USA TODAY Co., Inc. (TDAY) Q2 2016 Earnings Report, Transcript and Summary

Good morning. My name is Melissa, and I will be your conference facilitator. I would like to welcome everyone to Gannett's Second Quarter 2016 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] 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.

Thank you, Melissa. Good morning, everyone and welcome to Gannett's second quarter 2016 earnings conference call. I'm Mike Dickerson, Vice President of Investor Relations and Real Estate at Gannett. Joining me this afternoon are Bob Dickey, our President and Chief Executive Officer; Ali Engel, our Chief Financial Officer; John Zidich, President of Domestic Publishing; and Barbara Wall, our Chief Legal Officer. Many of you have already seen a copy of our press release from this morning. For those of you who have not, it is available our website at Gannett.com. I want to call your attention to our Safe Harbor provisions for forward-looking statements that can be found at the 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 2015 annual report on Form 10-K and other periodic filings on file with the SEC provide further detail about the risk factors related to our business. During this conference call we may refer to adjusted EBITDA, adjusted earnings per share, and free cash flow. We define adjusted EBITDA as earnings before income taxes, equity income, and other non-operating items, which includes interest income, interest expense among other items, severance related charges including early retirement programs, asset impairment charges, depreciation, and amortization. We define adjusted earnings per share as EPS before tax affected severance related charges including early retirement programs, asset impairment charges, acquisition-related expenses, and transformational items. The tax impact on these non-GAAP tax-deductible adjustments is based on estimated statutory tax rate in the United Kingdom of 20% and the United States of 38.7%. We define free cash flow as cash flow from operating activities less 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. Reconciliation of adjusted EBITDA to GAAP net income, adjusted EPS to GAAP EPS, and free cash flow to cash flow from operating activities are included in our press release. For any periods prior to the third quarter of 2015, 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, 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 a brief discussion and update of our key strategic priorities. Next, Ali Engel will take us through the financial performance for the second quarter and conclude with an outlook for the balance of 2016. Lastly, there will be a question-and-answer period. With that, I'd now like to turn the call over to Bob Dickey.

