Good day everyone, and welcome to Gannett’s First Quarter 2015 Earnings Conference Call. This call is being recorded. Due to the large number of callers, we will limit you to one question or comment. We greatly appreciate your cooperation and courtesy. Our speakers for today will be Gracia Martore, President and Chief Executive Officer, Bob Dickey, President of U.S. Community Publishing; and Victoria Harker, Chief Financial Officer. At this time I’d like to turn the call over to Jeff Heinz, Vice President, Investor Relations. Please go ahead.

Thanks, [Gellar]. Good morning, and welcome to our earnings call and webcast. Today, our President and CEO Gracia Martore, Bob Dickey, President of U.S. Community and Publishing; and our CFO, Victoria Harker will review Gannett’s first quarter 2015 results. After their 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 this conference call and webcast include forward-looking statements, and our actual results may differ. Factors that may 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 on the Investor Relations portion of our website. With that, let me turn the call over to Gracia.

Thanks very much Jeff and let me join in and welcoming you to our earnings call. Today’s I’m going to provide a high summery of Gannett’s impressive performance in the first quarter and after that Bob Dickey who will be the CEO and President of our publishing business once the split is completed will give an overview of the publishing business including operational highlights and financial performance during the quarter. Then Victoria will review the financial results of the company and our broadcasting and digital segments, provide some detail on special items and review our balance sheet. Dave Lougee, President of Broadcasting and Jack Williams, President of Gannet Digital Ventures are also here to participate in the Q&A session. The first quarter kicked off with promises to be a very strong and exciting year for us. Our exceptional results this quarter will lead by significant revenue growth in our digital segment and solid growth in our broadcasting segment. Both segments achieved a record level of first quarter revenues. Our strategic acquisition of Cars.com continues to pay dividends and we’re looking forward for future growth of that business and the continued positive impact we'll have on our digital segment. Broadcasting segment revenues were also up despite challenging comps given the absence of $51 million of Olympic and political ad demand that contributed to results in the first quarter last year. Once again we maintained our usual discipline with regard to expenses in the quarter, expense growth was in line with our revenue growth. This was mainly due to the acquisition of Cars.com, on a pro forma non-GAAP basis expenses were down 3% reflecting lower publishing segment expenses and flattish digital segment expenses. It's important that as we grow we continue to leverage our scale and operate as efficiently as possible, we've…

Thanks, Gracia. First let me say how honored and excited I am to have been chosen to lead new Gannett. I have been at this company for more than two decades, I can tell you first ten, this is a very exciting time not only for Gannett but for Publishing specifically, we've made significant strides in the past few years to provide our audiences with fresh content, keep them engage and then service an integral member of their local community all while continuing our long-held tradition of being a very strong operator. First the new key concepts we've launched recently have been overwhelming positive and it encourages us to dig deeper and provide our audiences with increasingly unique ways to consume the news and information they created. We will continue to focus on innovation, finding creative approaches to producing and delivering superior content all along engaging with subscribers and our community and servicing of course our advertising partners. Not only will the new Gannett continue to push the envelope in terms of products and services, but we will begin our life as an independent company with a strong financial footing, positioning us to be a successful consolidator of local market publishing and related digital operations in the future and invest in products and services that will drive growth. We will be financially disciplined, maintaining a strong flexible balance sheet through conscientious cost management, conservative financial policy and strong and efficient operation. The new publishing company will remain committed, preserving financial flexibility and maximizing cash flow to allow investments to enhance our company. Focusing now on the first quarter, our combination of award winning journalism and innovative distribution methods kept Gannett at top of the industry. The all-access content subscription model continues to help drive circulation revenue as home delivery revenue…

