New York Times Co (NYT) 2005 Q1 法說會逐字稿

Good day, everyone, and welcome to the New York Times quarter 1 2005 earnings conference call.

Today's call is being recorded.

A question and answer session will follow today's presentation. [OPERATOR INSTRUCTIONS].

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

Ms. Mathis, please go ahead now.

Thank you very much, and good morning, everyone.

Welcome to our first quarter conference call.

We have several members of our senior management team here this morning to discuss our results with you, including Janet Robinson, our President and CEO;

Len Forman, Executive Vice President and Chief Financial Officer;

Scott Heekin-Canedy, President and General Manger of the New York Times newspaper group; and Martin Nisenholtz, our Chief Digital Officer;

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

Stu Stoller, our Corporate Controller; and Tony Benten, our Treasure.

Please note this quarter that we are making two changes in our reporting practices.

First, we did begin expensing stock-based compensation, which Len will discuss in a moment.

And second, we have broken out our acquisition of About.com as a separate reporting segment.

Our discussion today will include forward-looking statements.

Our actual results may differ from those predicted, and some of the factors which may cause our results to differ are listed in our publicly filed documents, including our 2004 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 archive will be available on our website, which is www.nytco.com.

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

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

Thank you, Catherine.

Good morning, everyone.

Today we reported earnings of $0.76 per share compared with $0.38 in the same period last year.

Included in our first quarter '05 earnings are $0.46 of gains from the sale of our current headquarters building, as well as property in Florida.

Excluding these gains, our earnings would have been below the level of last year.

This morning we will discuss the factors that produced our results and discuss the outlook for our businesses.

I'll begin with the revenues.

As has been true for sometime, advertising revenue growth continued to be weakest at our large market properties and strongest at our Regional Media Group.

At the New York Times Media Group, advertising revenues were virtually flat, up just under 1%.

Strong categories included retail banking, including advertisers such as Citibank, Banc of America, and JP Morgan Chase; department stores including increased business or new business from Macy's, Saks, Bloomingdale's, Lord and Taylor, and Barney's; and pharmaceuticals, where ads for drugs, such as Botox, Ceremedix, and Pravachol increased revenues.

Weak categories included telecommunications where the merger of Cingular and AT&T adversely effected results; financial services, because of fewer advertising campaigns for mutual funds; and hotels due to the strong Euro, which has pushed up occupancy rates and reduced the need for advertising.

The Times' results were also effected by the timing of Style and Entertaining, a special supplement to the Sunday magazine.

Last year, it ran in March.

This year, we planned for this rebranded section, now called T Living, to appear in fiscal April.

T is one example of the investments we've made in our journalism in 2004, which is benefiting us this year.

We plan to continue to strengthen The Times in 2005 as illustrated by the launch today of our new Thursday style section.

This new section is designed to both delight our existing readers and draw new ones to the pages of The Times.

Similarly, we believe advertisers will find the new section a strong environment in which to promote their products and services.

During the balance of the year, additional enhancements are planned, including another issue of T focused on the holidays.

Color advertising continued to be a very strong story at the Times, totaling approximately 27% of advertising revenues in the quarter, up from 24% in the same period last year.

We expect color advertising demand to continue to be strong and plan to increase our color printing capacity 40% by the first of November, which will help us during the busy holiday season.

With Boston lagging the rest of the country in economic growth, the New England Newspaper Group had a challenging quarter.

Advertising revenues declined 4.2%.

The major reasons were significant losses in the banking category because of the Banc of America merger, and telecommunications, again, the AT&T/Cingular merger.

Retail advertising in Boston was on par with last year, and classified advertising decreased because of sharply lower automotive advertising.

At both The Times and The Globe, the timing of the Easter holiday effected results.

Traditionally, Easter, like other holidays, is a time of light advertising.

Adjusted for the estimated effect of Easter, the Company's March advertising revenue would have increased approximately 2%.

The same is true for our first quarter advertising revenue.

In early March, we completed the circulation of a 49% interest in Metro Boston, a free daily newspaper catering to young professionals.

The acquisition enables us to offer joint advertising packages that reach a large and attractive audience, and we are particularly encouraged by the enthusiastic responses advertisers have had to the cobranded classified pages, which we launched on March 21.

Like our other properties, The Globe is working hard to develop new revenue streams.

This quarter, it launched ZIP code level zoning pad capability.

This enables us to seamlessly distribute preprints at the ZIP code level and reach a large market of smaller advertisers in the greater Boston area.

