Good day, and welcome to The New York Times Company Fourth Quarter Earnings 2012 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to your host, Ms. Paula Schwartz. Please go ahead.

Thank you. Good morning, and welcome to our fourth quarter and full year 2012 earnings conference call. On the call today from our senior management team are Mark Thompson, President and Chief Executive Officer; Jim Follo, Senior Vice President and Chief Financial Officer; and Denise Warren, Senior Vice President and Chief Advertising Officer, The New York Times Media Group and General Manager of NYTimes.com. All of the comparisons on this conference call will be for the fourth quarter of 2012 to the fourth quarter of 2011, unless otherwise stated. As we noted in our release earlier this morning, the results for The About Group are reported in discontinued operations for all periods presented. 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 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 under Investor Relations. In particular, this quarter, we will discuss the impact on our revenues of the extra week in our fiscal fourth quarter of 2012. And now, I would like to turn the call over to Mark Thompson.

Thanks, Paula. As everyone knows, this is my very first earnings call as President and CEO of The New York Times Company. So hello and welcome. I took this job not just because I've been a devoted user of The New York Times for many years, but because I believe it is one of a handful of global news brands which cannot just survive but can thrive in this digital era. Since joining the company in November last year, I've spent a lot of my time meeting my new colleagues across the company in New York, Boston and Paris. I heard first-hand stories of the first chapter of digital, like that brilliant spring 2011 launch of The New York Times pay model, a strategy which continues to deliver. I've also met with some of our major advertisers both here and internationally. And that helped me gain a better understanding of their priorities and how we can work together to achieve their goals. And of course, I'm looking forward to meeting many of you in the weeks and months ahead. Before talking a bit about the larger picture, let me briefly address our fourth quarter results. As you know, this quarter had the benefit of an extra week compared to the same period in 2011. Total revenues increased 5% as the continued strong performance in circulation revenues and the effect of our additional week offset weak advertising revenues. Operating profit was $44 million in the fourth quarter and, excluding depreciation, amortization, severance and special items, totaled $125 million, down 2% versus the prior year. Earnings per share from continuing operations, excluding severance and special items, was $0.32 a share compared to $0.39 in the fourth quarter of 2011. Now I'm currently leading the development of a new strategy for the company.…

Thank you, Mark, and good morning, everyone. As Mark referenced, [indiscernible] our fiscal calendar, both the fourth quarter and the year, have an additional week for purposes of our results. My comments that address revenues will exclude the impact of the extra week. Costs are a bit more difficult to break down on a week by week basis because some expenses will rise with a longer month while others remain constant. Our fourth quarter performance reflects the steady build of the circulation side of our business, balanced by the ongoing challenges facing the advertising side. Double-digit growth in Times' digital subscriptions, combined with last year's price increases, have managed to largely offset the continued softness in our advertising business, resulting in total revenues declining about 1% in the fourth quarter, excluding the additional week. Diluted earnings per share, excluding severance and special items, decreased to $0.32 in the fourth quarter from $0.39 in the prior year period due principally to higher effective tax rate after exclusion of severance and special items in the 2012 quarter. We have included a table in the press release that provides greater visibility on this topic. Circulation revenues rose 9% for the company and 11% for The Times Media Group in the quarter, excluding the extra week, with our digital subscription revenue stream contributing most significantly to that increase. Circulation revenues also benefited from the price increases at The Times and The Globe in early 2012. The Times also implemented another home delivery price increase at the beginning of 2013. And The Times continued -- continues to benefit from improved retention rates for home delivery circulation following the launch of our digital subscriptions, despite those price increases. Further demonstrating the value readers place on digital access, which is provided for free to all Times print…

[Operator Instructions] And we'll go first to Alexia Quadrani with JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: Welcome, Mark. We're happy to have you. Just a couple of quick questions. First, on the comments that I think you made about the secular challenges to the advertising growth still. Is that -- is -- any way to sort of gauge about how far along we are in terms of that share shift? How much of the sort of the ad pressure now is secular versus sort of cyclical? And then my second question is really on the digital sub-growth, which in the quarter was obviously very impressive. And I know you mentioned that it's going to not be quite as strong in the first quarter, but do you guys have an internal goal maybe you can share with us? Or where do you think that can ultimately go?