Thanks Bob and good morning everyone. As Gracia already mentioned we’re very pleased with our first quarter financial results, testament to the outstanding progress in the strategic transformation journey of our company. Before I review our financials as well as our capital allocation efforts during the quarter I’d like to spend a few minutes reviewing several special items which impacted the quarter to help provide additional context for our recurring performance strength. Our ongoing efforts to transform the business continue to generate greater operating efficiencies and effectiveness across the portfolio. These initiatives draw workforce and other restructurings across several of our businesses for a total of $13 million with an EPS impact of about $0.03 per share. Total non-operating special items totaled $26 million with an EPS benefit of $0.03 per share mainly related to a gain on the sale of Gannett’s Healthcare Group earlier this year. Now let’s briefly review the ongoing operating results for the quarter. As a reminder we’re focusing on our non-GAAP performance today you can find all of our reported data and comparatives in our press release. As Gracia mentioned the year-over-year comparison to reflect the absence of significant Olympic and political advertising and broadcasting as $27 million of revenue previously associated with USA WEEKEND and the sale of Gannett Healthcare Group which comprised about 20 million of the total with the remainder comprised of Apartments.com and the sale of the commercial printing business. Additional the pound to dollar exchange rate declined by 8% year-over-year impacting revenues by about $10 million and EPS by $0.01. Despite this, total company revenues of $1.5 billion were up 5% year-over-year. During the quarter total company operating expenses of $1.2 billion excluding special items were up 4% year-over-year reflecting the addition of Cars.com partially offset by our continued focus…

Thanks Victoria. It goes without saying that 2015 will be a turning point in Gannett's history. As we enter the fourth year of our transformation journey this year, we started the year on a strong footing and we're incredibly pleased to have done just that with the terrific performance in the quarter. There is a tremendous amount of innovation happening in our digital segment as both CareerBuilder and Cars.com explored new avenues of growth. Broadcaster is performing well and the integration of our new stations is proceeding even better than we hoped, and we’re on track to achieve at least if not more than the goal for our synergy. In publishing our USA Today local content is really catching on, so much so that other publishers as you heard Bob say, want our content in their publications giving us access to previously untapped audiences and revenue sources. As three years of hard work, relentless focus and successful execution of our strategic transformation plan culminate in our separation into two independent publically traded companies, the momentum we're currently generating will serve us well as we embark on the next chapter of the Gannett story. As you just heard all three of our business segments are on in upward trajectory and we are very excited about their future prospects. Gannett is exceptionally well positioned and the progress and invention will only acceleration when we become two more nimble and more highly focused companies. As it's always been the case, we have all of Gannett's dedicated and talented employees to thank for bringing us to where we're today. Their hard work and support has allowed us to produce must see content for our audiences for best-in-class marketing solutions for our advertising partners and generates significant value for our shareholders. With that, please open the call up for questions.

Thank you. [Operator Instructions] And we'll take our first question from Alexia Quadrani from JPMorgan.

I apologize if I missed this, but did you give a number for the benefit of the Super Bowl in the quarter? And then any commentary I guess on how with the core advertising is pacing in the second quarter? Thank you.

Yes, Alexia what I would say is that when you look at how much political we had in the first quarter of '14, it was about comparable to what we did in Super Bowl advertising in the first quarter, so in that $10 million to $15 million range. And then with respect to the other businesses, we provided guidance for broadcasting this morning, as we said we expect total revenues for the segment to be up in the mid-single digits and as Victoria pointed out will be absent about $17 million of political. Publishing, on the publishing side, on a pro forma constant currency basis because currency is really starting to have an impact as I am sure, we're going to hear on lots of earnings calls. If you look at the ad revenues, it looks like Bob, I'd there about a percentage point or so better than what we saw in the first quarter which was a percentage point or so better than what we saw in the fourth quarter. Currency just to put it in perspective, the currency rate was down about 8% in the first quarter, looking at where the pound is right at the moment, it looks like currency would be down around 11% or so in the second quarter so obviously that will have -- it costs us about a penny in EPS in the first quarter so it'd be probably cost us a bit more than that in the second quarter obviously. Cars.com, I think we would expect to see jack sort of the same range of revenue growth as we saw in the [first quarter] 0.25ish percent and [CarrierBuilders] looks like it's travelling about the same as what we saw, now they've got a little impact from currency as well because they're in a number of countries and that costs us some millions of dollars in the quarter and we would expect we'll have a similar if not slightly more meaningful impact in the second quarter.