Thanks Mike, and good morning everyone. We are very proud of our journalist's dedication and accomplishment so before we get into the details of our second quarter results, I want to take a moment to recognize the USA TODAY Network as the recent winner of three significant Edward R. Morrow awards. The Radio, Television and Digital News Association host the National Edward R. Morrow awards annually to honor outstanding achievements in electronic journalism and news rooms across America. In no particular order, first is Eric Seals from the Detroit Free Press who won the best feature award. Next is our operation in the Milwaukee Journal Sentinel with its win for best website audio and finally the Burlington Free Press with its win in best reporting in sports video. These awards reflect our company's commitment to innovation and excellence in all of our news rooms. These awards also demonstrate Gannett's dedication to delivering high quality independent journalism across all platforms to the diverse communities we serve. Our employees and journalists are our greatest assets. We believe that it is important to have a strong expensive network of individuals empowered to report the news as they see it especially as we continue to grow our USA TODAY Network to include more local markets and new platforms. Our continued investment in our news rooms and people will ensure that the USA TODAY Network has the scale to preserve the best principal journalism for years to come. On the product front, we’re continuing to make progress as well. At the cornerstone of our USA TODAY Network is a robust content management system that enables our journalist to work closely together, collaborate and drive efficiency in content creating and sharing across the network as we coordinate our news coverage. We're beginning to rollout enhancements to this system which includes the ability to load virtual reality content, directly into the CMS giving journalist access to this content across the network. In May we were listed the number one news network on mobile web in the news and information category according to comScore. Our internal investments continue to focus on product enhancements for mobile web as we grow and nurture this audience. Recent upgrades includes enhancements for speed, advertising including advertising enhancements to extend the reach of our award winning Gravity ad unit to the mobile web. As these things demonstrate, we are making the internal investments necessary to create robust and appealing content for our digital audience and provide the tools necessary for advertisers and journalists to be successful. Now I would like to touch on the business acquisitions we’ve announced over the last several weeks. Let me start with ReachLocal, which accelerates our digital growth strategy adding more than $320 million of annual digital revenue with the best digital marketing solutions technology in the marketplace and an outstanding and well respected management team. ReachLocal's focus on local small and medium sized businesses aligns well with Gannett's local to national strategy and extends our reach into new local markets. This transaction represents an important step as we continue to transform our business to meet the changing needs of consumers and advertisers in today's digital world. Initially, ReachLocal will expand Gannett's digital revenue by roughly 50% with its more than 16,000 customers in markets throughout North America, Latin America, Europe and the Asia Pacific region. After Gannett's concludes its current digital services arrangements for its existing markets at the end of quarter two 2017, the combined organization will benefit further from leveraging ReachLocal's best-in-class digital marketing services products in Gannett's existing 109 local markets in the U.S. The tender process for the ReachLocal shares is currently underway. We expect to close this transaction during the third quarter. In July, we also acquired the New Jersey Media Group including the record in Bergen County, the Herald News and their affiliated digital property. These outstanding publications have been in the same family for generations and have a strong record of journalistic excellence, community engagement and expectably connecting advertisers to the audiences they seek. We continue to execute on our local market growth strategy and this latest acquisitions, positions the company to be the leading news provider in the state of New Jersey, as well as adding about $19 million in annual revenues. We expect this deal to be mutual to earnings for the balance of 2016 and modestly accretive in 2017with margins approaching corporate averages by the end of 2017. Let me touch on our overall financial performance. Overall reported revenues increased in the second quarter by $21.7 million or 3% compared to the second quarter of last year. Year-over-year revenue comparisons for the quarter were impacted by several items including the unfavorable impact of exchange rate changes, accounting for third party digital affiliate agreements and the closure of certain printing operations which Ali will detail for you in a bit. Revenue before these items increased 7.3% in the second quarter compared to the second quarter of last year. This is primarily due to the addition of Journal Media Group on April 8 of this year and increases in national digital advertising. While we have been expecting to see modest improvement in underlying revenue trends throughout the year, these improvements have been less than expected, consistent with our experience in the last couple of quarters. On the cost side we have been successfully implementing actions to improve efficiency throughout the printing, packaging and distribution system, as well as executing on the savings plans related to our recent JMG acquisition. In June, we announced plans to consolidate our Fort Myers printing and packaging operations into one of our newly acquired Journal Media Group properties in Maples, Florida. In July, we also announced the printing and packaging operations of Florida Today in Brevard will also be consolidated into one of our newly acquired Journal Media Group properties, the Treasure Coast printing facility. These consolidations will provide operational efficiencies to increase utilization and newer equipment, as well as provide enhanced color capabilities which will give advertising clients in the region more options. Lastly also in July, we announced that the Journal Media Group, Corpus Christi Editing and Design Center will be closed and combined with Gannett's Phoenix operations. Each of these moves are underway and are expected to be completed before the end of the year, another example that at Gannett we move quickly. Now before I turn over to Ali, I want to take this opportunity to welcome all of our North Jersey Media Group colleagues into the USA Today Network and Gannett family. I believe the combination of these two organizations will carry on the tradition of great journalism as we continue our transition towards a digital first organization with outstanding journalistic talent as the cornerstone. Let me now turn it over to Ali to take you through the financials.