It's Denise. I'll take both questions. Let me start first with the advertising one. I think you know it's kind of difficult for us to determine what the real mix is between both the secular and cyclical impacts. I think it's fair to say that the last couple of months have had a lot of cyclical uncertainty given the uneven economic recovery and the fiscal cliff. And that has absolutely impacted our results, both on print and on digital. But it is -- it's difficult for us to pin it down and sort of give you a sort of mathematical answer to that, if you will, if that's what you're looking for. In terms of our digital subscriptions, we were very pleased with the performance not only in the quarter but obviously in the year. I mean just to give you a benchmark, in the first year -- so on our first year anniversary, we had 454,000 digital subscribers. And in the remaining 3 quarters of 2012, we had added an additional 186,000, which put us on track somewhere in the vicinity of 50% growth for our second year. And as we have said repeatedly in prior calls, that there are several segments of the business that we think still have an opportunity for growth, including the corporate education and international markets. So we definitely believe that we will have solid, incremental growth into 2013 and beyond. We definitely saw in this past quarter an increase in the performance due to the new cycle, as we've noted in the remarks. In addition, if you're looking at the first quarter, Alexia, I'll just remind you that we are comping against the most engaged user program, the anniversary of that, which many of the subscribers that came on board did do so in the first quarter of last year. With that said, we are very, very optimistic about this initiative, and there's a lot of room for growth. We are working on a growth strategy that is looking at several elements, including premium products, evaluating our pricing structure and several other things, as we've noted in the past, including the opportunities in the international market.

Alexia, it's Mark here. Thanks for your welcome. If I can just add. I mean, from my point of view, coming into the company, this is a revenue stream which scarcely existed a couple of years ago, which has shown strong growth so far. It's now the key focus of the strategy where we're doing at the moment of how we can develop and expand this new revenue stream.

We'll go next to Doug Arthur with Evercore Partners.

Yes, two quick questions. Denise, can you just take your comments up north to the Boston Globe and talk a little -- I mean, those numbers seem reasonable but still quite small. So what's the game plan up there on the digital sub-side? And then, Jim, just to nitpick. The severance charge in the quarter, is that mostly in SG&A or in other costs?

I don't have the exact breakdown. It's spread throughout. We got some newsroom buyouts that existed, and there's some in G&A. And I'm sorry, I just don't have the complete breakdown there.

Okay. And Jim, are you going to...

Yes, I'll -- yes.

answer The Globe...

Yes, The Globe has seen some -- it's kind of a steady growth. We don't see that trajectory changing dramatically [indiscernible] but it has been steady growth. It's clearly not as impactful to that business as NYTimes is. We don't really see the dynamics of that changing. We see it as an incremental business. We're trying lots of new things to drive that growth, and we -- it'll continue to grow nicely, but I don't think -- we're not calling for a significant ramp in growth rate there.

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

I just have a few housekeeping questions. The first one, please. Can you update us on the daily and Sunday circulation volume percent change year-over-year for your flagship paper and The Boston Globe? I believe last quarter it was down 7% and 2% for your flagship, for example.

Yes, so the total units -- let me give -- I'll give you daily and Sunday, I guess. So our total units for NYTimes.com in the fourth quarter is about -- down about 5.7% revenues.

That was for circulation.

Circulation. I'm sorry [indiscernible].

[Indiscernible] for circulation. It's not NYTimes.com's, it's New York Times.

Yes, sorry, New York Times. Negative 5.7%. We've actually had some growth in revenues given the price increase. And most of that, a good part of that, was single copy, which was down meaningfully more. On the Sunday side, our units total were up a little bit short of 1%. On The Globe, total units daily, down about 10%. And on Sunday, down about 6% in the quarter.

And then also, your corporate expense, which is what -- how much was it roughly to [indiscernible] cash costs? Is that roughly $10 million in the quarter?