And I know its early days but some folks are throwing numbers; do you have any sort of rough estimate of political benefit next year for you guys?

Oh gosh, if there one thing we learned we never forecast numbers before we allow our folks in the field to tell us how they feel about them. The only thing I can tell you is that from a presidential standpoint, there is no incumbent candidate, looks a lot of people are going to be spending a lot of money to make sure that their candidate becomes the President and we are incredibly well positioned with our footprint in places like Florida and Colorado and Ohio and also the strength of our stations where we will disproportionally gain political revenues and Dave you might mention the senate footprint we have this year.

We've got -- Florida is going to have a race now with Rubio, Colorado is going to have a race so we have a very big footprint. Ohio is going to have a race so we've always had a relatively good house footprint, but the senate has tended to have puts and takes next year looks to be among the best we've ever seen for portfolio standpoint.

And think that there will be a record year for presidential solid…

Absolutely.

And we'll take our next [technical difficulty] Capital.

Good morning Gracia, at Cars.com what was the growth rate in direct sales and then separately on your capital return plan is some form of real estate monetization catch in place where could such a monetization create upside? Thank you.

Yes with respect to direct sales, that was double digit growth for Cars.com and as you know direct sales by the Cars.com sales force is about 75% or so of the total -- yes so double digit growth teens low to mid-teens on growth there. With respect to our capital allocation plans, no, that -- those capital allocation plans really assume what we anticipate from a pure cash flow from operations. So, any additional monetization of -- significant monetization of real estate for instance such as our headquarters building here in McLean, that certainly wouldn’t be part of that current plan.

And we’ll take our next question from John Janedis with Jefferies.

Thank you. Maybe just two quick short ones, first, Gracia you’ve joined really a six year run of strong double-digit growth in retrans and I know you tend to knock it to specific on individual [deals], but can you tell us how many of the top five or 10 distributors come up by the end of ‘15 and ‘16 and then just separately there is a pick-up in corporate, was there something in there related to the spend or is that the run rate going forward? Thanks.

Yes, let me answer the first question which with respect to retrans. Towards the end of this year we have north of a third of our subs coming up so once again as we’ve said, we still believe there is a gap between -- a significant gap between what we are being paid and the value of that we’re bringing in and when we look at sports programming, what that is able to achieve and given the substantially greater audience that we bring to the table. We think there is still a lot of room to grow there. So we feel very good about what we are to be able to accomplish. So we’ll have a good opportunity at the end of the year to obviously grow that in another meaningful way. Last year we had about 60% plus growth, this year with no real significant deals coming up at the end of ‘14, we're going to be up 20% plus on the retrans side. And I’m sorry, your second question again was?

Just on corporate.

Corporate, yes.

There is a bit of pick-up, is there spend money in there?

Well, there's got to be a little bit of spend money, just probably some legal cost associated with some other activities this quarter. But we’re pretty focused on that. And also as we add to Bob’s team as we add to other things obviously there will be some duplicative expenses for a short period of time here particularly in the second quarter before we ultimately spend.

And we’ll take our next question from Craig Huber with Huber Research Partners.

Yes, hi. Two quick questions please. Your pension Grace, can you just remind us what percent of your pension is going to go with the publishing company and has your thoughts changed there at all on the percentage given the performance of the operation. And then secondly your core ad revenue for TV excluding political for the second quarter, are you kind of thinking up low single-digits year-over-year, how is it tracking please?