Thank you Bob, and good morning everyone. Let me begin by reminding you of an accounting item that came up in the period post spin. Beginning with the period post spin from the company's former parent and in conjunction with the execution of new agreements, we began reporting full sale fees associated with the sales of certain third party digital advertising products and services on a net basis as a reduction of the associated digital advertising revenues rather than in operating expenses in our consolidated statements of operations. This change has no impact on reported operating income, operating cash flows, net income related to the reporting of sales of certain third-party principally Cars.com and CareerBuilder, digital advertising products on a net basis, as described previously, $5.7 million of unfavorable foreign currency exchange rate changes and $9.7 million of selected exited operations and other items. Excluding these items, revenues increased $52.7 million or 7.3% compared to the second quarter of 2015. This increase was primarily attributable to the addition of Journal Media Group to our results of operations beginning on April 8, 2016 and improvements in National Digital Advertising revenues offset by ongoing advertiser demand shifts and the impact of an unfavorable affiliate agreement change with CareerBuilder and its negative impact on classified employment revenues. Adjusted EBITDA for the quarter was $89.7 million compared to $97 million in the prior quarter a decrease of $7.3 million. Contributing to the decrease in the second quarter adjusted EBITDA-- contributing to the decrease in the second quarter adjusted EBITDA were $6.9 million of reduced EBITDA contribution resulting from changes to the CareerBuilder affiliate agreement in August of 2015 and $1.3 million in unfavorable foreign currency exchange rates. Overall declines in print advertising and circulation revenues are being offset by ongoing cost reductions and efficiency gains in operating expenses, increases in National Digital Advertising revenues, selective subscription price optimization strategies and operating results from acquired businesses.Net cash flow from operating activities for the quarter was approximately $67.1 million. In addition to the cash conversion of its strong EBITDA performance in the quarter the company generated approximately $7 million from the disposition of certain real property resulting from its efficiency and consolidation efforts. Capital expenditures were approximately $16 million primarily for printing and technology investments and real estate projects .During the quarter the company paid dividends of $37.3 million as dividends declared in both the first and second quarter were paid in the second quarter reporting period. At the end of the second quarter of 2016 the underfunded pension liability was $509.4 million compared to $612.4 million as of December 27, 2015,a reduction of $103 million or 16.8%. This reduction is principally the result of a full year – of the full year cash contribution of $25 million made to the Gannett retirement plan during the first quarter and the effect of foreign exchange rate changes. Now let me provide a few thoughts on guidance for the remainder of 2016.Given the continued successful implementation of the company's acquisition strategy, we have revised our guidance and now expect year-over-year revenue growth for the second half of 2016 between 7 and 9% As a reminder, the third quarter tends to be a seasonally slower revenue quarter and the fourth quarter is generally the best revenue quarter of the year. Margins will remain under pressure particularly in the third quarter driven by the impact of recently acquired businesses in part reflecting incremental investments being made to accelerate the integration of these businesses to achieve the expected synergies as well as other technology related investments. Also due to our foreign currency exposure in the U.K., we estimate that the recent appreciation of the U.S. dollar relative to the British pound sterling will result in a reduction in reported adjusted EBITDA of approximately $6 million in the second half of 2016.Additionally for the second half of 2016, the company expects capital expenditures of 30 to $40 million not including real estate projects, depreciation and amortization of approximately $65 million and an effective tax rate of 35 -- 34 to 35%. Now before turning the call back over to the operator, we would like to spend a minute on capital allocation. We were fortunate coming out of the spend at zero funded debt and about $60 million of cash on hand. We're committed to having a meaningful dividend and have maintained a $0.16 per share quarterly cash dividend representing currently about 4.5% dividend yields. With this level of dividend committed to shareholders, the company is still been able to generate substantial amount of deployable free cash. We've used our committed north of $400 million for acquisitions of both Traditional Local Publications and Digital Marketing Solutions Company. There has been a downside to our active acquisition pipeline. We've not had the opportunity to execute open market purchases of Gannett shares or enter into 10-B files trading plans. We view recent price levels as extremely attractive for repurchases and we look for opportunities to do so in the future. I will now turn the call back over to operator, who will assist us in taking some questions. Operator?

[Operator Instructions] And our first question comes from the line of Michael Kupinski with Noble Financial. Your line is now open.

Thank you. A couple of questions. In terms of the base number that you are using in terms of your revenue guidance for the second half of the year - of growth between 7% and 9%.What is the base numbers that you're using for both the third and fourth quarter? And in terms of - just to clarify in terms of that guidance in your commentary about the seasonality, I know that fourth quarter is stronger than third. Are you saying that the more of the growth is going to be back half weighted towards the fourth quarter, is that what you’re saying or are you just saying that there is just seasonality between the quarters?

Mike we were talking specifically to seasonality just reminding folks that there is -- that there is some seasonality in the business.

Okay. Got it.

The base number is same as last year, last year…

…reported.

Yes.

Okay. Last year's reported numbers, okay. And in terms of your- can you identify your plan facility consolidation and the prospect that impacted that might have on your commercial printing revenues for the balance of this year and for the full year 2017?

We don’t have any more that are going to impact commercial printing revenue, Michael. I think we've closed the ones that we’re going to close in or in the process of winding those down.

Okay.

Those will have impact for the next few quarters.

We’ll cycle through them but we don’t have any more that we’re shutting down.

