New York Times Co (NYT) 2004 Q4 法說會逐字稿

Good day and welcome to The New York Times quarter four 2004 earnings conference call.

Today's call is being recorded.

A question and answer session will follow today's presentation.

At that time, if you'd like to ask a question, please press "star" "one" on your telephone keypad.

For opening remarks and introductions, I would like to turn the conference over to Ms. Catherine Mathis.

Please go ahead.

Thank you very much, and good morning, everyone.

Welcome to our fourth quarter earnings conference call.

We have several members of our senior management team here today to discuss our results with you and they include: Janet Robinson, our President and CEO;

Len Forman, our Chief Financial Officer;

Scott Heekin-Canedy, President and General Manager of The New York Times Newspaper;

Jim Lessersohn, our Vice President of Finance and Corporate Development;

Stuart Stoller, our Corporate Controller; and Tony Benten, our Treasurer.

And sitting in for Martin Nisenholtz, who is responsible for our Digital Operations and who couldn't join us today are Katharine Levine, Vice President, Product, Business Development and Strategy and Karen Nathaniel (ph), who handles Digital Financial Operations.

Our discussions today will include forward-looking statements.

Our actual results may differ from those predicted and some other factors, which may cause results to differ are listed in our publicly filed documents including our 2003 10-K.

We are undertaking no obligation to update publicly any forward-looking statements either as a result of new information, future events, or otherwise.

This conference call is being webcast and an archived will be available on our website, which is www.nytco.com.

An audio replay as well as a transcript will be available on the website, as well.

And with that, let me turn the call over to Janet Robinson.

Thank you, Catherine and good morning, everyone.

Our fourth quarter earnings per share rose 4% to 75 cents compared with 73 cents in the same period last year.

Three major factors affected this result.

First of all, our share repurchase program provided a benefit as we had 5.4 million fewer shares this past quarter than in the same period a year ago.

Secondly, our tax rate in the fourth quarter was down significantly from the same quarter last year, which Len will discuss in detail.

Thirdly, our results from joint ventures improved from a loss of 2.8 million in the fourth quarter of 2003 to a loss of 900,000 in the same period of 2004.

Advertising and circulation were in line with what we expected as were costs.

In the fourth quarter, advertising revenues grew 2.4% in the news media group, similar to what we saw in the previous three quarters of 2004.

Newspapers in small cities performed better than those in large markets as national advertising decreased 1.4% in the fourth quarter with the largest declines coming from the entertainment, travel, financial and technology categories.

The Times, however, did see gains in telecommunications, healthcare, pharmaceuticals and banking advertising.

An American fashion and international fashion benefited from the very successful redesign of our special Sunday magazine section, which we rebranded "T" Style.

Classified advertising increased 2.9% as a result of growth in help-wanted and real estate advertising, partially offset by a decline in the automotive category.

Across all our newspaper properties, help-wanted continued to perform well as hiring improved.

During the quarter we saw gains at the Times in real estate advertising, which had been weak throughout 2004.

Both the commercial and residential areas improved and the real estate category was favorably affected by the well-received redesign of the real estate section last June.

Retail advertising showed significant year-over-year improvement of 8% in the quarter at the news media group.

The Times and the Globe recorded the highest gains.

Department stores and mass-market chains did well at both properties as retailers stepped up advertising to boost holiday sales.

Preprint advertising also showed strong gains, up 11% at the Times and up 7% for the entire news media group.

At the IHT, advertising rose in the quarter.

Its combined dye with the Times has proven very successful, nearly doubling to more than 3 million for the IHT in 2004.

Nytimes.com, Boston.com, and all of the websites associated with our regional newspapers, all turned in very strong performances.

On-line advertising was up nearly 35% in the fourth quarter with all major categories, national, retail and classified, showing double-digit gains.

Circulation revenues this quarter were on par with the fourth quarter of last year.

The Times expects circulation to be up both daily and Sunday for the ABC period, ending March 31.

The Globe, which has posted copy gains in the last two ABC periods, expects to show declines in March.

Gains were strong at our broadcast media group, which experienced double-digit revenue growth stemming from robust political advertising in the quarter as well as the higher level of automotive advertising.

Political advertising totaled 9.5 million in the fourth quarter compared with 3.2 million in the same quarter the previous year.

For 2004, political advertising amounted to 19.1 million.

So we will have difficult comparisons in 2005.