Let me start with the pension and then I’ll turn over the broadcast question to Dave Lougee who knows those things inside and out. On the pension side as we indicated in our Form 10 we tend to have the liabilities follow where the employees will end up post-spin. So given that the vast majority of our employees who are in the pension plan are retired or our current actives emanated from the publishing side more of that pension plan clearly is going to be go to publishing and we’ve outlined those numbers in the Form 10. Now obviously on the broadcasting a digital side our digital businesses never had a pension plan so there is new pension liabilities there. On the broadcast side obviously with the acquisition of Belo we picked up their plan as well as few $100 million of liability on the remainder of the broadcasting and corporate employees that will be associated with the broadcasting and digital company going forward. So we have no real plans to change that. Our pension fund is well over 80% funded. When you look at the fact that we have a frozen plan and have had a frozen plan since 2008 with a return that is lower than the historical return we’ve ever generated on the plan be it a three, five, 10, 20 or since the inception in 1979 we have ample assets in the plan to payout all of those liabilities. So feel very good about where they will be I think post-spin it looks like at this point that the plan that will go to publishing will be even more funded than the 82% or so that its funded currently and similarly on the broadcast and digital sides. So feel very good about where we are on both plans.

And as for core in the second quarter Craig it’s still very early so we can’t really see that far out but right now April is positive and the choppy has been up and down so we’ll see where it [lands].

And we’ll take our next question from Doug Arthur with Evercore Partners.

Thanks. Grace it seems like the story in the quarter is the surprising margins in digital and it's sort of a reset here, you’re doing a lot of initiatives on the new product side at Cars.com, is it realistic to expect a pro forma cost to be flattish going forward in the year?

Part of that is a benefit that we get from the new affiliation agreements which, and Jack you might want to just the more specific details of that.

Doug, the new affiliation agreement raised the wholesale rates on the former owners who continue to be affiliates and most of that wholesale rate drops are 100% to the bottom line so the margin is pretty high on that for remainder of that first period.

But that being said Doug before the change in the affiliation agreements at Cars.com the margins were in the high teens, low 20s, and we would expect that business to even with the investment we're making continue now be in the low 30s as we sort of indicated when we announced the acquisition last year.

So from your perspective you are tracking as plan?

Sorry?

I said from your perspective is tracking as planned?

It is tracking better than what we planned as you can appreciate, I have a very conservative CFO who won't let me get ahead of things but we feel very good about the way Cars.com is tracking, we feel extraordinarily good about the way the Belo transaction has worked out for us, that has exceeded our expectations and we will be very comfortably exceed what we anticipated our third year run rate synergies will be. I'd also give a nod to our broadcast segment because to have $51 million of Olympics and political spending in the first quarter and to overcome that through a lot of the good work that they've done I think is a real testament to the strength of our stations and the strength of our management team there led by Dave.

And we'll take our next question from [Amit Kapoor] with [indiscernible] and Company.

Just a quick question about the publishing side, so revenues were down 5% and actually able to contain cost down four; how much loan do you have to create efficiencies in the [Popco] going forward manage costs especially given that it will be an independent company, and then I have a follow up please.

Bob will do his great job as always but Bob go ahead.

Actually I think there is -- we have a team of folks right now that are reviewing additional efficacies based on the fact that we will be operating under one company and I am confident that we'll continue to find those efficiencies and in no way damage the quality of the products or the services we provide.

And then just sort of follow up to Doug's question there. So in the digital business you have a business that’s almost high 30s, close to 40% incremental margins. It might on a run rate basis be a $350 million, $450 million EBITDA business. Will the digital business have the autonomy it needs to operate within the broadcast segment and thrive there given the pace and the DNA its showing in terms of growth.

I mean first of all it's the broadcasting and digital ventures segment and I think if you talk to the leadership team at Cars.com, Jack and I and others here were just out for their sales kick off for 2015. And one of the questions obviously we were asked was about autonomy. And we talked a lot about the fantastic culture that Cars.com has, the fact that they are running on all cylinders, no pun intended, one area that I think we have with just one owner rather than five owners that had different strategic needs. I think bringing that one strategy and one strategic focus to them actually is a benefit. I think the one thing we've obviously encouraged them on is to actually accelerate their product roadmap and to do more investment in their product roadmap. So I think if you talk to the folks at Cars.com you would hear I hope that actually we want to continue to allow them, we're here to help them fulfill their mission and to retain the great culture that they have there. So I think they feel very good about the way its… And frankly that's been our history of dealing with these various businesses. So feel very good that Cars.com has lots of room and lots of autonomy to continue to be an incredibly successful company.