In March, The Globe successfully rebranded its Spring Real Estate Preview as The Big Move, following in the foot steps of the Big Help recruitment section.

Also in the quarter, the Telegram & Gazette launched Worcester Quarterly, a life-style magazine targeting upscale households in Worcester County.

Turning to the Regional Media Group, for the quarter advertising revenues grew more than 7%.

Excluding the February acquisition of the North Bay Business Journal, a weekly publication targeting business leaders in California's Sonoma, Napa and Marin counties, ad revenues increased 6.7% in the quarter.

Retail advertising was strong, driven by gains in the Sarasota, Wilmington and Spartanburg markets.

Classified advertising grew as a result of double-digit gains in recruitment advertising.

This was partially offset by weaknesses in real estate, mainly because of the lack of homes for sale in Sarasota.

As we have said in the past, our Regional Media Group strives to derive a third of its total revenue growth from new products and services.

It successfully did so in the first quarter through the introduction of new city magazines and additional weekly newspapers and increased database marketing and online advertising.

In 2005, we expect to have a total of 12 magazine titles with 47 issues, compared with 10 titles and 34 issues in 2004.

To date in April, the Company's overall rate of advertising growth is in the low single digits, similar to what we saw in January and in February rather than March.

Total circulation revenue in the quarter was on par with last year.

The Times Media Group was up 1%.

The Regional Media Group was flat, and the New England Media Group decreased 4.5%.

By the end of 2006, we plan to add seven print sites for the New York Times, which will increase availability and circulation of the paper outside the metropolitan New York area.

The Globe is also expanding its footprint by deepening its penetration in areas outside metropolitan Boston.

Despite difficult comparisons to the first quarter of last year, when political advertising amounted to 2.4 million, our Broadcast Media Group was able to achieve first quarter revenues similar to those of 2004.

Growth in costs, however, including stock-based compensation, resulted in lower operating profit.

Pacings in April are currently flat.

As is clear, the operating environment remains quite challenging.

We continue to focus on internal growth, expanded availability of our newspapers, added color capacity, and new products and services.

Importantly, as part of that internal growth, I'm happy to report that at our news media group, internet advertising revenues grew approximately 30% in the quarter as a result of strength in both display and classified categories.

We continue to see great potential online to innovate, to explore new opportunities for our existing print brands, to cross-brand, and to share content among our print, broadcast and online properties.

Indeed developing the full potential of our digital properties was an important part of the thinking behind our acquisition of About.com, which joins the two transactions I've already mentioned, Metro Boston and North Bay Business Journal as strategic acquisitions in the quarter.

So before I wrap up my remarks, let me take a few moments to focus on About.com in greater depth.

We are very excited about this acquisition.

About is a profitable, rapidly growing content business that adds tremendous reach and revenue diversification to the Times Digital Network.

It has a strong and highly profitable cost per foot advertising business, as well as a significant impression-based display advertising component.

More than half of its revenues come from cost-per-click advertising, which is the fastest growing segment of online advertising.

Combining About.com with New York Times.com and Boston.com, these sites offer over a billion quality content page views to the marketplace, accessed in March by 29 million unique U.S. users.

About has more women than iVillage, more men than SportsLine, and more teens than MTV.com.

This year, we expect the dilution from About to be $0.04 per share or less.

Next year, we believe About will result in little or no dilution; and in 2007, we project it will add to earnings.

You'll be able to track our progress since About will appear as a separate segment in our financial statements.

About and our other acquisitions, coupled with our growth initiatives in developing new products and maximizing the reach and value of our existing brands, will help us improve the performance of our Company.

And now I will turn the call over to Len.

Thanks, Janet.

During the quarter, we remained very disciplined on managing expenses.

Costs grew 4%.

Of this amount, distribution and outside printing expense, stock-based compensation, wages and non-stock benefits, and higher newsprint expense made up most of the increase.

The balance was from professional services, promotion and other expenses.

In the first quarter, we began expensing stock-based compensation, which amounted to 6.3 million pretax, or $0.03 per share in the first quarter.

Excluding stock-based compensation, year-over-year costs were up 3.2%.

Newsprint expenses rose 6.6% in the first quarter, compared with the same quarter a year ago with 9.9% resulting from higher prices.

This was partially offset by a 3.3% decrease from lower consumption.

We are exploring ways to reduce consumption at all of our properties, including the use of a lighter weight sheet.

We've converted to a lighter weight sheet at our Santa Rosa newspaper, and we plan to convert the rest of our printing facilities, including national edition print sites during the second half of the year.