Okay. And then in terms of your revenue performance you indicated that you thought you would have more moderating trends. I was just wondering maybe if you can just talk a little bit about on the trends that you’re seeing currently in terms of retail as a category and in any other categories that maybe we were kind of disappointed in and hoping to see more moderation as we go forward?

Hi, Michael. This is Bob. I will let John answer that in a moment. But two categories that continue to provide some challenges of course department stores and grocery. However, John can speak to some improving trends with our local advertising marketplace.

So Michael I think in general, we saw a slight improvement in advertising revenue for the quarter. And as Bob said, we had a continued erosion with those large national retail trends and those were offset by both local digital revenue gains but especially the national digital performance that Ali mentioned where we were up 19% on the existing business and 22% overall. I think that’s where we are excited. And of course to the importance of our network it gets to the point where we see, and have discussed the launch of our brand studio get creative in Q1 and we're starting to see some excitement with national advertisers and agencies around that part of the business for the future.

Okay, very good. Thank you. That's all I have for now, thanks.

Thank you. And our next question comes from the line of Alexia Quadrani with JPMorgan. Your line is now open. Q – Alexia Quadrani: Thank you, just a couple of questions. The first one just with the potential impact on Brexit on the U.K. papers, is there anything you're doing sort of an advance of potential slowdown in the economic environment there over the next sort of year or two in terms of being more aggressive on the cost cutting? And then I have follow-up.

Yes, Henry Walker our CEO has been working with his managing directors. They just had a summit two weeks ago and are moving forward with some further cost reduction plans. Also after the close to ReachLocal acquisition, the U.K. will be in a position to begin selling ReachLocal products, and so we're excited towards the end of this year Henry and his team will have the opportunity to improve their digital trends through that.

And then second question, just given when your commentary about the overall marketplace, you had market still some challenges or lacks of improvements on the larger department stores and larger advertise, but yet some better selling in the local digital business. Does that influence you…

Alexia, sorry, we just lost you for a second, if you can repeat the end of that question?

I was just - can you hear me now.

Go ahead.

My question was on, what you're seeing in the overall industry environment with the still lack of improvement on the national level and in terms the department stores, retail but still some better growth in the local digital businesses. How if any does that implement your acquisitions strategy going forward, like you can update us on really where you are in terms of the pipeline of acquisition in your outlook?

We're still very bullish on the fact that our local market expansion makes sense. We continue to have a very robust pipeline. The most recent north New Jersey acquisition will turn out to be very, very positive for us. And we still see some further opportunities out there. At the same time with ReachLocal joining Gannett, we are exploring with ReachLocal management team opportunities in the digital space that could accelerate some of their product development.

Thank you.

Thank you. And our next question comes from the line of John Janedis with Jefferies. Your line is now open.

Thank you. Couple of questions, first, Ali wanted to ask can you provide little more color on the focus areas coming and magnitude of that incremental investment.

John, the focus areas of what John?

Of the incremental investment going forward is that you referenced in terms of the outlook?

Yes, John we're bringing in some resources to accelerate the implementation and consolidation of these recently acquired businesses. So there will be some overlapping expenses that we incur.

Yes, it's really like if where we need to bring in resources to help us get them all up on our same systems where we need extra consultants and bodies to get everybody on the same systems and platforms. It's things like that. It's just resources to help us get all on the same in the same place, and it just takes a little bit of investment to get us there. This is all built into our models and planned for but there are expenses.

Should we assume it's sub $10 million for the back half of the year?

Definitely sub $10 million.

Yes, way less than that.

Sub $5 million.

Yes.

Okay. All right. Thank you. Maybe couple on the revenue side then first just maybe as I take it back in terms – Mike's earlier question. What are you seeing from the pre-print category and can you give us the revenue contribution there given that some of the changes in the portfolio. And then separately can you just help us to think about the underlying assumption in terms of the organic or core revenue for the back half of the year, should we assume that no real improvement in terms of trend?

Yes, the trends we look to be similar to what we’ve seen Q2. The preprint revenue is where we saw the erosion in the quarter and that’s directly related to the larger retail department stores, grocery stores and we see that continuing throughout the rest of the year as well.

Is that maybe 15% of ad revenue in general or is it smaller, I am not sure about the size of the any longer.