Currently pacings for the first quarter are running up in the low single digits.

Like our other properties, the website in the broadcast media group did very well, more than doubling in the fourth quarter.

Cost rose 4.6% due to an increase in compensation, promotion and outside printing expense, mainly because of strategic investments made at the time and the IHT as well as higher newsprint prices.

Len will discuss this in just a moment.

In the fourth quarter and, indeed, throughout all of 2004, the company invested in its journalism, expanded availability of the New York Times newspaper, introduced new products at all of its properties, and remained disciplined in managing its cost.

These investments position us well for 2005.

At this early point, however, the year is off to a slow start.

In January, advertising continues to be challenging and visibility remains limited.

At the Times and the Globe, we have seen softness in travel, particularly hotels and entertainment, where the holdover from the holidays has not been as robust as projected.

We will continue to seek new revenue streams in 2005 to meet these challenges and grow our business.

This year the Times plans to add four more contract print sites to improve availability of the national edition; three more are planned for 2006.

To meet the growing demand of color advertising, we expect to increase color capacity 40% by year-end.

In 2005, we will have the full year benefit of the Times redesign completed in 2004.

Also this year, we will be redesigning the main news section, biz day and sports.

And other section designs are currently under evaluation.

Building on the success of the magazine in 2004, sophisticated traveler will be rebranded as "T" Travel and appear four times in 2005.

And in December, we will launch "T" Holiday, an exciting new issue devoted to the end of year celebration.

At our New England Media Group, the Globe will see returns from the expanded news mailroom capacity it completed last year to accommodate continuing growth in part run advertising and preprints.

Preprints are an important business for the Globe, which recorded its highest level of preprint advertising last month.

The Worcester Telegram & Gazette will be introducing Worcester Quarterly, a lifestyle magazine targeting upscale households in that market and we expect it to be profitable in its first year.

Our Regional Media Group will be launching three new magazines, bringing the total number of magazine titles to 13 in 2005, up from 10 last year.

We expect these titles to produce 50 issues this year, up from 34 in 2004.

These publications have been profitable since they first appeared, and we expect the same of the new publications in 2005.

At our websites we are enhancing vertical sections to help us increase inventory and grow ad revenues.

In the first half of 2005, Boston.com will introduce site registration, which will enable advertisers to target users.

This mirrors are successful strategy we have used at NYTimes.com.

And of course, as we move forward into 2005, we will continue to be disciplined on cost, which is critically important in this environment, and to closely monitor the returns on the investments we make.

With that let me turn the call over to Len.

Thanks Janet.

As Janet mentioned earlier, total costs during the quarter rose 4.6%.

The main reason was the increase in compensation, promotions and outside printing costs associated with investments made at the IHT, where we have added new content and print size and introduced color, and at the Times where we redesigned sections and began printing the weekday paper in Ohio.

In addition, newsprint expense rose 7.5% in the fourth quarter with most of that coming from higher prices, partially offset by about 0.1% decrease from lower consumption.

Excluding the cost of newsprint, costs rose 4.2% and non-newsprint cash costs were up 4.5%

Over the quarter the past year, we have continued to keep a tight rein on headcount.

At the end of 2004 we had approximately 100 fewer employees than we had at yearend 2003.

We expect our FTE account to remain unchanged in 2005 as we continue to be disciplined on cost, and expense area where we saw improvement in 2004 was a workers' compensation by improving safety, preventing accidents, and helping people return to work sooner when accidents do occur.

We have reduced worker compensation costs, reversing the negative trend of the last several years.

As a result in the fourth quarter, we were able to lower our expenses by $10 million.

For the year as a whole, workers' comp declined by 11.5 million or 44%.

Our effective income tax rate was 36.7% in the fourth quarter and 38.5% for the full year versus 39.5% for both last year's fourth quarter and full year.

The decrease in 2004 for both the quarter and year resulted from a greater proportion of estimated income being generated in lower tax jurisdictions.

We determined this late in the fourth quarter when we filed state tax returns and our yearend tax analysis was completed.

The fourth quarter effective tax rate is disproportionately affected because the benefit of lower state taxes for the full year is reflected entirely in the fourth quarter.

At this point, we expect our tax rate in 2005 to be 40.4%, mainly because the expense for our employee plan -- our tax rate may decrease as a result of the American Jobs Creation Act of 2004 and we're currently reviewing that at the moment.