Just to quantify that a little bit for you, I talked about the 19 million or so in CapEx that we spent during the year, about a third of that was CareerBuilder and Cars.com on their new product development accelerating their price line. So I think it speaks…

And we'll take our next question from Kannan with Barclays.

Just a couple of questions. On the publishing side of it Bob how important is scale post the spin? Is that, I mean specially looking at so many print companies now being listed, is there an opportunity to basically roll up some of these entities and benefit on the cost side of it. And then secondly Gracia just on the region side of it, once the whole process is done which is all the upcoming deals as well as your reverse retrans deals over the next couple of years, is it fair to expect that your margins will be more in line on the broadcast side compared to the rest of the industry instead of the 50% kind of margins?

Bob, why don't you start with publishing and I'll be happy to finish on the broadcast.

Absolutely we see tremendous opportunity as consolidator. We believe with our national to local strategy with strong USA Today brand, our terrific local community publications currently that are scaling to go put this in a position to be a leader and we intend to do that. We also think over the last three, four years the various initiatives we put in place for U.S. Community Publishing and USA Today can be leveraged across those markets as we start to look at opportunity, so it's not only an opportunity to generate energies and cost savings, we also believe we have some very good revenue initiatives that we can leverage as well.

And Kannan with respect to margins on the broadcast side, what I would point to is long before re-trans was a glimmer in any one's eyes, Gannett always had the best margins in the broadcast industry, so when all of is said and done and when all of the dust settles on re-trans reverse, which by the way on re-trans I don't think the dust is going to settle for a very long time because it's still a long way to go in getting our value reflected. I think we will continue to have superior margins in the industry.

And we'll take our next question from Barry Lucas from Gabelli & Company.

Gracia you still have a fair amount of room under broadcast cap to make additional acquisitions, so how do you comment your appetite for more stations and maybe what the M&A pipeline would look like? And then finally how was the impacted if it all by the upcoming incentive option?

Yes, what I would say Barry is that you're right, we -- the cap is 39%, we're on an undiscounted basis about 31% on a discounted basis about 24%. What I would say is that we are always open to looking at great opportunistic transactions. I mean Belo came along it fit every criteria we had and we knew that they are fantastic stations and what we could with the scale we had a great job in continuing the great heritage of those stations. So we are always looking at potential opportunities for great acquisitions that create shareholder value. That being said, I think given as you mentioned the spectrum auction and the uncertainty around the timing et cetera, I think that has probably put a little bit of a damper on M&A activity right now. As I think everybody is trying to figure out ultimately what that auction will mean to them whether in fact their stations will have value or not, frankly when you look at -- what we think about where the highest congestion is really in that I-95 quarter from Boston down to Washington up in LA, San Francisco and some other areas. So I don't think the auction is going to treat everybody the same, but I think that certainly out there is creating some hesitancy for folks to look at either selling their stations until they have a better grasp on how the auction is going to be run, when it's going to be run, what the rules are going to be and whether there is an opportunity or not for their stations. But we continue to be very bullish on the broadcast industry and with the right opportunity that we can see a clear path to creating shareholder value, we would be a buyer.

And we'll take our next question from Marci Ryvicker with Wells Fargo Security.

Hi, guys its John stepping in for Marci. Can I get a better handle on more trends? Can you tell us maybe what the more revenue [indiscernible] was this year? And what [indiscernible]?

Yes, one that we haven't given out specific numbers but frankly it is very-very modest their contribution while they're wonderful-wonderful stations, they're very-very small stations, but terrific stations. So the contribution is very small.

Okay is April still up [indiscernible]?

Yes, on a pro forma basis yes.

Okay then just last one, [on purgatory], can you breakdown that $37 million [indiscernible], how much was from healthcare group USA Weekend and currency changes?