We expect approximately 900,000 to $1.6 million in savings as a result of this step in 2005, and we estimate annualized savings in the range of 2.5 million to $3.5 million.

Interest expense in the first quarter increased to 14.2 million from 10.3 million in the same period last year.

In March, the Company redeemed 71.9 million of its outstanding 8.25% debentures due March 15, 2025 at a redemption price of 103.76% of the principle amount.

The redemption premium and the unadvertised issuance costs increased interest expense in the first quarter by 4.8 million before tax, or $0.02 per share.

This increase was partially offset by higher capitalized interest related to the Company's new headquarters.

Going forward, the increased interest expense resulting from a higher level of debt associated with the About.com purchase will be partially offset by the lower cost debt issued to replace the debentures due or called in March.

Total debt outstanding at the end of the quarter was 1.3 billion versus 1.1 billion at the end of 2004, due primarily to the About.com acquisition, but offset in part by the sale of our current headquarters.

Our tax rate was 42.9% in the first quarter compared with 39.5% in the first quarter last year.

It was higher than it would otherwise have been because of the gain on the sale of the Company's current headquarters.

Exclude thing gain, the tax rate would have been 39.7% in the first quarter.

Capital spending in the quarter totalled 34.1 million, including 14 million for our new headquarters building.

In the first quarter, the Company repurchased approximately 600,000 shares at a cost of $21.7 million.

Approximately 180.2 million remained at the end of the first quarter from our current share repurchase authorization.

At the end of the quarter, we had 145.6 million shares outstanding.

Since 1997, we've spent nearly 3 billion to repurchase more than 77 million shares.

As Janet mentioned, the advertising environment remains uneven across our properties, requiring a focused and a disciplined effort to contain and reduce costs throughout the Company.

Late last year we began an in-depth reexamination of all our processes and operations and their associated expenses.

This process is accelerating as we reexamine how we work and implement more efficient ways of accomplishing our task.

We expect to streamline many of our business processes, resulting in a far more efficient organization; and we believe it will result in significant savings, although at this point, it's too early to quantify.

Our new optimization council, the cross functional teams that are focusing on finding ways to reduce costs in specific business areas, are also hard at work.

The new teams are concentrating on circulation acquisition, consulting contracts and webification [ph], which is using the web to reduce the cost of transactions and printing and disseminating information.

This effort is benefiting from our overall work on process mapping [ph].

As a reminder, our previous optimization council generated $25 million in permanent annual savings.

And while we've enjoyed notable success from our investment in technology, there are still opportunities for further expense reduction in such areas as working capital management, purchasing and electronic transitions -- transactions, excuse me.

We continue to shift more operations to our shared service center to increase efficiency and drive down expenses.

With regard to guidance, we plan to update you on how our second quarter is looking when we meet with all of you in June at the mid-year media review.

And now, we'd be happy to answer any questions you might have.

Thank you, sir. [OPERATOR INSTRUCTIONS].

Lauren Fine, Merrill Lynch.

Great, thank you.

Just a couple of questions.

I just want to clarify on your comments regarding April trends.

Were you referring specifically to the news media -- the news media group only, and then in any case, why are we not seeing any benefit from Easter if it's only tracking in line with January and February?

And then I have a follow-up question.

Lauren, could you repeat the first part of your question with regard to Easter.

Well, the first part of the question was just clarifying if the 2% kind of growth, I think, that you're seeing in April was news media only; and I'm trying to figure out why there's no benefit from Easter if March was weak.

That was total company, because we're guiding right now on total company revenues.

Okay, but I guess I'm still trying figure out if April only looks like January and February, it feels like it should have been better given how weak March was and you blamed the weakness in March on Easter.

This is Scott.

At The Times media group, we expect April to look a lot like January, February and March, in spite of the Easter switch for a couple reasons.

One, we had some product switches that are effecting April, as Janet noted, and last year, the falloff in Easter was much less than what we saw in March this year.

We're continuing to see unevenness in category performance carrying over into April, and we expect to see a decide upturn in May based on reservations we have in the system.

And then I'm just curious, on some of the new sections or magazines that you add, what kind of analysis do you do to see if you're getting a positive return, both on the advertising side and then as you indicated, with personal style, you hope that it also attracts new readers.

How do you measure that over time?

We are-- this is Janet, Lauren.

We constantly do research in regard to what our readers are thinking about the newspaper and what they're enjoying in the newspaper.

Loyalty, of course, is always measured.

And section profitability is also measured periodically.

One of the reasons why we did launch the weekday style was primarily because of the success that we've had with weekend style, Sunday style.

