Good day, everyone, and welcome to Gannett's First Quarter 2012 Earnings Conference Call. This call is being recorded. [Operator Instructions] Our speakers for today will be: Jeff Heinz, Gracia Martore, Bob Dickey and Paul Saleh. And at this time, I'd like to turn the call over to Jeff Heinz. Please go ahead, sir.

Thanks, Matt. Good morning, and welcome to our conference call and webcast to review Gannett's first quarter 2011 results. Hopefully, you have had the opportunity to review this morning's press release. If you've not seen it yet, it is available at www.gannett.com. Before we get started, however, I need to remind you that this conference call and webcast include forward-looking statements, and our actual results may differ. Factors that might cause them to differ are outlined in our SEC filings. This presentation also includes certain non-GAAP financial measures. We have provided reconciliations of those measures to the most directly comparable GAAP measures in the press release and on our Investor Relations portion of our website. With that, let me turn the call over to Gracia.

Thanks, Jeff, and good morning, everyone. I'm pleased you're able to join us today. Paul Saleh, our Chief Financial Officer, is here with me, and together we will be discussing our first quarter results and an update on the integrated growth strategy and cash flow-funded capital programs that we unveiled at our Investor Day in February. Bob Dickey, President of U.S. Community Publishing, is also here and will discuss early progress on our new content subscription model. The strategy and capital allocation plan we discussed 8 weeks ago defines the path we are taking to position Gannett for success in the digital age and reflects the financial discipline underpinning all of our work. As we explained in February, we are executing an ambitious but achievable plan to revitalize our company. The media landscape is evolving rapidly, and we intend to be a leader in a reshaped industry. We expect the work currently going on across the company, as well as our continuing plans, will put Gannett on a sustainable growth trajectory and enable us to return more than $1.3 billion to shareholders by 2015. Now let me begin by turning to the first quarter. And as expected and as we shared with you at our Investor Day, our results were impacted by the uneven and somewhat sluggish U.S. economic recovery, a particularly challenging start in January for advertising overall and the planned investments we made in growth initiatives that we will detail in a few moments. On track with our forecasted EPS, total revenue was approximately 3% lower than a year ago and total expenses, excluding special items, were basically unchanged. Earnings per share in the quarter, when adjusted for special items, were $0.34, which exceeds the $0.28 to $0.32 range we provided on Investor Day, as well as the…

Thanks, Gracia. As Gracia pointed out, we are in the very early stages with our test sites, but I remain optimistic our approach will indeed help stabilize U.S. Community Publishing. Let me share some of those early results. In March, which was our first full month [indiscernible] the year-over-year circulation revenue gains ranging from 20% to 37%. Across the entire test group combined, revenues increased 29% year-over-year. St. Cloud and Wilmington were our top-performing markets. Recently, we received many questions about the potential impact on advertising revenues. I'm happy to report that the test sites executed all of their digital campaigns in March. We are successfully communicating with our local advertisers so they understand how we are working to provide them a more engaged consumer. The test sites' total advertising revenues were 2 percentage points better than the USCP average in March. Preprint and digital revenues were impacted less than projected in our business model. 5 of our 6 markets have successfully sold sponsorships with their smartphones and tablet apps. 40% of sponsorship revenue is coming from new customers. Combined, the test sites posted year-over-year digital revenue growth. Utilizing the meter approach, we've been able to test various levels and feel comfortable that we are understanding where to set the meter. It remains very early in the billing cycle, but our March 13-week retention improved slightly year-over-year for the test sites and is just above the USCP average. This is led by successful conversion programs to our EasyPay plan, and that is helping drive the retention. In just 6 weeks, we have seen an increase of 2 to 5 percentage points in the test markets. EasyPay in some of the test markets now exceeds 60% of our total subscribers and is growing. In every market, we outperformed our projections for…