Victoria will lead us through that.

Actually we've got about between -- USA Weekend and the sale of Gannett, they were about 20 million of the total and the remainder was Apartments.com and a commercial printing business. And then we had 10 million on top of that getting up to the 37 million which is currency.

And we'll take our next question from Tracy Young with Evercore ISI.

On first quarter, could you give us some sense of how Local bid versus National and then also the auto business, how that performed during the quarter? Thanks.

Are you speaking specifically about broadcasting?

Yes.

Great. All right, Dave would you pipe in there?

Yes, it's such a difficult question for us a little bit and its muddy because of Olympics because the Olympics so disproportionally effects are year-to-year comparisons. So on our non-NBC stations it disproportionally makes national look better this year in local artificially worse and vice versa in NBC station. So overall what we see is not there wasn’t much of a trend difference between the two. Our own particular numbers are jaded by the Olympics.

Okay. Thank you. And how did auto do in the first quarter for broadcast?

Auto was up, but again we had the Olympics.

Okay, thank you.

I’m sorry, auto was down on an -- if we do we would call internal pro forma -- my apologizes but it’s down real on a pure basis the last year all because of Olympics.

Yes, you got to remember that when we get Olympics if you look to our auto category last year it was up dramatically because a lot of spending around Olympics is auto related. So when you compare against it the following year you always have a distorted comparison because you don’t have those same dollars being very concentrated on in the quarter.

And we’ll take our final question from Dan Kurnos with Benchmark Company.

Great, thanks. Obviously most of my questions already been asked. So let me just ask Gracia two high level questions here. I know it’s probably way too early but we just love to hear your initial thoughts about [Sinclair's] audience aggregation efforts especially giving your broad reach. And then I apologize if I missed this, I know you love to highlight mobile in the past so can you possibly give us an update on how monetization is trending particularly within the digital segment given that mobile monetization is still lagging desktop pretty significantly on a broader basis and how rapidly mobile is growing from both a traffic and revenue perspective. Thank you.

Let me ask Dave to take the audience aggregation question.

I think the [Sinclair] initiatives specifically don’t know all the details on that but I think the use of visible world certainly works at over the air homes, how it works with [MBTD] homes it’s still pretty understood. But we’re looking in a number of topics like that our self but don’t have any -- I really don’t have any real comment on what their effort itself is going to look like.

I’d say with respect to mobile advertising clearly that’s a huge area of focus for us. The numbers are beginning to cross on mobile being more significant than desktop and other things. We are seeing great mobile revenue growth percentages but clearly off a smaller base but that’s a huge area of opportunity for us and we are seeing very good growth. But we’re going to be doing a lot of product developments, a lot of investments around that area on every one of the businesses we’ve talked about and Cars.com particularly from a mobile perspective that’s been a huge opportunity for them and unlike a lot of the mobile advertising the mobile efforts you’ve seen where there has been very little monetization what I think we found and Jack correct me if I’m wrong is that with Cars.com because the mobile experience is really very close to the bottom of the sales funnel. We’ve actually seen a fair amount of monetization of that mobile traffic but Jack if you want to add anything.

Just one of the things from the digital perspective to think about is for Cars and CareerBuilder, the traffic and a lead is a lead it’s not the same as display advertising and finally convert from a desktop format to a smaller mobile format, those translate very well. So a car dealer doesn’t really care if their lead comes from the mobile application or it comes from the desktop. The things that are monetizing [indiscernible] those kinds of things whether it’s employment or any of those categories where it’s transactional and frankly the other thing that’s doing well is video kinds of advertising versus the traditional display.

And I think USA today is having tremendous success Bob on the mobile side, you might want to?

Starting to see some real traction obviously the growth be continue to monetizing it and there is some good work going on at looking at some new advertising profit as well in mobile.

Great. Thank you all very much for joining us today. If you have any further questions you can reach Jeff Heinz 703-854-6917. Have a fantastic day.