There has been an overwhelming demand by many of our advertisers for a weekday style component, and we certainly answered that call today with the section that appeared in the paper.

We will constantly evaluate all of the sections that appear in all of our newspapers, not just The Times, to test reader involvement, and certainly to judge what advertisers are looking for in regard to those soft news sections.

Great.

And then just the last question.

Could you discuss whether the ad rate realization at The Times is improving and how it compares to the actual rate increases you put in place this year?

It's compared very favorably to the rate increases we've put in place this year.

We're doing quite well on the rate yield.

Great.

Thank you.

Fredrick Searby, J.P. Morgan.

Thanks.

Two quick questions.

One, Dow Jones has indicated there is some tech pickup.

It's been a -- some rough sledding in that category.

Can you just drill down and do you -- are you getting any indications that, from some of the larger players, if you could give us that there's a pickup.

And then secondly, I'm -- understand that you've been experimenting with the tabloid format and some different formats in Europe.

And if you could give us any preliminary findings or thoughts.

Thank you.

This is Scott again.

We were down slightly in the first quarter on technology.

April probably will be similar to the first quarter as well, but beginning in May, we're expecting an upturn in technology that we expect will carry over into the second half of the year.

We're seeing commitments coming from the big advertisers, HP, Dell, Microsoft, to name just a few and as a combination of B to B and B to C.

We are not experimenting, Fred, with tabloid opportunities in Europe.

Our commitment to the IHT in broad sheet format remains, and we are pleased with what we're seeing in regard to the cooperation between The Times and the IHT in regard to group packaging.

That continues to be a growing area of ad growth for the IHT.

Okay.

Thank you.

Steven Barlow, Prudential Securities.

Thank you.

I wonder if you can talk about the demographics of Metro versus the demographics of The Globe in terms of age and income.

And the second question would be any idea at this point on your FAS-FAX for The Times and The Globes -- Globe, for March 31st period ending.

Thanks.

In regard to Metro, Steve, it is a younger audience, as you would expect, and the professional managerial is similar, a bit lower than The Globe and the household income is a bit lower than The Globe.

But as we've said, the reason for the purchase is primarily to give us an opportunity to provide our advertisers with a very rich, full market buy.

We are extremely pleased with what we've seen, even in the last few weeks, which, of course, the acquisition has just gone through and the kind of response that we have gotten from advertisers, the cobranded classified pages have gone over very, very well and have exceeded our expectations, just in the last two weeks.

The general advertising and display has started to take off nicely with Cingular and some of our retailers also taking advantage of that group buy.

We also introduced a new -- The News Service, The Boston Globe News Service into Metro on March 14th, so some stories from The Globe are appearing in Metro.

We are also right now exploring ways to decrease the cost of printing Metro by usage of our Millbury plant in Worcester, and we are also doing a lot of cross-promotion with Boston.com and with The Boston Globe and Metro, which is working very nicely for us.

At the New York Times, we're just in the midst of filing or FAS-FAX today or tomorrow, but I can give you the range we're filing numbers for.

That would be to show growth on both daily and Sunday.

Daily in the upper 2,000 range, and in Sunday in the mid 3,000 range -- 3,000 copies.

That would represent the 12th out of the last 13 publisher's statements positive for daily, and 11 out of the last 13 positive for Sunday.

There's growth reflected in these filings in our national markets, offset by declines in the NDM [ph].

At The Boston Globe, right now, the range is approximately around 17 -- down 17,000 on daily, and down about 15,000 on Sunday.

Thanks very much.

You're welcome.

Douglas Arthur, Morgan Stanley.

Couple questions.

Janet, can you talk about, or Scott, real estate and entertainment ad trends at The Times and then secondly, can you detail classified ad trends at The Globe?

Thanks.

I'll start with The Times.

The real estate agate is -- continues to trend down and we don't see when that's going to change in a dramatic fashion.

Real estate display has been growing nicely, helped very much by the redesign we introduced in June of last year, and we expect that to grow in double-digit fashion for the remainder of this year.

Entertainment grew slightly in the first quarter.

April is going to be a difficult month for us in that category.

There are eight fewer film releases this April -- this April compared to last year.

That will come back slightly in May and June and we expect to finish the quarter flat.

There are quite a number of additional releases scheduled for the second half of the year.

We're cautious in forecasting around that.

We're forecasting to be up slightly in the entertainment category for the year overall.

We're not seeing the overall softness that we experienced last year as of now.

As far as the classified trends at The Globe, help wanted was up 2.6% for the quarter.

