Good morning. My name is Kat, and I will be your conference facilitator. I would like to welcome everyone to Gannett's Second Quarter 2015 Earnings Conference Call. This conference call is being recorded at the request of Gannett, should you have any objections, you may disconnect at this time. [Operator Instructions]. Thank you. I will now turn the call over to your host, Mr. Michael Dickerson, Vice President of Investor Relations for Gannett. You may begin your conference.

Thanks, Kat. Good morning, everyone and welcome to Gannett's second quarter 2015 earnings conference call. I'm Mike Dickerson, Vice President of Investor Relations at Gannett. Joining me this morning are Bob Dickey, our President and Chief Executive Officer; Ally Engel, our Chief Financial Officer; John Zidich, President of Domestic Publishing; and Barbara Wall, our General Counsel. Many of you have already seen the copy of our press release from this morning. For those of you who have not, it is available on our website at gannett.com. I want to call your attention to our Safe Harbor provision for forward-looking statements that can be found at end of our press release. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements. Our current Form 10 report and other periodic fillings on filed with the SEC provide further detail about the risk factors related to our business. During this call, we refer to adjusted EBITDA and free cash flow. We define adjusted EBITDA as earnings before income taxes, equity income, other net operating items which includes interest income and interest expense among other items were of course restructuring, asset impairment charges, depreciation and amortization. We define free cash flow as cash flow from operating activities unless capital expenditures. These non-GAAP company defined measures are provided because management believes they are useful in analyzing the company's operating performance and cash flow before the impact of various reorganization and other charges. A reconciliation of adjusted EBITDA to GAAP net income and free cash flow to cash flow from operating activities is included in our press release. For the second quarter, the accompanying results of operations have been derived from the consolidated financial statements and accounting records of the company's former parent and presented as if the company were a separate entity. The most significant changes from the publishing segment results reported by the company's former parent include adjustments for businesses retained by the parent such as Clipper Magazine and Gannett Government Media, and adjustments for corporate allocations related to equity based compensation, pensions, and other various items. The format for today's call will be as follows. First, Bob Dickey will lead us off with an overview of Gannett's performance and an update on our key strategies. Next, Ally will take us through the detailed financial performance for the second quarter. And lastly, Bob will provide some closing remarks followed by question-and-answer period. With that, I will now turn the call over to Bob Dickey.

Thanks, Mike, and good morning everyone. I think it's an understatement to say that it's been a very interesting and somewhat challenging six months since we worked through the completion of the spin transaction. As I mentioned to you a few weeks ago at Investor Day, we exit the spin on solid financial and operational footing. We have assembled a management team from both inside and outside the company, some with publishing and digital experience, some from other sectors but all experts in their field. I'm very confident that this is the team that will take Gannett to the next level. Our domestic digital platforms are performing very well, with 92 million average monthly unique visitors in the second quarter, this represents a growth rate of 16%. We saw digital revenue growth of 1% in the quarter. With digital revenue growth in the UK at Newsquest even stronger, at 11.5% on a local currency basis. However, not enough to offset the decline in print advertising and searching revenues in the second quarter. Advertising and circulation revenues continue to drop in this quarter at a rate similar to the first quarter. This is in part due to the cycling and price increases that were put in place in 2013 and 2014. As a result, total revenues as adjusted for exited business in foreign currency were down 6%. Overall, these declines while expected are disappointing, make no mistake, we fully intend to reverse this trend overtime and deliver meaningful value to our shareholders. We will do this through a combination of programs to develop new streams of revenue from existing assets and technology, the continued growth of digital and through the consolidation of this fragmented industry. We have taken several actions recently in support of this goal. In June, the company completed…