Well, thank you, Bob. I'll provide some additional detail on the quarterly results for each of our business segments and cover some items from the balance sheet. Operating revenues in the quarter were approximately $1.2 billion. Total expenses, excluding special items, totaled $1.1 billion, relatively unchanged year-over-year despite about $20 million of investment in initiatives and about $6 million in higher pension expense. Earning per diluted share on a GAAP basis were $0.28. Earning per diluted share, excluding special items, were $0.34. We recorded net special items in the first quarter related to facility consolidations and workforce restructuring that totaled approximately $21 million pretax or about $0.06 per share, as detailed on Table 3 of our earnings release. Now let me quickly cover those in more detail. First, we recorded pretax facility consolidation charges of approximately $5 million or about $0.01 per share that reflected primarily accelerated depreciation costs associated with the transfer of production activities for The Cincinnati Enquirer to a third-party printer in Columbus, Ohio. That's the move that was announced in the fourth quarter of last year. As previously disclosed, similar levels of accelerated depreciation will be recorded in the second and third quarters until the move is completed. Second, we recorded pretax workforce restructuring charges of just over $16 million or about $0.04 per share that related primarily to an early retirement offer program we announced for U.S. Community Publishing employees during the quarter. Turning to our segment results. In our Publishing segment, revenues were $874 million, down 6% in the quarter, reflecting an 8% decline in advertising revenue while circulation was about 2% lower. Advertising demands firmed during the quarter but not enough to mitigate a slow start to the year. Ad demand in January was soft across all categories, particularly the retail and national…

[Operator Instructions] And we will take our first question from John Janedis with UBS.

You cited weakness in telecom and entertainment in national print. And I think it seems like the industry also saw some weakness for those categories in the quarter as well. Can I just ask, is it your sense that the categories, meaning those 2, have made a strategic decision to spend away from print, on other media platforms this year?

John, I don't think it's that they're choosing to spend away from print as much as it's that some of the competitive pricing wars and other issues that drove a lot of telecom spending have abated a bit. When we look at, for instance, our television numbers in the first quarter, we also see that telecom was a lagging category for them in a sea of fairly strong other categories. So I don't think it's just a print issue. I think it's more a moment in time for the telecom companies as they have a different strategy around how they are pursuing growth.

Okay. And entertainment, I guess, Gracia, that's less movies for USA TODAY. That's correct, right?

Yes, exactly. On the entertainment side, USA TODAY simply doesn't get the level of movie advertising that newspapers, for instance, in L.A. or New York get from that category.

Okay. Just quickly on CareerBuilder. What were the North American revenues for the quarter, I guess, solely? And within the Digital segment, I think if you back into the numbers, looks like non-CareerBuilder was kind of flattish. Can you talk about what you're seeing there within the segment x CareerBuilder?

Sure. On North American revenues, I believe that the network North American revenues were up about 7% in the quarter. International revenues obviously were much stronger, I think up in the 35-or-so-percent range. And obviously, CareerBuilder drove a lot of the growth that we saw in the Digital segment. ShopLocal also had a pretty good quarter as well.

We will go next into Alexia Quadrani with JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: Just a question on your outlook for the second quarter. First, on the Publishing side, any comment you can give us on how April is trending in print? And then on your Broadcasting guidance in terms of pacing, I think it implies that we may see some softening in core in Q2, just given what we're expecting, political and retrans. Is that what you're suggesting as well?