Real estate was up 2.1% for the quarter, and automotive was down 18.7%.

We do expect help wanted to show growth in 2005 during the course of the year at The Globe.

We are seeing continued growth on the print side, but we're seeing robust growth in regard to the online side in the help wanted category with Boston works.

In real estate, the outlook for the Boston area continues to be solid, particularly in the homes for sale area.

Apartment rentals is weaker and there is migration more online, but homes for sale is very robust for The Globe and as noted, they did quite well in regard to their performance in the first quarter.

And as far as automotive is concerned, we are looking at some slight losses in the automotive category.

There is local automotive consolidation in that area.

There is also a concern, I think, in regard to dealer margins in the Boston area.

We're seeing a little bit of that in the New York area as well, so consequently, budgets are being challenged, and in fact decreased.

Martin, you may want to just jump in regard to some of the online information.

Sure.

Real estate at The Times website remains very robust.

First quarter grew 32%, and the -- the digital versus upsell, digital only revenue versus upsell revenue also continued to improve.

The digital only revenue is now 61%, as opposed to 39% in upsell.

So in real estate, The Times website continues to do extremely well.

Thanks.

Alexia Quadrani, Bear Stearns.

Good morning.

Just a couple questions on circulation.

Looks like the circulation revenues in New England have deteriorated a bit in this quarter.

Is that -- should we expect sort of a down mid-single digit run rate for the rest of the year, do you think, or is there something abnormal in this quarter that may have made it worse than in the previous quarters?

We are expecting declines during the course of the year, Alexia.

We have seen some changes there in regard to, primarily, where our footprint is right now.

As I said, we are making sure that we are extending the footprint throughout the New England area, more in Rhode Island and Vermont and New Hampshire.

We have been plagued in the first quarter by weather problems there in regard to the snowstorms, of course, that they experienced.

We are deliberately not putting pricing programs in place that we had last year.

We are also making sure that we are migrating away from more of our bulk circulation and into individually paid, and as I said, early reports from the expansion of the geographic footprint are encouraging us, but we are still noting that we will probably be looking at declines in Boston during the course of the year.

And are you seeing that some, maybe, of your larger advertisers are becoming more increasingly focused on the circulation numbers, given, I guess, the industry declines and the headlines we've seen?

I think advertisers are becoming better informed in regard to what circulation -- what the circulation analysis means and certainly at The Times Company, we are -- we take this very serious, as we always have, in regard to explaining the quality of our circulation in the ABC statements.

It's very important for us -- for any newspaper, for that matter, to fully explain what the ABC statements really do mean, but it's also very important for us to convert to a readership model as opposed to pure circulation numbers, which we certainly are in the process of doing.

And just one last question.

On your comments earlier about seeing signs of an uptick in advertising in May, I think you mentioned that was largely driven by technology.

Are there any other drivers behind that beyond the technology sector?

There's actually several categories where we're seeing this.

The luxury goods and the branding categories that run in the T Style magazine continue to be strong.

Department stores will continue to be strong for us.

The whole retail category has been strong for us year to date, will be through the rest of the year, all through the spring and beyond.

Entertainment is going to be stronger for us as well.

Banking is going to be strong for us, May into the rest of the year.

Financial services has been a category that's been down for us for the first quarter, and we're seeing mutual funds committing to campaigns that are probably -- they're going to ramp up at the end of April and carry over into May and June.

That will carry us as well.

So we're seeing strength across a number of national categories lining up for reservations in May and June.

Thank you.

William Drewry, Credit Suisse First Boston.

Thanks a lot.

Two questions.

And the first one just continuing on that last theme.

I guess you've said in the release that 2005 guidance still growth rate expected mid single digits for the total company advertising revenue.

And given that TV will be a tougher comp all year, newspapers, I guess, will carry the bulk of that load and obviously anyway just because of the size.

So I'm just wondering, will Q2 -- you refrain from guidance, but based on just what you just said, will Q2 markedly pick up over the Q1 growth rate or will this really end up being a back-end loaded year?

And do you still feel confident, I guess, for the second half that you would have to do better than mid-single digit growth?

And then just a second specific question was just, Janet, could you talk about help wanted trends in the New York market?

I don't think you mentioned those things.

Thanks.

Okay.

The second quarter is going to continue to be challenged as the first quarter was, but given what I said about May and June, obviously we're expecting the second quarter to turn out better.

The conversations that we're having with our advertisers tell us that they have substantial budgets for the second half of the year.

That they intend to spend, but we've seen in the first half of the year that at the last minute, they've pulled back on those plans, as they've experienced pressures in their own business segments.