Somewhere in that. It's about -- right, it's about a $40 million run rate for the year. That's about right.

Okay. And then also, another nitpick question for newsprint. What was the percent change in consumption there, please, adjusting for the extra week?

I believe it was about 3% down. As you know, prices are -- our prices were steady in the quarter. I will say prices have begun to decline, but that decline has happened and will impact us next year. But the prices were stable in the quarter with volume down on it about 3%.

And then also, on the advertising pricing side for your print newspapers, I guess it's down about 10% for the revenues. How much of that was price, please? Was it about half of it?

No, price is generally flat. But as you know and as we've discussed many times, that's largely a function of the mix. So it depends on the category. But overall, it looks flat.

We'll go next to Kannan Venkateshwar with Barclays.

So I just wanted to drill down on the liquidity question a little bit more. So thanks for the clarity on the -- on what do you want to do going forward. But just looking at your balance sheet, there's about $900 million of cash. And debt is obviously less than that. So the first question is, do you plan to be debt free at some point? I mean, is that part of the plan? And then secondly, on the [indiscernible] front, is it merely a question of when rather than if that's a possibility at all?

Jim, do you want to -- I spoke at some length in my remarks [indiscernible].

Yes. Look, we haven't -- we've been asked many times about what we think the right debt level is. As of right now, it's -- our view is right now, given the volatility in the market and the things that Mark -- particularly advertising -- things that Mark talked about, we think now is a good time to just keep our balance sheet conservative. And as we get better visibility in some of these other areas, our views will change. I -- we're not here to say we think the business ought to be debt free over a period of time. We're just suggesting that as of right now, we think that would be an appropriate place to be.

Okay. And is there a liquidity number that you have? And also, sorry, on the dividend question, is it merely a question of timing?

Well, you heard me -- Kannan, you heard me say that there's a number of factors that we're going to look at. We're doing a strategic review. I've said that. And I'll say much more about that on the next earnings call. We will start implementing that. So that factor is definitely one of timing. We're also looking at what I'll describe as continuing uncertainty in some operating revenues [indiscernible] print advertising. We'll be looking at that over time. And I thirdly talked about potential further opportunities to further deleverage our debt and reduce our pension exposure. This is something we're going to look at. It is definitely -- these are all factors we'll look at going forward. But for at least some of them, for example, uncertainty in the operating revenues, it is hard to give a precise timetable. So yes, it's about timing, but that doesn't mean you can reduce it to a precise timetable.

Okay. Right, okay. And secondly, from the cost perspective, I mean, you've obviously done a good jobs over the last few quarters in bringing down costs consistently, and you're also guiding at -- to further reductions going forward. So what exactly -- I mean, could you just detail that a little bit in terms of where that's coming from and what the main sources are?

Jim, do you want to get that?

The guidance we gave is in the first quarter, I think is just broad based. You've heard there's been some very public discussion about some of the headcount reductions we've already implemented that will obviously benefit us. We had a number of issues that pressured costs negatively that we've cycled past. We talked about some of the spending we did against the election and the Olympics. That's behind us. We're going to begin to cycle through some of the commercial work-up in New England. That will be behind us. So once those are behind us, there's nothing that really sticks out as a significant headwind. So I think the core business, we'll continue to see good performance on. But I'll go back to some of the comments we made earlier. I think we'll be in a better position on the first quarter as we firm up some of these strategic initiatives to give more detailed guidance as to what costs look like going forward. But we'll be prepared, where we see fit, to be able to invest and grow the business, and that will be have to be part of the question.

Okay. And one last question which is on the international business. I mean, you made a comment saying you're looking at expanding The New York Times brand internationally. Could you just detail that out in terms of what that involves, I mean -- and which parts of the world you're looking at?

We are in the middle of looking at the international strategy. I certainly expect to have more to say in April about international -- in the international strategy. Clearly a part of that work is looking at the world and deciding which markets offer us the best opportunities. But what's interesting is the very extensive use of NYTimes.com outside the U.S., the fact that essentially, with minimal marketing activity, the fact that the company has begun to attract subscribers from outside the U.S. So we think that the potential to tap into larger reservoirs of potential users and subscribers is there. We're doing the work, trying to figure out region by region, and country by country where the best opportunities are.

