Good day, everyone, and welcome to Gannett's Fourth Quarter 2013 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] Our speakers for today will be Gracia Martore, President and Chief Executive Officer; and Victoria Harker, Chief Financial Officer. At this time, I would like to turn the call over to Jeff Heinz, Vice President, Investor Relations. Please go ahead, sir.

Thanks, Vicky. Good morning, and welcome to our earnings call and webcast. Today, our President and CEO, Gracia Martore; and our CFO, Victoria Harker, will review Gannett's fourth quarter 2013 results. After their prepared commentary, we'll open up the call for questions. Hopefully you've had the opportunity to review this morning's press release. If you've not seen it yet, it's available at gannett.com. Before we get started, I'd like 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 the Investor Relations portion of our website. With that, let me turn the call over to Gracia.

Thanks, Jeff, and good morning, everyone, and let me join Jeff in welcoming you to our earnings conference call this morning. I'm going to provide a high-level overview of our fourth quarter results, and I'm going to update you on the strong progress we've made on our strategic initiatives, as well as on the integration of Belo into our broadcasting portfolio. And after that, Victoria is going to review the financial performance of each of our segments as well as some balance sheet items and some assumptions for 2014. Before I kick things off with our fourth quarter results, I'd like to just remind everyone that a couple of the comparative factors made this a difficult quarter to easily assess by purely looking at our reported numbers. First off, the reported comparisons include an extra week in the fourth quarter of 2012, 14 weeks versus 13 weeks in 2013. And secondly, we were also up against a record level of political advertising, over $91 million in the fourth quarter of 2012, a formidable mountain to climb. So the issues impacting those comparisons need mentioning because they could mask the very good performance of our company for the fourth quarter and the full year. Again, as I said in the fourth quarter, we were up against a huge amount of political advertising in 2012, but I think we did a fantastic job capturing additional demand. Just to put that in perspective, the amount of political advertising we achieved in the fourth quarter of 2012 was a bit more than we achieved in all of 2010 and slightly less than what we achieved for all of 2008, the previous presidential election year. So if you exclude the incremental impact of political spending on a comparable week basis, 13 weeks in both quarters,…

Thanks, Gracia, and good morning, everyone. As Gracia has already mentioned, we are very pleased with our financial results again this quarter despite some continuing headwinds within the publishing sector. Before I dive into the details of our results for each segment, I'd like to briefly mention several onetime events, which occurred during the quarter. In terms of special items, it's significant to note that our ongoing efforts to transform the business allowed us to perform with greater efficiency and effectiveness again this quarter. These initiatives drove $21.6 million in workforce restructuring and related expenses, as well as $10.1 million in facility consolidation costs during the quarter. At the same time, in connection with an evaluation of our expected future financial performance, we recognized $33 million in goodwill and intangible impairments during the quarter. When combined, these special items drove a $64.6 million impact to the quarter or $0.18 in earnings per share. In terms of non-operating special items impacting the quarter, as you might expect, we incurred expenses of nearly $21 million [ph] related to transactions, which impacted EPS by $0.09. Our efficiency program such as our consolidation of printing and distribution platforms, as well as our global sourcing and real estate optimization efforts, continue to generate significant cost savings, helping to fund new product initiatives, including providing USA TODAY content in some of our local publishing operations. We're very proud of the performance of these initiatives as they continue to support the ongoing transformation of our business. Now onto operating results for the quarter. Please note that all of the comparisons that I'll cover here for ongoing business results exclude the extra week as well as captivates the operating results from the prior year. Across the enterprise, as Gracia mentioned, total company revenues of $1.4 billion were relatively…

Thanks, Victoria. So the fourth quarter capped off a very exciting, productive year for Gannett. We are very well positioned for 2014, and we're going to remain relentlessly focused on the execution of our strategy, and we'll continue to explore new related initiatives such as we did this year that will accelerate growth. This strategy, combined with the game-changing addition of Belo to our portfolio, our strong and flexible balance sheet, an increased advertising demand in connection with the upcoming Winter Olympic games that are going to be starting in a few days, and political elections make for a promising and exciting 2014. With that, I'd like to open the call up for questions. Vicky?

[Operator Instructions] We'll take our first question from Doug Arthur with Evercore.