Whether you look at airlines or technology or entertainment, there's a last minute decision-making that goes on that raises a caution about the spending plans that they share with us.

Can I -- I just add to that before Scott tells you about help wanted in New York, there are many new revenue initiatives still planned for the second quarter and third and fourth, not just at The Times, but at The Globe and the regional newspapers as well.

Biz Day, for example, is being relaunched.

The new section at The Times, the holiday -- new T Style holiday issue in the fourth quarter of the year, and there will be several others added to The Times as well.

Boston Globe is looking at a culture revamping during the latter part of the year, and at the regionals, there are many weekly newspapers, many more magazines planned for the second quarter and beyond.

So the second, from the second quarter on, there are many new revenue initiatives, more than what indeed we had, of course, in the first quarter of the year.

For recruitment in the New York market, we're expecting agate to continue to trend down.

We're expecting display recruitment to be quite strong for the rest of the year, and we think that we'll see low single-digit growth overall for the category.

Online component continues to be quite strong, consistent with the trends that Martin described in real estate.

For the -- for the quarter, Bill, we were down 3.2% at The New York Times Media Group in help wanted.

That's great.

And could I just ask one more small specific question.

Just on entertainment, will that continue to be, for the full year '05, the biggest single category?

I think you talked about it.

The delta's trending a little stronger as we go forward, but full year growth, mid single digit?

Is that possible?

Or even better?

It's about 16% of our annual revenue.

That's been pretty steady for the last couple years.

Right.

And the growth that we would expect is probably low single digit.

Okay.

Great.

Thanks very much.

Brian Shipman, UBS.

Thanks, good morning.

Just a little bit more color, please, on the FAS-FAX numbers you mentioned for The New York Times newspaper.

Could you give us some color on how tri-state circulation looks, and then national circulation?

Thank you.

The FAS-FAX that we're currently filing will show New York declines in the low 2% range and -- on the daily, and growth in the national in the high 2% range.

The Sunday is similar.

The New York numbers will be down around 5% and the national numbers will be up slightly, over 5%.

Okay.

Thank you.

It's also important to note, Brian, that there are initiatives in place in regard to the NDM that are important to our growth in the NDM, which includes earlier delivery.

There is a pilot program in place in regard to earlier delivery.

There's also a college readership program that has been very successful for us that we're expanding in the NDM as well.

There are additional retail routes that are being added in the NDM and more promotion that I'm sure you've seen in the market already in regard to what we're doing.

And are those initiatives targeting specific issues you've -- that you've seen coming up as circulation churn has continued?

Or are these -- are there other issues to attribute the declines to?

The -- we're experiencing in New York what just about every other major metro newspaper is experiencing in their core market.

The long-term trends in New York that are effecting this, our next generation readership and the changing demographics reflected in immigrant, the recent immigrant waves.

Janet cited our gains in the education category.

We're seeing some significant growth, not only in the NDM, but nationally.

We're making very important strides in our ethnic and immigrant marketing.

We're seeing much better yields on our home delivery marketing.

We're also employing some of the techniques that we've learned in our national market campaigns.

We have a saturated market approach that we've employed in the Silicon Valley and in Detroit, where we coordinate very tactical promotional efforts with consumer marketing efforts, community relations efforts and media relations efforts.

We've seen nice gains in those national markets and we've just instituted it on a test basis on the north shore of Long Island.

We've seen some good early results.

It's too early to judge the overall effect of the test.

But we believe that we're taking the actions that can stem the declines and turn around the circulation in New York.

Okay.

Thank you.

Craig Huber, Lehman Brothers.

Good morning.

Two questions.

First, for your flagship newspaper, can you -- would, if you please, quantify the percent change for your top 5 or 6 national advertising categories here in the first quarter.

You gave some brief remarks up front, but just quantify it, if you would, please.

And then secondly, should we expect at all in the next six to twelve months if you would start charging for access to your flagship website, similar to the Wall Street Journal?

Any changes there, perhaps?

Thanks.

I'll take the website question and then I'll turn it over to Scott.

We have always, from time to time, had full discussions regarding paying for the website in some way, shape or form.

In fact, I think you know that there are portions of the website that already are paid.

We will certainly always have these conversations, but we have no plans at the present time.

On the national categories, I've already said that entertainment was up low single digits.

Transportation travel was down in the mid single digits.

Telecommunications was down about 15%, that reflects the exit from the market of AT&T Wireless.

We're seeing nice growth from the telecom entities that are in the marketplace.