Thank you, Bob. Good morning, everyone. Operating revenues in the second quarter were $727.1 million compared to $796.5 million in the second quarter of 2014, a decrease of $69.4 million, or 8.7%. This decline is partially due to approximately $12 million of revenues in the prior year related to accident businesses, as well as $10.6 million of unfavorable foreign currency exchange rate changes. Before the impact of accident businesses in foreign currency, revenues were down $46.8 million or 6%. This decline in revenues is primarily attributable to ongoing advertiser demand ships, partially offset by positive revenue trends in Gannett's digital products, as well as $9.3 million of revenues from businesses acquired in the second quarter of 2015. Before the impact of accident businesses, foreign currency in acquired revenues, total revenues were down 7.2% in the second quarter compared to the prior year second quarter. Adjusted EBITDA in the second quarter of 2015 was $97 million compared to $125.3 million in the second quarter of 2014, a decrease of $28.3 million or 22.6%. The decline in second quarter adjusted EBITDA was primarily due to ongoing reductions in print advertising revenues, and approximately $6 million of increased cars.com affiliate agreement cost, partially offset by cost reductions and efficiency gains in operating expenses, as well as increases in digital revenue. During the quarter the company took several actions resulting in special charges of $20.5 million. Approximately $15.4 million or 75.1% relates to workforce restructuring which took place late second quarter, while the remaining $5.1 million or 24.9% relates to asset impairments and other related charges. As Bob mentioned earlier, the company has identified an additional $10 million of efficiency opportunities that will be put in place in the second half of 2015 resulting in total expected savings from our current actions of approximately…

Thanks, Ally. I think you can see we certainly have a challenging environment, particularly in the near term as we put our strategic plans into action. We negotiate new public company issues and absorb the related standalone costs. Ally covered much of the guidances that we are providing but to add some color, as you know there is some seasonality to this business, while we expect revenue trends to improve in the back half of the year, third quarter tends to be a slower quarter while the fourth quarter will be our best quarter of the year. We expect EBITDA margins to improve modestly, as well in the second half of the year. Clearly, we are doing all we can on the cost side of the equation to mitigate as much of the topline decline and changes in the cars, career builder and geodigital agreements as possible, and you can count on us to continue to do so. Gannett is a best-in-class operator, newspapers in the US and the UK. We bring significant operating efficiencies and synergies to acquire businesses that others simply cannot match. We will continue to leverage these efficiencies as we actively pursue our industry consolidation strategy. And finally, I'm very pleased that the Board approved our $150 million share buyback program, and along with the dividend supports our commitment to return capital to our shareholders. I'd like to now turn the call back over to the operator who will assist us in taking some questions. Thank you.

Thank you. [Operator Instructions] And our first question comes from the line of John Janedis with Jefferies. Please go ahead.

Hi, thank you. Bob, I know you're involved in the original roll out of the content subscription model. Can you talk about the circulation trends we're seeing and how different is this circ revenue growth at USA today compared to USCP?

As it relates to the overall circulation trends, John, I think the interesting part for us is that as we've cycled through the aggressive price increases over the last year, year and a half, almost two years I guess; we are seeing volume trends improving at our domestic locations, particularly proud upon the Sunday site, we've seen about a 2% movement. So as our revenues are being impacted as we cycle those price increases, we're happy to see that long term our retention is up about a 1-1.5 and that volume growth will benefit us down the road, certainly around the circ revenue but as well as true prints. On the USA Today side, as well as domestic publishing, the revenue challenge - the volume challenge and associated revenue challenge is really around single copy. That continues to be where the consumer is making you the choice to move from print to digital, it's certainly helping us grow our digital audiences but the good news around that, that is an area that we can quickly adjust our costs around distribution, marketing sort of locations, things like that to offset those declines to some extent, and I think that will continue to be a challenge on the single copy side but I'm happy to see that home delivery volumes remain in a place that we're comfortable with, and I think we can continue to improve, particularly around Sunday.

Okay, thanks. And then maybe - can you clarify domestic publishing ad work for the second quarter, I think the release had down 93. Just wanted to clarify, that did that include the benefit from the text mix consolidation, and if so, what was the pro forma ad work for the quarter? And then, based on the third quarter outlook, do you expect the revenue trends on the outside to improve the deal?