Gracia, 2 questions. First, on the enhanced content for the digital subscription, you've talked about price -- potential price increases in those markets. Can you add -- I think you mentioned that a little briefly on the call. Can you kind of add some details to that? And then I don't know if David is on the call, but I'm wondering -- obviously, you had some significant retrans renegotiations in the fourth quarter. What's -- what opportunity -- you've given out that number for '14, but what opportunities do you have for further renegotiation on a significant level for '14 going into '15?

Thanks, Doug. Let's start with your first question around the USA TODAY enhanced content along with our local content. Yes, obviously as I said, we expect to be able to achieve pricing opportunities as a result of the enhanced subscription model we're providing, which amounts to some very welcome USA TODAY national and other kinds of content as well as additional local content. Bob Dickey is here. Do you want to make any comment, Bob, more specifically on pricing actions?

Well, as you know, Gracia, the price is only just starting to roll out. [indiscernible] very encouraged. We're taking a very strategic approach. This is not a market-wide effort. It is very much driven by the demographics and demand in the marketplace. So it's not a 100% market-wide effort at this point. But based on that approach, we are seeing anywhere from 3 to 4 percentage-point improvement in those USA TODAY local content markets versus the markets in the past that did not have the product. So we're very encouraged. On the other side, what's really exciting as well is that our starts have improved by about 8 percentage points prior to the launch. So we're not only seeing retention and acceptance of the price increase. We're also seeing former and new subscribers come back to us.

And Doug, on the retransmission opportunities, obviously, we still have some of the Belo subs that where we didn't, in some small cases, have after acquired clauses. So we'll get some uplift from those as they come off over the next few years. And then almost as you would expect at this point, on an annual basis, probably every fourth quarter, we're going to have opportunities at some agreements to continue to favorably impact that retransmission level. But obviously, we're a long way from that. We're just starting to enjoy what we accomplished in December. Thanks for the questions, Doug.

Next will hear from Jim Goss with Barrington Research.

One quick question about the Sochi Olympics. I'm wondering with the expanded franchise you've had in sports as well as USA TODAY in the broadcasting area, where it's most affected, are there -- can you look at how that might have an expanded impact relative to other past Olympics? And then secondly, and maybe in a more broader area, Gracia, you've always stressed the synergy and reach advantages in your multiplatform approach, yet there are always questions coming up about, why doesn't Gannett split up the company like everybody else is doing? I'm wondering if you could use this platform to discuss the pros and cons of being potentially unique or at least rare in keeping Broadcasting and Publishing together rather than pursue a split as has been the fashion for many in your peer group.

Well, let me take the easy question first, your second one. I think the most important thing that the Gannett Co. can do right at this moment is to achieve all of the great synergies and all of the great things we believe we're going to achieve and we've set out that we're going to achieve from our combined Broadcasting group, not only for 2014 but to set the stage for all of that to occur over the next 3 years. So that has a lot of our time, focus and energy right now. But at the same time, I will tell you that the board and I are continuously evaluating, as you would expect, everything -- a lot of different ways for us to have consistent increases in shareholder value. We evaluate everything from capital allocation decisions to the appropriate structure for our businesses and our company and everything in between. But I think, Jim, right at this moment in time, just literally having completed the Belo acquisition, in the short term our time, energy and focus is to create the substantial -- substantially more shareholder value we believe we're going to achieve with the successful and I believe overly successful achievement of everything we promised around the Belo transaction. Now taking the other question, which is around sports, I'll start with the USA TODAY Sports side, and then I'll have Dave Lougee, who's here with me, also talk a little bit about our Olympic efforts on our now expanded group of NBC affiliates. So at the USA TODAY level, I mean, I think they've done just a fantastic job with their sports coverage. I think it's miles ahead of what it has been, even in the last 2, 3 years. And so I think you'll see coming out of Sochi a combination of the great work that USA TODAY is doing, but the combination of their work, together with our broadcast folks, together with our local community publishing folks, in a concerted effort to provide some of the best coverage of the Olympics. But as we -- and so that will, I believe, lead to obviously some dollars at the Publishing side and then some digital breadth. The vast majority of the Olympic dollars are obviously spent on television, and Dave, why don't you comment on some of your efforts?