They're growing at a very, very healthy rate, but not enough to offset the AT&T Wireless.

National automotive was up low single digits.

We're expecting better growth in the remainder of the year from national automotive.

Live entertainment was flat; and tech, as I said, was down in the low double digits and we're expecting that to come back in the rest of the year.

Lastly, if you would, just maybe give us what department stores did.

Thank you very much.

Department stores was up in the high teens, percentage wise, as part of an overall retail growth that we saw 8% range.

I think Janet cited --

Thank you.

-- the department stores that were doing particularly well.

It's really across the board, Craig.

Bloomingdale's, Saks, Barney's, Macy's, very, very strong growth in that particular area.

In fact, very heavy use of color.

Paul Ginocchio, Deutsche Bank.

Yes, thank you.

Back to Martin's comments earlier.

Were those comments about online only increasing or people advertising only on the web or New York Times?

Was that just for real estate, or was that for the site as a whole?

And just to refresh my memory, you get about 40% of the revenue, if it's online only, relative to a print plus online buy?

Thanks.

Right.

On the latter, it's 61% is online only now, and obviously it's the fastest growing part of the business.

Each category has a different composition.

So the overall is about 60/40.

Just to give you a quick rundown in help wanted, the digital sales portion grew 33%.

The upsell portion grew 23%.

In real estate, the digital sales portion grew 35%.

The upsell portion grew 25%.

In autos, the digital sales portion grew 27%, and the upsell portion fell 39% on a very, very small number.

It's a tiny number.

So overall, total classifieds grew 30%, and as I said, 61% of that is in digital only.

So is that saying just the advertisers are much more comfortable not beg in the paper?

Thanks.

No, it's not saying that at all.

It's saying that the fastest growing part of the digital portfolio is digital only.

The digital piece is growing faster than the upsell agate piece.

That's what it's saying.

Right, and just -- and when you sell digital only versus print plus online, what's the sort of revenue you get relative to print plus online?

Thanks.

Again, it, it's different in each category.

In fact, in help wanted, the online only piece is smaller.

In real estate, it's somewhat larger, and in autos, most of it is digital sales.

Thank you.

Michael Kupinski, AG Edwards.

Thank you very much for taking the question.

How much of your retail is annual business, and have you received commitments for both volume and rate?

And if so, what type of rate increase are you receiving on average for retail at this point?

And then on the news print side, I was just wondering, and many of the peers are saying that newsprint prices may be stable for a while here.

Any thoughts on newsprint prices in the coming quarter?

And can you repeat one more time, should we start seeing the benefit from your newsprint initiatives, including the lighter weight newsprint in the third quarter?

I'll answer the department store question first.

We have multi-year contracts with most of our key department stores, and they call for volume and revenue growth.

We build in incentives.

We call for minimums and build in incentives for them to achieve targets.

And in terms of -- just kind of following up on that, is that what gives you the visibility in the second half?

Are you anticipating that more of that annual business is going to be booked later?

Do you think that there was some holding back of other budgets for the second half?

The retail category as a whole--

I know it was very strong, it was a much stronger than -- than in the quarter, but I was just wondering, are you -- do you have any visibility on your annual business that kind of gives you some comfort in what your guidance is for the year, is what I guess I'm getting at.

The contracts give us a measure of comfort, but the track record of the advertising in the first quarter and the positive feedback we're getting from our advertisers regarding that spend gives us the confidence throughout the rest of the year.

There's always more spending, Mike, also in the second half of the year in regard to retail, primarily because of a stronger fall season and the holiday season.

That's one of the reasons, in fact, why we are making sure that we have that 40% color capacity in place by November 1st to capitalize on it, primarily because the -- particularly the department stores and fashion/luxury are asking for more ROP color in the newspaper.

What percentage of your retail -- of your retail business, then, is annual?

Do you -- do you know that number?

A total -- well, as far as department stores, I would say that it's 90% multi-year.

The rest of it, fashion jewelry, retail, and home furnishing, I would say that that as a percentage is quite a bit less.

I would say that that's maybe 25%.

But we'll have to get -- we'll have to do our homework on that, Mike and get back to you on it.

Okay.

Thank you.

Mike, you asked the question about newsprint.

This is Len.

We're going to begin to see benefits primarily in the third and fourth quarter as we begin to convert.

So the major piece of the benefit will come in '06.

We're going see anywhere -- roughly sort of a round number, around $1 million this is year.

It's hard to talk about the exact number because it really depends on the yield we get from the conversion.

So that's why the range was as wide as it was in my earlier remarks.