Ally, you want to talk about that?

Yes, I just wanted to make sure I'm understanding your question. So the numbers that we put out there include the acquisitions of TMT and Ramona [ph]. The incremental revenues was about $9.3 million for the quarter but we didn't acquire TMT to about - I think right at the beginning of June. So we don’t have a full quarter impact in there for that. Did that answer your question John, or did you - I'm sorry, there is a lot in there.

Off the 93, can you help us think about maybe how much was FX [ph]?

About 2/3rds.

And I guess the second quarter was, on the third quarter outlook I know you mentioned the I guess the sequential improvement I was just wondering but you also said it was partially because of the Romano [indiscernible] and so if you strip out those two do you see trends improving or they weakening?

You know John, I think third quarter is going to be slightly better than the second quarter when you strip that out but what we see is with some of the programs we have in place and with Kevin on board we feel much better about the improvement happening in the fourth quarter.

And just one last one, I wanted to talk about the expense side. I'm trying to understand a little bit better. On the 67 million of cost reductions, should we interpret that as total cost over the years say before the acquisitions are going to be down that amount or is the 67 million maybe incremental to the user reductions like pay per cost so the total savings would be down actually more than 67?

I'm trying to make sure to understand the question. It's an annualized number that basically start in the third quarter but a lot of the things that we did that are related to headcount and other actions that we took in June are impactful immediately. Some of the actions that are part of that are related to some plant closures and other things that aren't taking place later in the second half of this year. And so it's an annualized number based on that but we won't really see the full benefit of it until the end of this year beginning of next year. Does that help, John? I mean I just want to make sure I was getting all your points.

Yes, it helps. I guess that I was thinking that traditionally there have been sort of memory savings that you’ve had when you didn’t say cost reduction programs in place meaning say pay per cost, declines etcetera. So I was wondering--

Sure, yes. They are incremental - these are incremental to those run-rate savings which yes we are experiencing and we will continue to experience particularly around news print where we have had some positive pricing.

Thank you. And our next question will come from the line of Barry Lucas with Gabelli & Company. Your line is open. Please go ahead.

I’ve several and maybe just a follow-on John's expense enquiries. Bob, Gannett has always been cost leader or most efficient producer of newspaper out there. You’re taking another 67 million out over the next 12 months or so. How much more room do you have if the trends do not improve or if you can't find those incremental, digital or other revenues?

You know Barry, it really goes back to what we discussed in investor day in terms of the team managing the company as one integrated company and we’re already in the planning process for 2016 and have some ideas around additional efficiencies that we’re very comfortable being able to count on in the 2016 budget year. Like Aly just pointed out, some of those require months of planning and implementation as we work with various groups, but we still are committed to the fact that if the revenue environment continues to challenge us we will adjust accordingly. John Zidich our Domestic President is off to a great start with the team of bringing USA Today and Community Publish together. He has only been at it for a couple of months and he has uncovered a number of opportunities for more synergies internally and I would tell you that as we look at our acquisition strategy, consolidation strategy we are very confident that we can bring some incredible synergies to all of those that would also help offset any changes that we see on the print side of our business.

If I can squeeze another one in especially since you mentioned the M&A, could you just expand a tiny bit on the Texas, New Mexico part of - was there a put call there or you just reached an arrangement to swap the papers and the reason I'm asking I'm sure you know where I'm going with and that would be Tucson.

No it wasn’t a play, it was just the partners as our partner was, we all know putting their company up for sale. It opened the opportunity for us to have discussions where we could transfer partial ownership to full ownership and Barry, you have been covering Gannett long enough, you know we like it when we’re 100% in charge and I personally have managed this partnership in the past as well as [indiscernible] and both of us we were very eager to get them back into our company and we know there is terrific synergies we will bring to both our properties in Pennsylvania. So really no magic in terms of a forced deal or anything. It was partners coming together and we were happy to give up our California ownership for various reasons for some properties that we are very familiar. We know the people, and we know what we can expect out of them.