Yes, just to build on what Gracia said, it's a really good question because we do have a very unique set of assets between many large and strong NBC stations. USA TODAY, which has always been a go-to place for Olympic coverage, and all of our community papers that give and need coverage of the local athlete. So we have, to your point, an incredible, integrated operation in place in Sochi now, where people are safely inside the security zone there, with a lot of efforts on security. And it is an integrated operation between NBC News and our NBC stations and our NBC stations with USA TODAY and U.S. Community Publishing. So any coverage of any local athlete in any of our 100 plus markets, we will have it and we can give it. On the revenue side, most of our efforts right now from a go-to-market strategy have an about furthering and accelerating the sales initiatives that we rolled out 2 years ago and very successfully accelerated our revenue results on our Gannett properties, and that is continuing this year. Our focus now and in the future will be doing that with the expanded Gannett properties, the NBC properties that we've added and then doing that in concert with USA TODAY and Community Publishing on a go-forward basis.

Next, we'll hear from John Janedis with UBS.

Gracia, your retrans outlook is a bit higher than I would've expected. Can you maybe give us the implied same-store growth rate in 2014? And are there any renewals coming up from the top 5 distributors? And maybe an unrelated topic, is there any way to help us think about the margin on the retrans now that some of the stations are going to be paying reverse?

Well, let me repeat I think what -- some of Victoria's comments. Obviously, from a reverse retrans perspective, there's a couple of factors at play. Number one, our own 3 ABC affiliates, their affiliation agreements come due at the end of this month. So Dave will be quietly and privately doing the negotiations that we always do quietly and privately. Secondly, with respect to Belo, as you may recall on our call announcing the transaction, both Dunia and I mentioned that Belo was already paying reverse retrans to a couple of the major networks but had not yet paid it to one of their other major networks. They completed those negotiations in the second half of last year and so will be paying reverse retrans to all networks for a full year in 2014, obviously, subject to the agreements they have in place for how reverse retrans is paid each year. And also as she mentioned on the after-acquired stations, we all have to remember that those dollars are subject to Belo's affiliation agreements and the reverse retrans contractual commitments they made. So the reverse retrans number is certainly a -- will be in the expense part of the equation. And as Victoria said, in our 10-K, we'll provide guidance on what we believe expenses will be up for the broadcast group, both on a reported basis as well as on a pro forma basis. But we're not going to peel out these individual components. We believe in negotiating in private and have strict confidentiality clauses on all of our agreements that we always live up to.

Okay, maybe just a...

And you actually asked about additional opportunities on the retrans side. As I mentioned a little bit earlier, we're at the point now where literally every year, we're going to have some agreements coming up. I would expect we'd have some agreements coming up, I know we'll have some agreements coming up in the fourth quarter of this year, but as we get closer to -- once we get them done, we'll report on all the good news that we've accomplished just as we did this December and now we are beginning to enjoy that. As well we have some small agreements with the Belo folks on -- that the after-acquired clauses. We don't have after-acquired clauses, so we'll enjoy the benefit of getting to closer to our rates when those agreements come up in the normal course of events over the next 1, 2, 3 years.

That's helpful. Maybe just as related to that, if we look at your retrans growth at Gannett, same-store I think was maybe up by around 30% in 2013.

Right.

Would '14 be something, now that you aggregated together, would it be something similar to 30 above or below? Can you help us with that?

We will in the 10-K when we finalize it all.

Next will hear from William Bird with FBR. William G. Bird - FBR Capital Markets & Co., Research Division: Gracia, is the Aereo case having a noticeable impact on the TV M&A market? And does the unresolved nature of that case influence your M&A strategy?

Actually, Bill, we're delighted that it is going to the Supreme Court because we believe that the Supreme Court is going to uphold the well-established, well policed, well done copyright laws that are the law of the land here. So we're delighted that it's going to the Supreme Court. And what I will continue to tell you is that we are very excited about the future prospects of our TV business. We don't see any reason for us to, if we found another Belo opportunity which had the combination of all those unique factors we talked about on the call when we announced the transaction that we wouldn't be ready to move full speed ahead, but those are kind of unique transactions, and we were very fortunate with the Belo transaction. But it does not dim our enthusiasm in any way. And I think you'll -- I keep hearing that there are lots of transactions being looked at and who knows what will be announced here or there. But no, I don't see any diminishment on our enthusiasm for our business. William G. Bird - FBR Capital Markets & Co., Research Division: And Gracia, a related question, how best to think about where you're leverage limit is? There's clearly a hard line where your credit agreements are, but how do you think about how much leverage you would consider adding to the company?