We'll go next to John Janedis with UBS.

Denise, when we think back to the launch of the paywall, you had talked about heavy users as the people you were targeting. Now when you look back, where have the paywall subs come from? Was it those heavy users or a different bucket of uniques? And embedded in the mid-singles guidance, does that assume print subs are down in line with trend?

Okay. The mid-sub guidance was all about digital subscribers. So...

I think...

[Indiscernible].

You you're referring to the guidance we gave on circulation revenue of mid-single-digit growth. Is that what you're talking about?

Yes. Yes, Jim.

Yes. We're going to see kind of similar print -- were going to see kind of flattish to a little bit up on revenues. The New York Times, as we've said, raised prices early in the quarter. So we'll see some of that benefit. We'll see -- my guess is we'll see some similar unit trends and so, generally, contribution on the print side in line and a little bit of a moderating on the growth on the digital subs for all reasons that Denise spoke about earlier.

And to answer question about where -- who are the subscribers and where are they coming from, I mean, obviously, a vast majority of them in the initial days and still continuing come from heavy users of our products and services. That is still a very robust channel for us. We still convert a lot of people at the gateway. We convert a lot of people through using our own marketing channels on NYTimes.com. But, as I think we've discussed, we've got a fairly sophisticated marketing operation and a fairly sophisticated product operation that are trying to leverage all other channels. And we're doing so successfully. As I think we've noted in the past, we've done a lot of really interesting marketing programs -- our one-day sales have really generated a lot of activity. So it is, I think, beyond just the heavy users that we're attracting, although -- and I haven't looked at this number, but they're still obviously the larger majority of our paying subscribers.

So maybe a couple of years in, how does digital retention look relative to print retention?

It's very, very good actually, both on one year. And we only have 21 months at this point, but both of those metrics look very, very healthy versus print. And as you know, we actually have a pretty good print retention number. We don't disclose those numbers, but they do look extremely good versus the print retention.

We'll go next to Edward Atorino with Benchmark.

I got a couple of questions. At some point, do you get worried about the higher circulation price affecting volume somewhere as people either cancel or downgrade? Or is the math such that you could still come out ahead by doing that? Secondly, any plans to raise the price of NYT.com either in the U.S. or put a premium on it elsewhere?

Look, on the print side, we have a history of managing price increases quite well, and I think that comes out very well in our print revenue number being quite stable and a slight growth this year on The New York Times. So these are relatively -- we think relatively modest price increases. They're in the 5% range. And I think we've got a lot of history of doing it and doing it well. And so we think there's still power. We watch it carefully. Obviously, there's always a tipping point to every issue, but we think there's still -- we still think we're in a good place right now.

Yes, I mean, our subscribers are pretty inelastic to our prices, I think you know. As far as the digital price is concerned, it's one of the things we're evaluating alongside many other strategic initiatives in the coming year. As I alluded to earlier, we're going to look at all of our offerings. Is there the potential for a premium product? Is there the potential for an entry-level product? Do we actually have the right bundle and pricing structures given the convergence of mobile and other platforms? So it is absolutely something that we will continue to evaluate, but we've made no decisions at this time.

Has there been much difference between, let's say, New York circulation and non-New York circulation as prices have gone up?

Generally not. Generally not, no.

If I can just add, Edward. I mean, the fundamental, it seems to me, building block of future strategy that we have -- historically had print subscribers and now have digital subscribers who value, greatly value the products they get from The New York Times and stick with them with a good willingness to pay and with loyalty over long periods of time. That's been proven over decades in the case of print. What's very striking about the last 21 months is demonstrating it's also true of digital. And that's one of building blocks on which we can build our strategy.

At this time, I'll turn the conference back over to Paula Schwartz for any additional or closing remarks.

Thank you for joining our call. If you have any additional questions, please call us. Thanks.

That does conclude today's conference. Thank you for your participation.