During the fourth quarter we made 57.4 million tax-deductible contributions for our qualified pension plan.

This was the only contribution the company made in 2004.

If we elect to make contributions this year, they will be based on the results of January 1, 2005, evaluation, market performance and interest rates in 2005, and will likely be made in the fourth quarter as they were in 2004.

Capital spending in the quarter totaled 63.6 million, including 24.9 million for our new headquarters, which we expect to occupy in 2007.

For the year our total CapEx amounted to 169 million, including 58.1 million for the new building.

After the end of the fourth quarter, we completed the sale of our current headquarters, which will result in a pretax gain of 145 million of which 115 million, or 63 million after tax, will be recognized in the first quarter.

We expect this will amount to about 43 cents a share but could vary slightly based on the number shares repurchased in the quarter.

Under GAAP we will defer and advertise the rest of the gains, which will offset the cost associated with the leaseback provisions.

Our total debt at the end of 2004 totaled 1.1 billion, but because of the sale of the building and changes in working capital, it has been reduced by approximately 230 million since then.

This past quarter we bought back 1.3 million shares at a cost of 50 million.

At year's end, 201.9 million remained in our repurchase authorization.

For all of 2004, we spent 293 million to repurchase 6.8 million shares, significantly more than the 205.5 million spent to repurchase 4.6 million shares in 2003, and substantially higher than the amount allocated for our stock compensation plan.

Since 1997 we have spent 2.8 billion to repurchase 76.6 million shares, and have reduced our share base by about 25%. 2005, we expect repurchases to be at a slower pace than 2004, but we do plan to offset any share issuance from employee stock compensation plans.

As Janet mentioned, we will continue to be disciplined on cost in 2005 and seek ways to further reduce its extended cost.

For example, as part of our strategy to improve efficiency and to focus the Times television efforts on Discovery Times, our digital channel, in late 2004, we closed NYT-TV, the Times Television production unit.

This unit had revenues of approximately $13 million last year, which were included in other revenues under the New York Times media group.

It was not a profitable operation.

For out other revenues will be lower in 2005, costs will be even lower.

In January we discontinued printing the world business section of the New York Times, eliminating select financial listing the contents from this section has been incorporated into other parts of the paper and full information about stocks and mutual funds is available on line at Nytimes.com.

This year, we expect to save $3 billion from this change mainly in newsprint.

We've also launched an active and in-depth re-examination of all of our operations and the associated costs to determine the appropriate resources and process we need today.

We are taking an extended and a strategic view of how we'll use our resources, our people, and our capital.

It's happening in every property we own and we do believe we will find significant improvement in how we operate that will translate into substantial cost savings.

In addition, we've created four more optimization councils, cross-functional teams that are focusing on finding ways to reduce costs.

New teams will concentrate on circulation acquisitions outside services, consulting contracts, and webifications, which is using the web to reduce the cost of transactions and to lower expenses for printing and disseminating information.

Just as a reminder our previous optimization councils generated $25 million in annual savings.

We believe the advertising and the circulation environment will remain challenging in 2005.

Therefore, it's particularly important that we remain disciplined and innovative when it comes to managing costs and we plan to do just that.

Currently guidance, there has been only one change in our overall guidance since we last released it in early December.

We narrowed the range on what we expect stock based compensation expense to be in 2005.

Previously, we estimated it would be 24 million to 33 million and we now expect it to be 23 million to 27 million or 11 to 13 cents per share, spread relatively evenly across quarters.

I should remind you that unlike many of our peers, we will begin expensing in the first quarter.

The comparisons and others in our industry groups will not be on the same bases in the first and second quarters.

In December we also announced that we will no longer provide specific guidance for full-year earnings but we will provide it for a given quarter during that quarter.

For sometime in March, we'll guide you on how the first quarter looks.

With that, I will open the call for questions.

Thank you.

If you would like to ask a question, please do so by pressing the "star" key followed by the digit "one" key on your touch-tone telephone.

If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Once again "star" "one" if you have question.

We'll pause for just a moment to give everyone an opportunity to signal.

We'll go first to Craig Huber with Lehman Brothers.

Good morning.

Thank you.

Janet, on the year-end conference, you expressed a fair amount of optimism on technology advertising in your flagship paper for the New Year.

I was just wondering if you still held that same optimism given your quotes (ph) about the slow start to January in advertising mainly challenge for 2005 and also if you could just talk about your outlook here, for department stores this year for advertising.