The beautiful thing about Gannett is that even before the Belo transaction, we generated an enormous amount of free cash flow. And with the Belo transaction, with high-margin properties added to our mix, we generate even more enormous amounts of free cash flow. So our ability to pay down debt very quickly as we fully are capable of doing right now as a result of the Belo transaction, continues unabated. Now we are always very careful about using our balance sheet and allocating capital to investments and other usage. But again, if we see opportunities that we believe will create continued sustainable shareholder value for our company, then we will take a long hard look at them. But they will always be through the prism of being an incredibly disciplined allocator of capital. And I think you've probably seen that, Bill, over the years, that we are unbelievably disciplined, and I think the Belo transaction is just another example of that.

Next, we'll hear from Alexia Quadrani with JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: Just a question on the Publishing side. With all your initiatives to continue the ongoing to drive circulation with the inclusion of USA TODAY and, obviously, the continued success of the paid all-access model, can you give us a little color of, I guess, how we should look or how should think about the circulation revenue stream in 2014? If we look at the run rate of what you had in Q4, is that a good run rate for 2014 or should we see some improvement there?

A couple of pieces, and then I'll ask Bob to comment on obviously Community Publishing. But at Newsquest, we did, as we've mentioned, similar things on the circulation side, which is to improve their content, focus on providing more value to consumers. And as a result, they have sustained the circulation revenue growth, at least I think, Victoria, for the last couple of quarters?

Yes.

So at some point next year, we'll cycle that. But we have a nice increase in circulation revenue in the fourth quarter. We expect a positive number in the first quarter. At USA TODAY, we talked about I think on our last call the fact that we had circulation price increases, both on single copy as well as home delivery. And as Victoria again mentioned earlier, we saw our -- a nice year-over-year gain in circulation revenue at USA TODAY, and we'll have a few quarters, obviously, of that before we cycle that. And Bob, do you want to comment on U.S. Community Publishing given we have a couple of things in the mix here with the pilots?

Right. As we finish out the rollout of the USA TODAY local section, it certainly gives us some opportunity to increase subscription rates in those markets. That will be later in the year. So I would suggest that we will continue to see some improvements to the fourth quarter run rate. And we will, as we learn more from the pilots, we'll have a better handle on exactly how aggressive we can be in the pricing arena.

Yes, I think we'd hope to have some color for you and sizing of that opportunity once we've completed the rollout here in the first quarter, get a couple of months under our belt of experience, and then probably midyear be able to give you a pretty good handle on based on some real intelligence what our expectations are. But we do expect that initiative to be profitable in the second quarter and beyond. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: And just staying on the newspaper, just to follow up. On the advertising side, I think you mentioned in the release the combination of the softness gained from secular but also from some softness in the economy. It might be difficult question to answer, Gracia, but any sense on maybe what is more secular and what is more sort of cyclical there?

Yes, It was interesting. I think we all look at the economy and I think we thought we saw some good momentum in the middle of last year. And then towards the last quarter of the year, my sense was that some of that momentum kind of petered out a bit as businesses and consumers focused on health care costs and a variety of things and the stock market did some gyrations that got people a little bit nervous not dissimilar to what's going on through the last week or 2. and so I think we saw a bit of a slowdown. And particularly on the employment side, I think folks' businesses got a little bit nervous about what employees are going to cost and all of those things that you would expect them to be nervous about. I think that some of those -- obviously, those impacts carry over into the beginning of this year. I would hope that we could get a little bit more clarity and certainty on the economy. I think unfortunately, as we're beginning the year, the amazing number of storms, ice storms and snow storms and everything else that have been impacted -- you, saw I guess, a couple of days ago, auto sales being impacted obviously if there's 2 feet of snow or there's 3 inches of ice, you can't go to the dealership to buy a car appropriately so, and therefore, dealers probably don't think that they necessarily need to advertise. So we've got-some-odd things happening here in the first quarter, but I -- we hope that we'll see some improvement in the employment picture as things settle down on the health care side and settle down with Congress and all of those factors that I think kind of roiled [ph] the market a bit in 2013.

Next we'll hear from Barry Lucas with Gabelli & Company.

One housekeeping and then one maybe a little bit separate question, Gracia. Is it possible to strip out the last Winter Olympics and get kind of a core advertising number that you're seeing in 1Q for television?

Strip out the Winter Olympics in 2010?

Yes. Either way -- yes, the last Winter games from...

Yes, in 2010, we achieved about $19 million of Olympic revenue. It was the Vancouver Olympics. We obviously expect the Sochi Olympics based on what Dave talked about of their keen focus on it to do a bit better than that. Obviously, we wouldn't expect it to be better than the Summer Olympics.