As regard -- regarding price increases, what we know is what you all know, which was the next announced price increase is in the fall.

We don't expect anything to happen between now and then.

In fact, the full price increase hasn't been fully rolled in on the last announced increase.

So we expect, basically, a replay this year, looking a lot like last year in '04.

Christa Quarles, Thomas Weisel Partners.

Hi, couple questions.

First, on the entertainment side, I know you mentioned that the releases are down, but I was wondering if you could indicate what your revenue per release is up or down, and if that's been trending down as -- as the-- if the movie doesn't do well, the spending tends to get cut.

And then beyond that when you talk to your advertisers out there, are you getting the sense that print as a percentage of overall budget is sliding, or is their overall budgets decreasing?

And then finally, on share repurchases, they were a little bit down in the quarter, and I was assuming that was because of the spending on About.com.

Can you indicate if those could tick up in subsequent quarters?Thanks.

With regard to the second half of the year entertainment question, percentage of print, we see that holding.

If you saw Ad Age this week, you would have seen a front page story that talks about studio advertising shifting from television elsewhere.

Revenue per release, I don't think I can discuss that, but what I can tell you is that we have aggressive sales campaigns around each release that try to get the studios to spend on a pre-release basis, with building awareness or sneak preview advertising, as well as advertising to support the release after it's been in the marketplace.

They track their releases very carefully with prerelease research, and then obviously the box office immediately after afterward.

And we -- our revenues fluctuate based on that performance.

Chris, hi.

This is Len.

Yes, you're right.

We have slowed our purchases down.

We took on about $430 million in incremental debt with the three acquisitions.

Just as a reminder, we have repurchased fairly aggressively $3 billion worth since 1997, and our intent is to continue to be purchasers in the market, but clearly we're balancing the use of cash on a variety of fronts, including trying to pay down some debt.

Just to your question in regard to the print question as opposed to other media forms.

In the marketplace, we are hearing more softness in regard to radio and television commitments as opposed to print, internet commitments.

One of the reasons why, Christa, we have gone so deliberately towards a multiplatform approach is primarily because we do want to capture the dollars for print and digital and certainly with some of our smaller television holdings, but we are hearing more weakness in regard to radio and television.

The About acquisition, needless to say, is something that enlarges or digital holdings and provides us with an opportunity to capture more of those dollars, particularly in cost-per-click.

Martin, maybe you want to just acquaint us with what we're doing there.

Sure.

Well, as Janet said at the outset, by combining About with NYTimes.com and Boston.com, we offer over a billion quality content page views to the marketplace each month, and we're accessed by 29 million unique U.S. users in March.

So that forms the base of a very big, in fact a top 15 now internet property on the internet.

It allows us to cross fertilize our properties and send traffic from one property to the other.

So as an example, already we are putting our -- the videos that we have created for NYTimes.com into the About channels, and we expect to see the video accesses to NYTimes.com video increased by 30% in the first month.

The Movie Minutes, which some of you may have seen, there are critics that do internet video, we'll do 175,000 views in the first month to the Movie Minutes, just based on the About distribution.

So there's a significant distribution benefit for our content.

The other, of course, as Janet mentioned, is that we have much better audience composition now.

We have more teens than MTV.com, more women than iVillage.

So we can go to the marketplace with a significant buy and be at the table with some of the larger players.

And you'll start to see that translating into bigger buys over time.

Just a quick follow-up on About.

I know you said it would be 36 million for the full year of '04.

Could you tell us what it would have been for the first quarter had you owned it the entire period and what that may have grown year-over-year?

No, it's really tough to do that because it's easier on an annual basis in '04 because we can scrub the numbers.

We can't really scrub the numbers because it's so intertwined with the parent company.

So we're hesitant to release those numbers.

And any sort of outlook just on where it was growing?

Was it in line with the rest of your digital properties, like up 30?

It was certainly in line with the rest of our properties and with the market in general.

We're quite pleased with that.

And because we will be reporting that separately, Christa, you'll be able to track our success.

Perfect.

Thanks.

Edward Atorino, Fulcrum Global Partners.

Please check your mute button.

And hearing no response, we will move on.

Ladies and gentlemen, we have no further questions on our roster at this time.

Therefore, Ms. Mathis, I'll turn the conference back over to you for any closing remarks.

Thank you very much for joining us today.

If you have any further questions, please give me a call this afternoon.

Take care.

Bye, now.

And ladies and gentlemen, that does conclude today's New York Times quarter 1 2005 earnings conference call.

We appreciate your participation and you may disconnect at this time.