Thank you.

Good.

I may have Scott answer that with the technology question and department stores.

Pleased, as we said in December, we continue to be optimistic about the technology categories above B to B segments and the B to C segment.

Technology is off to a slow start in January, but we do not believe that's at all indicative of what the scheduling is going to be for the rest of the year.

In department stores, we are expecting to enjoy mid -- middle single digit growth for the year ahead.

And then lastly if you could maybe tell us department store and percentage of your ad revenues, where does you have for the full year '06.

Thank you.

Department stores were just under 5% of our total advertising revenue for the '04.

Thank you.

We'll go next to William Drewry with CSFB.

Hi.

Thanks.

A couple of questions.

Janet, I jumped out just a minute late.

I apologize if you covered this but just wondering on the near term, what advertising categories are you getting the best price realization from right now, second question is wondering in '05, how confident you feel on being able to grow in the entertainment -- the movie entertainment category.

And then maybe a quick one for Len just wondering how much acceleration you are taking on investing of options to mitigate option expense when you have to start including those numbers in the second half.

Thanks.

The categories that are performing well and are certainly from a yield perspective are classified.

We're seeing some very nice growth in real estate and help wanted and in automotive, and those are priced quite handsomely.

In addition, those are also strong categories brought online.

So, we're seeing some very good showing in regard to those specific categories.

Also retail -- you have seen some strong retail growth in our numbers.

We have very substantial contracts with many of the department stores and luxury stores, and we are seeing some nice revenue growth there as well.

In regard to entertainment, we are seeing some very good news in regard to how many movies will indeed be coming out during the fourth of 2005.

That I think that bodes well on regard to the strength of the category overall, but of course, it's very, very early for us to tell.

In addition, last year, it's important to remember the timing of the Oscars was very different than what it is -- what it was in previous years.

We do not have that comparison this year.

It is exactly the same timing.

So, indeed, we think that that may also give a little bit of a stronger start, perhaps, in the first quarter.

But again, it's much -- it's very, very early to tell.

Scott, you may want to add to that.

Our outlook for the year is that we will track relatively well box office performance.

So -- last year there was weakness in the box office and that accounted for the weakness we saw in entertainment apart from Kenneth has already referred to with regard to the Oscars, and we are optimistic that they will have a better lineup this year, and that we will enjoy the benefit of that.

Bill, I think, you asked a question about acceleration.

We took that last year to stock expense of 42 cents included the charges we took for accelerating options.

But, it was probably about half of the cost.

This year the 11 to 13 cents range that I gave earlier really reflects three things.

It reflects the 40% reduction in options that was rounded in 2003 over 2002, which will be eventually continued that similar level last year.

And changes in our stock employee Purchase Plan and the balance between options and restricted stock that we're going to in our compensation program going forward.

And just as a reminder Bill, we will begin expensing in the first quarter of 2005.

Thank you.

Very helpful.

We will go next to Paul Ginocchio with Deutsche Bank.

I had just one question along the magazine looks like it used from the publish statement had revenues up to 309 from 265.

You take that out of the New York Times Group and it looks like the newspaper itself, revenues were down.

Are those numbers -- the 309 million, is that close to what the actuals were?

We were up in the magazine, and I am not following your mouth.

Recent statements, I think, it's from publishers Information Bureau will suggest revenue growth up17% to nearly 40 million in the magazine and you take that out of the New York Times Group, I bet that newspaper would like it was down year-on-year.

I think you have to look at the way PIB calculates those revenues.

So, the...

Those are calculated revenues.

They are not reported revenues.

So, the report is not quite as good.

The magazine numbers that come out generally tend to overstate what's actually happening.

But my recollection is they use open rates basically.

Right.

There is heavy discounting.

So they really -- in many cases there is no resemblance to what's actually happening.

If you look at the statements that are made about our performance in the magazine industry, they usually refer to PIB volume as a measure of competitive share.

Okay.

So, can you breakdown magazine verses newspaper?

No, we don't do that.

It's included in our overall Ad revenues or at the Times Media Group.

Okay.

Great.

Can you give us an update on the Boston Metro?

As I think you -- now, we have announced that we are in talk to buy 49% of Boston metro.

The reason being that it furthers our strategy for serving the audiences in Boston.