But not all incremental.

But not -- surely not all. Yes, Dave, go on.

Yes, I'll just state. The point is, Barry, that's not all incremental, and so we are having -- we will have as I reference earlier a nice increase over Vancouver. But until the quarter comes in, we don't know how much of that is incremental because some advertisers pull money out of March to get into the Games, et cetera. So it's hard to do that equation.

We've got to see the full quarter, and then we have a better sense of what was incremental versus the other.

Okay. And just real quickly. Any update you can provide on Classified Ventures and comment, in particular, on the Cox Enterprise [ph] purchase of the balance of autotrader and that business?

Yes. I think everyone publicly knows that apartments -- the owners of Classified Ventures, are exploring options, vis-à-vis the apartments.com piece of it. I think we all concluded that, that was a less strategic part given we don't have deep-rooted relationships with apartment house owners and the like. So clearly that is undergoing a process. And once it's completed, we will, I'm sure, they will share the end results on that process. Vis-à-vis Cox Enterprises [ph], I think that's sort of a bit of a unique situation because you had an owner that potentially had either put rights or -- I think put rates. So it's sort of hard to really draw any conclusions around valuation or anything because it was sort of a unique set of circumstances. I think the only thing I would say is obviously given what's been going on with automobile sales and that category and the feeling that, that's going to be -- continue to be a strong category that those assets are valuable assets at the appropriate price

Next, we'll hear from Kannan Venkateshwar with Barclays.

The one question is when you're thinking about -- you've obviously been very conservative on the balance sheet side of it and you've been pretty consistent about that over time. So when you are thinking about options from a capital allocation perspective or even more importantly, from the perspective whether to spin off newspapers and so on, is that goal of investment grade rating a constraint in terms of what you want to do with the balance sheet.

Well, first of all, we are blessed with the fact that we do have investment grade metrics, albeit we are not rated investment grade. Nor would I turn down any great opportunity that I believe could have a sustainable long-term -- intermediate to long-term impact on shareholder value to in a moment in time, continue those investment grade metrics. But as I said earlier and as we have historically done with this company for the -- at least the last 28 years I've been here, is there are moments when opportunities come up, we expand the balance sheet. And then as I said earlier, that enormous amount of free cash flow we generate, we focus it on paying down debt, bring our metrics back where we are exceedingly comfortable, and then have the flexibility to be opportunistic about other opportunities. So I'm pleased that you think we run a conservative balance sheet. There were a few moments in 2008 and 2009 that people didn't have that few, but we totally agree. But the beautiful thing about Gannett is that we have great flexibly in that balance sheet, and we have great free cash flow generation, and that's a winning combination when you're an opportunistic investor as we are.

Kannan, this is Victoria. Just a case in point, when we went out to the [ph] market the summer relative to financing the Belo transaction, we had the benefit of really investment grade like covenants in terms of pricing and all of that. So there was not a -- we saw evidence of that was a market perception, as well as a reality.

Yes. Just to follow up on that, I mean, part of that -- part of those metrics are driven by the fact that you have the newspaper business still, which throws up a lot of cash. So in that sense, if you were to spin that off, obviously the metrics would look really different. So broadly that's the context for the question, which is that constraint what do you do with the newspaper business.

I don't think we are constrained by any of those factors. I think as I said earlier, right now, we are incredibly focused on achieving all of the great things that we are going to achieve as a result of the Belo acquisition. And in the short-term, that's what we're focused on because that's what's going to create, I believe, the most shareholder value, most sustainable shareholder value certainly in the short term. But as I said earlier, we -- the board and I look at everything constantly. And if we believe that we can achieve sustained shareholder value, then we'll do what's appropriate. But right now, we have a great acquisition that we're fearlessly integrating and feel very, very good about, but it's a lot of work. So let's do that work.

We'll take our last question from Amy Stepnowski with Hartford.

This is actually just a housekeeping question. I know you'll be releasing the K shortly. But just given all the activity in the fourth quarter, could you give us an idea of what kind of cash balance you ended the year with?

We had about a $470 million or so cash balance both across the U.S. and then piece that was Belo as well as the U.K. We're still finalizing the number. Obviously, the K is not filed yet, but it's in that range.

Thank you, all, for joining us. I'll turn it back to Vicky.

And that does conclude today's teleconference. Thank you, all, for joining.