Yes, I can follow-up with you a little bit later on that John.

Okay, great. Thank you very much.

Thank you. And our next question comes from the line of Barry Lucas with Gabelli & Company. Your line is now open.

Great thank you. Just a couple of housekeeping questions and again wondered it’s a repetition but could you provide a kind of a same-store basis for what ad revenues looked like in the quarter and going forward in the guidance what’s included and what’s not, is North Jersey included in the guidance, is ReachLocal that sort of thing to get to the plus or 7 or 9?

So let me Barry start with the guidance. That’s sort of an all in number so it includes North Jersey, it does not include ReachLocal which is a deal that has not closed, we expect it to close sometime in third quarter. It includes the unfavorable impact of…

It does not include ReachLocal.

It does not include ReachLocal.

You said North Jersey.

Yes, it does include North Jersey. And it includes the deteriorating found in our outlook as well.

And the non-acquisition trend for the quarter was down about 10%.

Okay, thanks for that. And in terms of discussion on categories did you – if we move into geographies any meaningful differences and I am thinking about what Engel was talking about yesterday in terms of your exposure in Texas any major regional variances?

Because we are spread across the country, for the last couple of years we really have not experienced what used to see 5 or 10 years ago geographically. We do see early in the year some upswing in cities like Phoenix, Palms Springs, Fort Myers but now that we’re out of the tourist season there is really nothing that would point to one geographic area overshadowing another.

Except for the U.K.

Right, okay. Last one from me Bob, going back to the big picture you talked about a robust M&A pipeline, what would be the size of your appetite, what can Gannett look like, three, four, five years from now given what opportunities you think may or may not be on the horizon.

Well, we’ve been pretty upfront with the fact that we don’t see us looking at hundreds and hundreds of titles. I think we’re seeing like today we’re at 109. When you look at the horizon out there we could see something between another 15 to maybe 30 titles but I think that’s kind of our primary focus today because that really ties as you know to our second goal which is as we move into a much more digital company we are building USA TODAY Network to be largest digital news network in the country and so it’s not so much about the number of markets. It’s more about how it helps us fulfill that goal as well.

Great for that color Bob.

Thank you. And our next question comes from the line of Doug Arthur with Hoover Research. Your line is now open.

Yeah, thanks. I just want to get some more color on the JMG acquisition. The 10% organic decline is that total revenue or just ad revenues, because if it’s total revenue that sort of implies JMG is at about $95 million in total revenue in the quarter.

It’s ad revenue Doug.

It’s ad revenue. So I guess is it fair to say JMG was around $100 million and was that on plan or not on plan and then if you could talk a little bit ex-integration cost how the margin profile of JMG looks just because it’s such a large acquisition relative to the scale of business, I am wondering if you could just sort of give us a little bit more detail?

Obviously we don’t separate the various properties but I will tell you this that we're slightly ahead of our expected synergies general media group predominantly our production, consolidation, production, distribution, consolidation are happening faster than we had anticipated and we will see margin growth at JMG particularly it will start moving in the third quarter but really in the fourth quarter. So we’re very confident, we’re on track with everything we had promised around the JMG acquisition.

And then if the 10% was advertising can you sort of talk about underlying circulation trends, I know you made a reference to digital circulation. What are you seeing kind of in the organic circulation print and digital side in the quarter?

Circulation volume trends remain in the same range as they’ve been throughout the year which is down about 9% Sunday and a little less than - 9% daily and little less than that on Sunday. From a digital only standpoint we saw increases quarter-to-quarter in the 11% to 12% range on volume and that’s up 40% year-over-year.

And then in terms of underlying circulation revenue obviously you’ve tweaked prices, so what’s sort of the organic circulation all in digital and print sort of organic revenue trend?

It’s down about 4%.

Okay. Thank you.

Doug, I was just going to add. This is Ali. On JMG one of the things to keep in mind too is just timing. We didn’t close still April 8 so we were off a few days and they were on a calendar year, we closed this year on December 25, so we lose a couple of weeks basically when you take that into consideration and it does add up to several million dollars. So when you are building your model please think about that.

That's helpful. Thank you.

Thank you. And our next question comes from the line is Kyle Evans with Stephens. Your line is now open.