We feel that Metro is a natural complement to the globe's strong leadership and certainly the acquisition in that market.

With this partnership, we have reached, and certainly, it's an exciting combination for advertisers in that market.

I think that from a standpoint of where we are right now, as part of our continuing due diligence on the investment of Metro Boston, that is ongoing right now.

We're closely reviewing the steps that Metro International is taking in regard to addressing recent reports of inappropriate comments, and from our prospective, we will finish that due diligence in a very short period of time.

Great.

Thanks.

We will go next to Alexia Quadrani with Bear Stearns.

Hi.

Good morning.

Just before starting off with a follow-up question on your comments earlier about the bounce back in the entertainment category, a projected bounce back I should say in '05.

Would you -- would it be a fair to assume that we may see that as early as the first quarter, given at the timing of the Oscars and your comments on that?

And then our second question is your improvement you saw it in New York Times in the real -- classified real estate category, is that largely due to the redesign or do you actually think, strength in the market?

I will start with the real estate question.

We're seeing a definite strengthening as a result of the redesign.

The growth is coming from display advertising.

In the year ahead, we expect to continue to see that growth especially in the first half, as we complete the first year of the redesign in the marketplace.

Aggregate side of the business, while probably, continue to be in low single-digit decline.

In entertainment, we're cautiously optimistic about this category, but we also -- after the experience of last year, we think, it's subject to the same volatility based on box office performance.

So based on, what we know about the lineup this year, there are nine sequels in the first half and eight animated features, which we think bode well for the box office performance.

We also expect to benefit from an increase in DVD advertising in support of this category.

And with the wide releases that are scheduled for the first half, it should give us promise as well.

Okay.

Thank you.

We'll go next to Lauren Fine with Merrill Lynch.

Just I guess, exceptional elective questions, for the second, you do expect to be up in the first quarter or is it sort of tough to say between first and second quarter?

I would say it's tough to say.

Okay.

Could you just refresh my memory on what kind of aggregate increases you took at the New York Times?

And what you are seeing competitively for national ad dollars across the national newspapers?

And then, Len, I am wondering, should we expect any change in intentional assumptions for the year?

Our rating increase is approximately 5%.

And I'm not sure;

I understand your question about national competitive?

I'm just wondering your performance, I guess, at the newspaper enrollment specifically; your national category has been a bit weaker than your peers.

Now I'm wondering, if some of that is due to increased competition?

Our share performance, most recent share performance data, we have is through November.

Year-to-date 2004, we pick up about 0.4 points in share relative to our national competitors.

And we think that is an indication that we're doing better competitively than they are.

When we are looking at shares, Lauren, the New York Times has 51% share of market against the national newspapers, USA Today has 19.7, and The Wall Street Journal has 29.4.

And when you are looking also at what we consider to be our competitive set, which is not -- would not necessarily just be the national newspapers, you're looking at a much broader set going up against particularly magazines.

And we enjoy our 31, 32% share there.

Lauren, hi.

This is Len.

We are going to more than likely lower our discount rate from 6% to 5.75%.

We were hoping, we get some help with interest rates moving up instead they've gone, the other way.

However, our assets pensions have been up dramatically up well over 10% in the 12 to 13% range, coupled with our contributions we've made essentially offset the change in discount rates.

So at this time, we need to wait until later in the year, when we see, where assets are moving and where interest rates are moving, and we get the full valuations back more actuarially.

But currently we don't anticipate anything in the first three quarters of '05.

All right.

Thank you.

We'll go next to Michael Kupinski with AG Edwards.

Thank you very much.

I was wondering, with the department store advertising in the New England Group near the percentage of the total department store advertising contribution, you had mentioned that it was about 5%of your total, I was just wondering, if it was similar in the New England group particularly because it seems like Federated May both have stores in Boston and assuming that, there is a merger, that might be the market most at risk with department store advertising, it's been so strong in the last quarter, I was wondering, if you can give your thoughts on that?

I think, it's -- as far as retail and (inaudible) is about 30% of our business.

The department store is -- I believe is fairly similar in that 5% range, so we will check that or maybe a little bit been higher or probably maybe in the 6 to 7% range.

There are May and Federated stores, needless to say, in not only in New York but certainly in Boston, as well.

Historically, when we have seen these mergers, we worked very closely with the consolidating company to really look at programs that we can put in place in regard to contractual agreements.

So it doesn't necessarily mean a decline.