Let me just kind of overall comment about the outlook for the second quarter. Overall, as we indicated, our advertising comparisons got much better as the first quarter went on. And like many others, I think January was a slow month. But clearly, we accelerated through February and March. And as I said earlier, our average for February and March was better than what we did in the fourth quarter. So starting out of the blocks, we currently anticipate that the second quarter will be much more like the way we ended the first quarter rather than the sluggishness that we obviously saw in January. On the television side, I don't think that our guidance is implying that core business will be a little softer. Obviously, we don't have the Super Bowl, which helped a little bit in the first quarter on our NBC affiliates. Political, I think we'll see how that all plays out, but I don't think we're looking for heroic political numbers in the second quarter. Frankly, as we mentioned, about 80% of our political dollars are garnered between Labor Day and Election Day. So usually, the first and second quarters are not a significant political opportunity. So I think our core business is hanging in there quite well. I look at auto and auto pacings, I think, are up in the 20% plus range for Broadcasting. Obviously, a little bit of that is in comparison to the last year's second quarter when we had, towards the end of the quarter, the impact of the Japanese tsunami. But we also had, absent the auto side, up revenues in Broadcasting last year in the second quarter. So in no way does that guidance imply that we expect core revenues to be softer. I think frankly where we sit today, we only really have good pacings for April and into May. I think June, we'll have to see. I think Dave Lougee, when we talk to him, he thinks that there is potential for some upside to the June pacings that we're obviously having just very early glances on right at the moment. Newsquest, I think, will continue to do a good job and continue to outpace their regional competition in the U.K. So overall, I'd say the comment is again that the second quarter is starting out, and we expect it to be much more like the way we finished the first quarter than the January aberration. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: All right. That's very helpful. And then can I just clarify something that I think you guys mentioned about your strategic growth initiatives. I may have misheard this, but should we assume -- was the comment earlier that we should assume that we should start seeing positive circulation revenue growth at year end, is that right? Or did I mishear that?

Go ahead, Bob.

That would be the expectation, yes, as we roll out throughout the end of September. So by that point in time, some of our sites will have been out as long as 6 months. So yes, we would expect fourth quarter.

Again, you have to recall that some of our subscriptions obviously are 3 months, 6 months, year subscriptions, so it will take time for those dollars to fully be realized. But I think as we said in February, we expect that the bottom line impact from the content subscription model should be a favorable about $100 million in full year 2013.

We go next to Doug Arthur with Evercore Partners.

Yes, a couple questions. Just on political in the second quarter in terms of your assumptions, as I look back to 2010, I think you did about $12 million in political in Q2 in a nonpresidential year. Is that a -- do you think you can get there this year in the second quarter or it's not clear at this point?

We look at both 2008, which was a presidential election year, as well as 2010, which was a nonpresidential year. In 2008, we had about $5 million of political spending in the second quarter. In 2010, I think there were more gubernatorial and senatorial races and those sorts of things that tend to generate dollars a little bit earlier in the year. I'd say at this point, our expectation is that political will probably be somewhere between $5 million and $10 million in the quarter. We're going to have to wait to see. Obviously, we are heartened by the fact that it appears that the presidential fundraising and the presidential election is finally getting underway in a very big way. And if you listen to any of the pundits about the kind of spending that is going to occur this year, it is going to be potentially unprecedented. We will be the beneficiary of that as it rolls out, but it'll be primarily in that Labor Day to Election Day period where we see the vast majority of that. In the interim, unlike 2010, we have fewer senatorial and fewer gubernatorial races; that's consistent with 2008.

Okay. And just a follow-up on the improvement in Publishing in March. What role, if any, did the early Easter play in that? And will there be a hangover effect in April?

While Easter was earlier in the month, that week before Easter was in -- partially in -- a little bit in the March numbers. But actually, the week before Easter was in our second quarter, as well as Easter and the week before it last year, so I don't think there's going to be a big impact -- there was a big impact in March for the earlier Easter nor do I think there's going to be much of a change in April. I'd suggest that as always, we can combine March and April, and we'll report on that in the second quarter as we did last year.

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

Gracia, just a few questions here. Can you talk about your pension issue? How much are you expecting for the full year to put into your pension plan? And also can you talk about furloughs? What is potentially planned for the second quarter? And did you have any in the first quarter? And I have a follow-up.

Paul, do you want to take the...

I think we said on the pension expense on a year-over-year basis, it's going to be $24 million higher expenses in 2012 than it is in 2011. And we said it's about $6 million a quarter.

