially it's 10-year loan, given option to repurchase. That option has meaningful value to the company, given the spread between fair value of the underlying asset and the loan. So that -- we cannot move on that option before the 10 years, but it was almost no scenario where we wouldn't move on that. And so we -- look, the building still has meaningful value, and that value is attributed to us and not to the party who sell this package.

And we'll go next to Kannan Venkateshwar with Barclays.

Just a couple of questions. One is with the pension front. Just wanted to understand what the contribution expectation is for this year and next? And secondly, should we assume that the asset monetization process is over? Or can we expect some more there?

On the pension contribution front, the only requirement we have right now is about $47 million of required contribution that’s largely required via a union contract. As I had said in some earlier remarks, we are ahead of our required contribution to the qualified -- to the main qualified plans. We will continue to evaluate that, and we've got plenty of cash there, potentially put to work there. So we'll continue to evaluate whether we want to get ahead of the required contributions. But we have not made any commitment to do that at the end of this year. But again, the key is we're not required to make it at the end of this year. We will do it simply to get ahead of requirement. But as you look out, as you get into 2013, they will become required and they will become meaningful numbers. We've got a -- going into the year, about a $500 million gap and then generally up 7 years on when the gap arises, that we're several years beyond when that gap erodes, largely in 2009, given the low interest rate environment. So we've got less than 7 years to get that ready. So you can imagine the size of the contributions that we're required to get that thing fully funded. Now that being said, that assumes, hopefully, level interest rate environment, and rates have not been stable. We've actually had negative rate movement this year. But I hope over the remaining 4 years or so, we got to get fully funded with that. Maybe we will get some help on rates, but who knows.

Okay. And then so -- and just to understand this a little bit more, I guess the $500 million spread over 7 years, roughly about $70 million a year. And if you're ahead of it, I guess it could be higher than that. Is that a fair expectation?

Let me just clarify it. I said we -- when -- 7 years on when it arises but it arose in '09. So we're 2 years, at least 2 years beyond when it arose. So we've got less time than that. So I would say you have more like 4 to 5 years to get fully funded. I think you had asked another question?

Okay. Yes, on the asset monetizations. I mean, is that process over?

Look, we -- it's something we just generally don’t public on -- comment on publicly. We evaluate all our properties on a regular basis. We don't have -- there's not much more we can say.

And it appears at this time we have no further questions in queue. So I'll turn the conference back over to our speakers for any additional or closing remarks.

Thank you very much for joining us today. And please give us a call if you have any additional questions. Bye-bye.

Once again, that does conclude today's conference call. We'd like to thank you for your participation.