We have been through this in the past and certainly, we'll be going through with it in the future.

And when indeed, we put those contractual agreements together, needless to say, we put incentives together for increased spending.

I think, what we'll be telling is, if indeed, this merger or this consolidation does go through, what Federated intends on doing with the Filene's name, and if indeed they intend on move through the Macy's nameplate, as opposed to continuing with Filene's that may affect more in regard to this outlet in Boston.

You know, you've obviously lived through store consolidations in the past.

And I was just wondering, generally, there has been a -- tends to be a spurt in advertising related to any particular nameplate changes and things like that, and then, overtime, it seems to trails off.

Has that been your experience as well?

It has.

But again, I have also seen ways in which not only the Times Company but other folks as well have put together programs that can indeed entice people to continue advertising.

What we've seen recently, needless to say, in regard to Macy's is that they are not focusing on one day sales as they were at one time.

They are very much more into the branding opportunity with the Macy's name.

Branding opportunities, of course, create a lot of our key opportunities for newspapers.

And again, you're also saying even some of the mass marketers move into ROP primarily to boost sales as well.

So, I think from a standpoint of opportunities, I don't think we should necessarily think that this consolidation is necessarily an indication that revenues will fall.

Okay.

Great.

Thank you very much.

We'll go next to Christa Quarles with Thomas Weisel.

Hi.

Couple of questions; first on the help wanted side, it looks like the comps starts to get meaningfully tougher in February, and I was wondering what your expectation is about the sustainability growth that we've seen in help wanted to-date.

And then, on the color side, can you remind us what percentage color now makes out as a percentage of the total, what it increased in the quarter, and what you think it color can be as a percentage of the total with the planned increases in capacity going forward?

Thank you.

Help wanted -- I do not believe I want to make a call in February specifically, but we're optimistic that we'll see growth in both display and across the full year.

With regard to color in the fourth quarter, it was 20% -- I'm sorry, 31% of our total advertising, 27% for the full year.

That's an increase of four points for the quarter versus the prior year, and the 27% compares to 23% for the full year of 2003.

We've seen also some very good performance in regard to help wanted, certainly from the New England Media Group and from the Regional Media Group.

We are expecting to see continued positive numbers in both of those areas.

With the 40% share of online job listings Boston Globe continues to dominate the Boston market and that, of course, as you know, includes Monster, HotJobs and Career Builder.

So we are pleased with what we have seen with our growing strength in the recruitment market there, and we're also seeing some strong numbers being put on the board in regard to our regional newspapers as well.

I think you mentioned -- you asked a question about the increase in paging.

We expect about a 40% increase in color paging capacity, and given the trend we would hope we would...

And then, in terms of just color rates, are you still averaging about 25% premium in black and white, and have been more successful in raising rates there than elsewhere?

We've increased our premium rate about 25% in the current year, and we have grown color premium revenue by 25% to 30% in the last couple of years, and we expect we can do the same again this year.

Great.

Thank you.

We'll go next to Steven Barlow with Prudential Equity Group.

Thank you.

Quick one; is there a breakup fee involved in the Metro deal at all from either side?

No, and we don't actually have a deal yet.

As Janet indicated, we're still dealing due diligence.

So we expect to deal to close that deal soon, but it hasn't -- we certainly have not completed our work.

But there is no breakup fee in the event we close the deal and go forward.

Okay.

Then -- on MarketWatch, certainly knew that you were in the hunt for that.

One of the rationales was increasing inventory out there to sell to consumers and B2B and all the rest.

What are your plans, if any at this point in time, to grow your demand from advertisers considering that the page placement opportunities for the prominent pages probably pretty much sold out, and how're you going to address that going forward on the online side?

We have a number of different initiatives.

We have a number of different initiatives on that term to address that situation, one of which is a redesign of the website which we're in the process of doing right now, which will introduce both new advertising opportunities on our pages result as well as enable additional or incurred additional uses as well as attract new users into a vertical category.

Is there any thought about buying any properties again as you look at MarketWatch, did you look at straight on other opportunities out there in the marketplace?

Steven, as you know, we don't comment on acquisitions and divestitures, but we are constantly looking at all the opportunities out there.

So, we're in the deal flow, which is important, and we certainly are keeping our eye out.

And I think you're well aware that when we are looking at put acquisition they have to be in line with our core purpose, they have to be reflective of rational operating expectations and a very strong return on investment for our shareholders.