And as to furloughs, we have already announced some, not company-wide furloughs, but in very selected areas. And just to give you some background, in 2011 in the first quarter, furlough savings were about $10 million and they were about $8 million in the first quarter. This year, $7.9 million. In the second quarter, we expect furlough savings to be about $4 million, which is consistent to what we did last year when we again limited the number of employees that were participating in the furlough program.

I'm sorry, for pension, I meant the pension contribution for the year, not the expense.

$54 million in the first quarter that we did.

Right. And we probably have possibly another $50 million for the rest of the year. But it all depends also on some of the legislation that is right now up for a vote sometime in the July timeframe. If it goes through, then the funding may be lower.

Yes, it's about $60 million for the remaining 3 quarters. But that was obviously factored into all of our thinking for the year.

Okay. Also if I could ask please, Gracia, your daily and Sunday circulation volume in the quarter for the U.S., what was the percent change there year-over-year?

Yes. For U.S. Community Publishing and USA TODAY combined on a daily basis for the first quarter, circulation revenue -- I'm sorry, circulation, net paid circulation was down about 3.5%. On Sunday, it was down about 3.4%. But I would say that within those numbers, there are some differences. Bob alluded to the fact that we have aggressively raised single-copy pricing, so we've seen more of a reduction in single-copy than we have obviously seen in home delivery, particularly on Sunday. And then also I'd say a terrific area for USA TODAY especially has been our e-Edition numbers, which frankly at USA TODAY exceeded the dropoff in print copies. So in fact, USA TODAY on a daily basis saw about a 2% increase in circulation in the first quarter.

And lastly, Gracia, for your CareerBuilder, your sales force-only revenues there, what was the percent change there year-over-year?

I'm sorry. Are you referring to CareerBuilder-only, excluding the newspapers sales?

Yes, exactly. What you -- yes, what you had booked in the digital line, the sales force-only piece of it, please, what the percent change was?

Okay. As I said, CB's North American revenue, excluding newspaper-driven revenue, was up about 8.3%. International revenue was up substantially, 40% plus. So overall, I think we said we reported about a 10% increase in revenues overall for CB in our reported numbers.

We go next to Jim Goss with Barrington Research.

I was wondering about initiatives like USA TODAY Sports Media Group and DMS. As you get into the competitive situation, you're looking at Internet, tablet and mobile, I presume, as categories. I'm wondering how they break out now and how they'll break down in the future and what you need to do to develop categories, like tablet and mobile, that are fairly nonexistent right now. And also, who you feel are the key competitors in these newer efforts you're undertaking?

Yes. Jim, I think I'd start by saying that overall, browser and Internet-based ad revenues and other kinds of revenues are absolutely the lion's share at this point of our Digital revenues. But we are also incredibly mindful of the fact that the tablet is going to be an increasingly important advertising force over the next few years, particularly as the adoption of tablets becomes much more ubiquitous and universal. And from a mobile perspective, I think there are clearly opportunities there on the ad revenue side, as well as I think down the road, e-commerce revenue opportunities as well. One of the things that we have been doing in conjunction with the work we've been doing on the all-access content subscription model is that we have started up mobile and tablet apps in all of those markets. Obviously, some of them are in their infancy. And if Bob, you'd like to jump in here and comment, love you to.

Sure. All of our sites will have those apps by the end of September. So as we roll out more, we'll be able to even look at new opportunities that would go with national and regional advertisers. But in the early test sites, we are seeing about 40% of the advertisers that are taking advantage of our mobile and tablet are new, so we're talking about new to those local media organizations, which is very encouraging because that's part of the strategy is to roll out these to bring new and different advertisers into the mix.