And Tucson?

Tucson, we’re happy partners with [indiscernible] and right now we have a terrific 50:50 arrangement with them. Mary, and Kevin and team. Think a lot like us in terms of our goals in Tucson. They have been great partners. I think they would say the same thing about us and we are very, very happy with the Tucson operation. It's one of the better mid-sized performers in the industry.

Thank you. Our next question comes from the line of Jim Goss with Barrington Research. Your line is open. Please go ahead.

Couple of questions also, first regarding your acquisition priorities. I'm wondering how aggressive do you plan to be. There are certain sizes of markets or locations or competitive issues that you’re looking at and I'm seem to recall from analyst day that you had targeted something like market, 0.5 million to 3 million population as ideal. Did I hear that correctly or are there broader range of market share you’re looking at?

As we looked at our initial strategy, you’re correct on the low-end it would be 500,000 and that would be not so much - that wouldn’t be centered around a single property. That would be typically if we were buying multiple properties, we’re not uncomfortable with going through the lower end of that scale. We really feel that the markets in the 1 million to 3 million are the most advantageous for us. It's where we have always performed at a higher industry level. So that is where we’re focused, it's also when we map it out tied to our geographic synergies very nicely for us. However we are also very open and have started discussions around looking at other markets that may not initially have the geographic synergies and build synergies around those because of the various resources and services we can bring. We can even make some of those 1 million to 3 million stand-alone markets more efficient and still be accretive. So we had put a team together, we have our legal and banking and advisors on Board and we have built a team here at corporate and we’re aggressively pursuing all the various opportunities that are in front of us.

Is there a multiple range that you think you can fairly target within those types of properties vis-a-vis [indiscernible] is going to be trading at?

We’re very confident that all of the opportunities we’re looking at currently would be accretive from the beginning and we would improve on them going forward. So I really don’t want to put out a multiple at this point but I can guarantee you we would be glad to post any deals we make, show our synergies and what we believe will be our multiple against that.

And then a couple of other things, with the indication by CareerBuilder that it wants to shift to more of a SaaS type mode versus the transactional model, how does that, what are the implications of that for your relationship with CareerBuilder.

I think that there are some affiliation changes around the contracts that Aly spoke to but for us or the next couple of years I can say with confidence that since we’re representing individual markets that we still think that we will have the opportunity to sell significant recruitment advertising using their platform and other services that we can provide employers as well.

And then a follow-up on what John and Barry were talking about related to cost. Are there many unionized markets in which you’re dealing and how far can you take the cost cuts without impacting the product quality standards either editorial or look or otherwise?

Well there are a couple of things around that, one we do have a small percentage of our overall employees represented by the unions and we certainly continue to negotiate in good faith with them and have had a lot of success there. As it relates to product quality. Our new order [ph] structure was put together under the Chief Content Officer and Chief Product Officer to ensure that we can more aggressively address product quality but in the print product or those that enjoy that platform but really around our digital platforms going forward as we look at personalization as such. That is very much on our list of concerns that we continue to give a great consumer experience. It's also why we’re expanding our membership program and providing our members access to special events and such and other products. The way in which we’re going to do that is that we announced the USA Today media network, we will be operating as one news organization and we are very focused on the resources necessary on the reporting side as well as the social media, engineering and programming. Those resources are protected and we’re very, very conscious of that. There are other layers of management and such where we know we still have an opportunity to be more efficiency and those are constantly under review.

It's less than 12% just under 12% of our population, employee population represented by union and there is a variety of them. So it's not concentrated in one bargaining unit.

Thank you. Our next question comes from the line of Alexia Quadrani with JPMorgan. Your line is open. Please go ahead.