Thank you.

We'll go next to Peter Appert with Goldman Sachs.

Janet, can you give just any quantification on the weakness you are seeing -- the relative add weakness you are seeing in January, any specifics terms of categories, we have seen changes?

I think that what we are seeing is that, I think we read this every day and the near times that the travel industry is going through a great deal of turmoil, not only the airlines but the hotels, as well.

And I think that the weakness of the dollar, we're seeing a lot of foreign travel here, which is, of course, is filling many of the hotel rooms, which is negatively affecting the amount of advertising that folks are doing.

I think that that is one of the key ingredients that we're seeing in regard to a slower start.

I also think people are gearing up in regard to later in the year spending rather than ride out of the gate in January.

We are hearing from many of the major categories, financial, telecom that indeed, there will be spending coming through, but I think that they'll -- they're just off to a later start rather than in January, but this is traditional.

January is always a softer or a slower month.

And I think that that is indicative of what we're seeing now.

It's also important to know from our New England Media Group perspective that in January we benefited from the Super Bowl and the Patriots', win up of the Super Bowl last year.

That will be in fiscal February.

And need us to say, we're hoping that the Patriots' win again.

Okay.

And then on the entertainment category, can you, number one; just remind us what percent of revenue that is?

And then number two, it seems like from some of the industry data the total entertainment as spending last year through all categories was stable or even up a little bit so, the newspaper industry specifically as potentially losing significant share.

Can you talk about anything that you are doing to try to address that competitive issue?

Entertainment is 14% in 2004 of our total advertising revenue.

And from a competitive perspective, I think that goes directly to our strategy.

Many years ago, we focused on becoming multi platform, class platform, -- with print product very strong promotional opportunities, strong online presence, and television, as well.

And we are continuing; need us to say to strengthen across all platforms and sale across all platforms.

So, we are offering a multitude of opportunities for advertisers if they prefer to be in print, or they prefer to be online, we are there with a very appropriate combination package.

I think also one of the things that you'll be hearing a lot about is the newspaper industry is moving toward changing the paradigm in regard to how newspapers are being bought.

We're the only medium that is not what based on total audience, total readership.

And, I think, that we are going to, as an industry be very focused on alerting our media buying community in regard to the strength of the total audience of our newspapers as opposed to just the circulation copies.

For example, the daily readership of the New York Times is 5.1 million.

This Sunday readership is 6.9 million.

That is a very strong argument to make to the media buying community.

Thank you.

We will go next to Douglas Arthur with Morgan Stanley.

Yes.

Two questions, I 'm wondering if you can be a little bit more specific in terms of the help-wanted and real estate growth for both the New York Times and The Boston Globe in the quarter?

And then in terms of the ramp up of the satellite printing plants, what -- I cannot remember if you mentioned a specific cost impact that will have in '05 versus '04?

Thanks.

Help wanted in recruitment in the first quarter will be adversely affected by the switch of Easter from April into March this year.

Dough, the fourth quarter help wanted was 4.6 for the New York Times and 13.5 for the New England Media Group.

Dough, as far as the impact on cost, we trying to expend most of the cost associated will increase printing plant.

And those expenses are included in the range that we gave in our guidance.

And also where we're putting the print site, where we are contracting, or areas where we see a strong potential in regard to circulation growth.

As I think you well know Dough, there are 70,000 non-routable currently and we're making sure that as we select print sites, they are in areas where we see strong potential, which of course will offset the cost of the additional sites.

Real Estate Dough was up 4% of the Times Media Group in the fourth quarter and in New England it was up close to 16%.

Great.

Thank you.

We'll go next to Frederick Searby with JP Morgan.

Yes.

Thank you.

Couple of questions.

Can you give us the thought process now on potentially taking your Internet offerings to a paid subscription model as opposed to a free model?

And, I guess, the second question would be we often hear about cutbacks from department stores and some of the attempts to skew younger on the demographics perspective.

Where is the real opportunity?

You know CPG it can -- at least played a little bit.

They're toyed with the idea and seem like there was some small amount of advertising picked up.

Where is the real opportunity from a category perspective where did you could actually gain shares as opposed to lose it?

Thank you.

In regard to some of the areas that we think there is strong potential.

We think that because of the showing that we have seen in department stores that we will continue to see some nice opportunities they're going forward.