And then as I mentioned earlier, USA TODAY is obviously relaunching its app, its mobile, its -- and the print product as well, all in conjunction with the 30th anniversary of USA TODAY in September. So we see those areas as -- they're small now. And even if you look at overall numbers that are being reported, tablet and mobile are still a very small piece of overall Digital revenues. But we see those categories as growing disproportionately to the rest of Digital revenues. And that's why we are making the investments and doing the things that we are doing in both of those areas that we think are going to be very important growth areas for us over the next several years. And the other thing I would mention is video. Again, all of the prognosticators talk about the fact that video growth and dollars that are going to be placed alongside video are going to grow and grow in an outsized way. That's one of the reasons behind the video production center that we have just put in our television station at WXIA in Atlanta that is going to be servicing the entire Gannett organization. We see video as an incredible opportunity. Having 23 television stations gives us a nice boost in that area with folks who understand video, who can teach the rest of the organization about that and who can share video in a much more meaningful way than if we just simply had publishing assets. So you're absolutely right, those are areas that we are all very focused on, areas that we are spending a lot of the time and investment on and areas that we see as propelling -- helping to propel our growth into the future.

And if I might, just to scale this and look at the development of Internet, which maybe took 10 or 15 years to get to the size and scope it has so far, do you think the mobile-type market and the mobile advertising will take a longer or shorter period of time to gain scale? And do you think it has an opportunity to be as big or bigger than Internet is right now?

I actually think that it will scale as quickly, if not more quickly, than what the Internet did. I think there's a lot more focus on it. I think just the evolution of business today, things grow faster and scale faster than they have even in the Internet age since the early '90s. So we would expect that over the next 5 years to grow significantly. It's why we're putting a lot of time and attention. And I think it does have the potential to grow to be larger than the Internet. I'm not going to project when that would be, but I absolutely believe that it does. And then 3 years from now, we'll probably be talking about other platforms that we haven't even envisioned today that will be going through the same sort of metamorphosis that mobile and tablet and these other areas are looking to grow in. But thanks for your questions, Jim. And I think we just have one time for one more question.

We'll go to Edward Atorino with Benchmark.

Got one question, but ABCs. One, your debt at the end of the quarter and the share base at the end of the quarter. And second, cost trend in newspapers x the charges.

Debt was about $1.7 billion at the end of the quarter, as Paul said earlier.

I must have missed it, sorry.

That's okay. And I'm sorry, the other...

The share base at the end of the quarter.

It was, I think, about 240 million diluted shares at the end of the quarter.

Okay. And cost -- if we look at the first quarter cost trend x the charges, that's sort of the "annual trend."

If you just look at it x the charges, you have to also look at it excluding strategic initiatives. And Paul indicated that strategic initiatives would be -- investments would be about $30 million.

Yes, right. I'm saying that -- yes, I got you. Okay.

Initiatives and special charges out, I think we'll continue to do a great job on managing expenses as we've always done. There was a buyout program in U.S. Community Publishing that about 400 or so folks took advantage of that we took a special charge for this quarter. And there'll be a small remaining piece next quarter to take. And obviously, we'll get savings out of that as well in the second, third and fourth quarters, so we'll continue apace.

I would say also I'll add on the cost side, we have the benefit of our Gannett Publishing Services that also are going to be playing out in the second half of the year. And then a lot of the revenue initiatives are basically the cost -- the revenue initiatives, the benefit will drop to the bottom line.

And did you give an April advertising for newspapers? Did I miss that?

No. We've got to close out the month. But what we said was just overall is that we all know how the first quarter, January, a slow month virtually everywhere. Everyone I've talked to, whether you're Digital, Broadcast or Publishing, talked about a very slow start to the year. But then February better, and March, much better. And it looks like the second quarter is starting out as and will ultimately be more like the end of the first quarter and not at all like the January beginning of the first quarter. And I think that's it for time today. If you have any additional questions, you should feel free to call Jeff Heinz at (703) 854-6917. Thank you very much for joining us today, and we appreciate all your time and attention.

And again, that does conclude today's conference. Again, thank you for your participation. Have a good day.