My question is on the revenue side, both on the circulation and on the advertising. I guess first on the advertising, can you talk a bit about where you’re kind of in the pricing model for advertising rates. And how are we still seeing declines there and maybe you can elaborate both in US Today versus Community and then just on the circulation, sort of the same type of question there, I know we went through around price hikes on the circulation only a couple of years ago and now you mentioned you are seeing the volumes sort of beginning to ease a bit following those price hikes. Do you envision the potentially of sort of increasing prices again on the print side?

Let me take those on. As it relates to pricing at the domestic local sites certainly we don’t have the leverage we had in the past. In many of our as it relates to print only, in a number of our categories the pricing has remained fairly stable I mean there is slight declines here and there. It's been more of a volume issue for us as it has been for everyone else as customers move towards digital environment. If you look at our automotive category, two years ago it was 40% digital, 60% print. Today it's the opposite, yet we’re growing our digital revenues, I mean our total auto revenues. So getting caught up in the pricing is sometimes we try not to - we look at it in the big full picture of how we’re trying to serve that segment. Having said that we are testing some print frequency programs at some of our larger metro sites. John and I both feel that we still deliver a heck of an audience over a 5 to 7 day frequency and so we’re testing in an environment where we’re in, we can afford to test some aggressive live programs that give advertisers the opportunity to have the frequency to be exposed to some very, very attractive demographics on their print platform and we will report back how that works going forward. The results we just started rolling, it's out in markets like Phoenix and Rochester and as such. As it relates to USA Today, we definitely had some pricing pressure early, off late what we’re seeing is the pricing pressure has been in the low single digits and I think that’s unusual if you were to talk to others in the national arena. We’re encouraged that we’re seeing very early in the third quarter some very positive improvement on the print side for USA Today and they continue to do very well on the digital side. As it relates to circulation, John and his team do have plans to do some selective price increases later this quarter, next quarter and into early next year. We have priced about 65% to 70% maybe up to 75% of the potential market. So we still have some room and we also have some room to move some of our early Sunday only subscribers up the ladder on the pricing side of things as well. It won't be as aggressive as we have been in the past. John, and his team have been working very closely with our frequent advertisers and we definitely want to protect those volumes and the pre-print business associated with it.

Thank you. Our next question comes from the line of Doug Arthur with Huber Research. Your line is open. Please go ahead.

Bob, can you give us a little bit better sense of the digital component of both advertising and circulation. I mean and what percent - to the extent you can give us any kind of sense, is digital advertising growing, not growing and how is all access progressing. How do you sort of see, you talked about the order category, how do you sort of see that shift going on another categories? Thanks.

Sure. So, as we look at - like we can speak to automotive category. We were seeing mid-single digit total growth in auto digital but what we’re seeing around the banner environment is like 25% increases. We have done a really fine job with our network in the last few months of leverage the programmatic in a much more - at higher rates and as a result we have been seeing some significant increases in that particular area. We continue to see good local display growth at our domestic properties as well and around in total our local properties are up in the low to mid-single digits. As it relates to digital only subscriptions we’re up about 40% year-over-year there is still room to grow there, in a big way, Andy and team are focused on that. Does that give you some sense Doug of where we’re at?

Yes I mean, are you willing to share some kind of range of - I mean if you look at the 727 million in the quarter I mean kind of total revenue for the company. Any sense of what digital is as a percent of total?

It's about a $178 million in the second quarter.

About 25%?

Yes of the total.

Our local domestic sites, Doug are getting more close to 30% range.

Thank you. And that does conclude today's Q&A portion of the call. I would like to turn the call back over to management for any closing remarks.

Well thank you all very much for joining us today. That concludes today's call, if you have any further questions you can reach me Michael Dickerson at 703-854-6185. Everybody have a great day.

Ladies and gentlemen, thank you for participating in today's conference. That does conclude today's program. You may all disconnect. Everyone have a great day.