We also, particularly at the times, have seen strong growth in the luxury category.

Fashion jewelry, international fashion and American fashion particularly because of re-branding of style, "T" style has been very good for us.

And we think that will bode well going forward as well.

The "T" style re-launch, and all of the redesign that were done last year will benefit us in this year, needed to 2005.

And also the new redesign is that we're planning as well in business and in sports.

The addition also of the holiday at the end of the year will also be a very strong contribution you look -- that in the magazine revenues.

I think, there are some categories that have performed in a very soft manner in the last few years, which we see hopefully showing some signs of growth going forward.

Certainly, technology is one that we have been waiting to see.

We have good initial conversations with many of our technology advertisers.

But again, we're taking a wait-and-see approach.

The financial cluster is also one insurance B to B, and financial institutions that are also areas that have been a bit softer that we feel may have potential for us this year.

And others that we have noted as well live entertainment and entertainment are also areas that we're watching very carefully.

Okay.

Janet just an object would real estate, given the underperformance you had relative -- these of the newspaper group, be another one or you think the market cooled little bit.

There is little more inventory and you actually maybe outperform the group in that class like category?

No.

I think is indeed the market cools a little bit, that as now you helps in regard to the importance of advertising.

When indeed there is a red-hot market, there is not a need to advertise as often and as much.

And we feel if that -- if indeed it does cool, there may be some real opportunities for us to grow above and beyond where we are right now.

The redesigned also did help a great deal in regard to display advertising.

Again we will have the full year effective that redesign because the redesign took place in the June timeframe.

Fred this is Len.

I think you also asked a question about charge for the website.

That's a perennial question here we look at it every year and have since we launch the site.

It's a debate between charging in restricting paid use these will be growing advertising and with the kind of growth that we've had in advertising.

And eluting to the earlier question restricting paid use is something that you want to be careful about.

So we constantly are looking at that question and will continue to look at it.

But we like 30% advertising revenue growth.

And charging for the site just across the board would certainly have the negative impact on that.

We already do charge for some products and we're likely to do more of that going forward.

But this is an annual question for us.

Len just quickly -- thank you for your candor.

But, I mean, the rumor mill is heating up here.

It sounds like there is more than just the usual annual evaluating, I mean, is that inaccurate?

I don't think so, I think that press on the rumor mill is the rumor mill.

We certainly give it a hard look.

We constantly are debating internally what the right strategy is, and that sometimes filters out that we were about to charge, but that's not a decision we have made.

We have looked at new products, we have looked they are charging for products that we currently offer or we do that now.

And if I say that's likely to continue going forward, and time from time-to-time, we'll add new products to locate here.

A year from now, we may have a different point of view, but right now growing the ad revenues, and continuing to grow at the rate we have been is really what's critical for us.

Thank you.

Once again "star" "one" if you have a question.

And we'll take a follow-up from Paul Ginocchio with Deutsche Bank.

Yes.

Two questions really.

There was modest growth in the entertainment in '04, is it safe to assume that all the growth can from online and print was probably down slightly?

And then the second question, just looking at Craig's List in New York, they're listing 8,400 jobs in the metro area versus your 7,400 jobs.

Do you think that there's -- are you seeing any impact on the charging for job listings?

Thanks.

Entertainment category was down for us for year 2004, both of the entertainment categories, the live entertainment and stereo entertainment.

And the difference between print and online?

We don't break that out Paul.

Okay and the Craig List question?

Can you repeat the question?

I'm just looking at their site; they're listing 8,400 jobs in the metro area versus your 7,400.

Just wondering, if you think you're seeing any impact?

Is your revenue growth being somewhat hampered by their growth?

I think from a standpoint of Craig was increasing their job growth;

I think that they're certainly doing a fine job.

But that said I think that NYTimes.com job market and our print opportunities are offering not only our advertisers, but certainly the services that we're expanding to job seekers also I think will provide us with some opportunities going forward as well.

There are a multitude of new services that we are looking at in regard to job market right now in regard to increase in revenue growth for 2005.

And we did have over 40% growth in help wanted in our online areas.

Okay.

Great.

And it appears to be have no further questions at this time, Ms Mathis, I'd like to turn the conference back over to you for any additional or closing remarks.

Thanks everyone.

Thank you everyone for joining us today.

And if you have any additional questions, please call.

Thank you.

And that does conclude today's conference, and you may disconnect at this time.