Hi, thanks. Most of mine have been answered. A few maybe more nitpicky type questions. You mentioned that preprint in retail and grocer was one of the reasons that you didn’t see things moderating. Have you sized the magnitude of that decline?

We see the trend continuing so from that perspective yes, it's in the decline in that group the larger retail group is in the 3% to 4% range.

I guess I was asking how far down are preprints on a kind of same paper basis?

Preprint revenues was down in the…

Mid teen.

Yes, in the mid teen range.

Okay. And do you.

We probably with some of the changes you’ve read what Macy's and Kroger and others are doing out there in the marketplace, that overlaps six month is could be $3 million to $5 million off of what we've trending in the first half that's kind of worst case but to give you some sense of the amount.

Okay. And you highlighted the growth of national digital, could you size that for us please.

Hang on Kyle.

It’s in the $4 to $5 million range.

Got you.

Incremental gain, yes.

I'm sorry. The $4 to $5 is the incremental gain or is it the total size?

The incremental gain.

Okay. Perfect. Thank you.

Thank you. And our next question comes from the line of Craig Huber with Huber Research. Your line is now open.

Yes, good morning. Thanks for taking my questions. Can you talk a little bit further about and ReachLocal, how it fits in with the portfolio with a crossline opportunities there with your existing infrastructure? And then I have a couple of follow ups. Thank you.

We are very, very excited about ReachLocal. The management team there has done an outstanding job of reengineering that business both primarily real focus on domestic but also seen some international improvements. You are seeing year-over-year revenue growth come back from them. They've got a number of new products that have been rolled out, that are starting to get traction. And for us, there is a couple of great opportunities. One, the U.K., where we have not been able to provide a full portfolio of digital marketing services. So Henry and his team can wait to fit the marketplace. Next July, we will be able to fully utilize their products across all of Gannett. We see a number of really positive things coming out of ReachLocal as they modified their go-to-market strategy around these new products that we believe their training, and product mix can be very helpful to our local sales team. And then Kevin Gentzel and his national team, we believe, can be a great addition to the ReachLocal national area which they haven’t been able to focus on as much as they’d like to, even though they are making some good progress around franchises. But we are very excited about getting in front of some of the major retailers, as well as the automotive segment, and healthcare as well.

I don’t know much about the company of ReachLocal, I’m looking at some financials here. It looks like last year, the overall revenues were down about 20%. Assuming that's true, I don’t know if that’s at divestiture or something or is there a problem with the operations. And if so, what's been going on with it, and why are you comfortable acquiring operation if there is some organic falloff in the digital revenues there?

Good question. What the current CEO inherited was a flood sales strategy. They had gone through a complete sales restructuring right before she joined the organization. They separate from both a chaos created around new account assignments, also the loss of number of top sellers. And so over the past year, they dealt with that challenge, they've hired some excellent talent back into the sales organization, and we expect to see quarter-to-quarter revenue growth going forward and getting back to the numbers we saw previously. Some of the business they lost was very high churn low profit type of products that were being sold. So not all of that was - some of that was well planned, but they just overdid the restructuring, created too much chaos with their clients and their sales team. And Sharon and the team have put great stability back into the marketplace and lot of confidence that what we've seen in the last two quarters will continue.

And then can you may be speak, if you would about the organic costs trend year-over-year and then a second quarter just for acquisitions and the recent things you shut down. With it sort of down - underlying cost down 3$ to 4% or is it materially different than that?

On a kind of same-store basis it's consolidated expenses were down about 6% year-over-year. Our largest savings were in our printing and distribution areas as we continue to execute on our end-to-end process and GPS, we also had good savings in news print and we really did have savings across all areas and departments as we remain very cost conscious and cost focused.

And just one last question. I think you said organic ad revenue in the second quarter is down about 10%, circulation organic revenue down about 4%, what's those organic numbers you are thinking for the back half or similar to that or little bit of up mark?

We see those being slightly improved on the ad side and similar within circulation.

Great, thank you.

Thank you. And I am showing no further questions. I would now like to turn the call back over to management for any further remarks.

Well, thank you all for joining us today. That concludes today's call. If you have any further questions you can reach me, Mike Dickerson at 703-854-6185. Everyone have a great day.

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