New York Times Co (NYT) 2007 Q4 法說會逐字稿

Good day, everyone and welcome to the New York Times fourth quarter 2007 earnings conference call.

Today's call is being recorded.

A question and answer will follow today's presentation.

[OPERATOR INSTRUCTIONS]

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

Please go ahead.

Thank you and 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, Jim Follo our Senior Vice President and Chief Financial Officer, Scott Heekin-Canedy President and General Manager of The New York Times and Martin Nisenoltz, Senior Vice President Digital Operations.

Our discussion today will include forward-looking statements, and our actual results may differ from those predicted.

Some of the factors that may cause them to differ are included in our 2006 10-K.

Our presentation will also include non-GAAP financial measures and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our corporate website, www.nytco.com.

As noted in the release, because of our fiscal calendar, in 2006 we had an additional week in the fourth quarter and the year.

We estimate that the extra week added $50.8 million in revenues, $36.8 million in cost, $14 million in operating profit, and pre-tax income of $14.3 million or $0.6 per share.

All of the comparisons mentioned in our formal comments on today's call exclude the extra week in order to make the numbers more meaningful.

An archive of this call will be available on our website as well as a transcript and a version that's downloadable to an MP3 player.

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

Thank you, Catherine, and good morning, everyone.

Today we announced the results a challenging quarter, one that showed the effects of a slowing economy but also demonstrated our progress in transforming our Company.

Before going into the details of the quarter, I would briefly like to recap 2007 and what we accomplished, particularly in building for our future.

In a difficult year for the media industry, the Company achieved some significant successes.

As many of you know, our strategy has four drivers, introducing new products, both in print and online, building our research and development capability, rebalancing our portfolio of businesses and aggressively managing our costs.

In each of these areas we made substantial progress and as a result ,in 2007, our operating profit from continuing operations before depreciation, amortization and special items increased 3%.

We have noted the special items in our earnings release.

We believe that we are on the right path.

We have powerful and trusted brands whose relevance and high-quality content attract educated, affluent and influential audiences highly valued by advertisers.

This is true in print, and it is true online.

Because of their strength, we were able to extend our brand across new geographic areas, new platforms and into new products that contributed to our revenues and profits in 2007.

We launched new print publications on topics of interest to our readers, and in areas where advertising, even in this difficult market, continued to grow.

We introduced new ad formats both in print and online.

In the digital area we launched new verticals nytimes.com and we expanded others in topics such as technology, travel and entertainment.

We increased our email offerings, launched more than 50 blogs, and offered more than 2,000 videos on nytimes.com.

In early November, we unveiled a redesigned Boston.com, the website of the Boston Globe.

The redesign provides easier navigation, new sections with things to do in the New England area, and simple tools for users to find, read and submit content.

The About Group, which includes About, ConsumerSearch, UCompareHealthCare, and Calorie-Count had a very successful year.

About Group.com saw healthy traffic growth with unique visitors of 35.9 million, up 12% from 2006 and average monthly page views of 304.7 million, an increase of 16%.

It's revenues grew 35% and for the first time surpassed the $100 million mark.

Since we acquired About.com in 2005 we've invested in organically growing its business and we have also acquired companies that strengthened its position in key verticals especially health.

For a Company as a whole, our digital revenues grew 22%.

They represented approximately 10% of the Company's total revenues in 2007, up from about 8% in the prior year.

Our Research and Development Group, whose work underpins the strategy and helps us into new relianceses with Monster and Yahoo and an expanded relationship with Google.

The Research and Development Group worked with all of our operating units to develop new mobile applications.

At our mobile site for nytimes.com traffic grow 600%, in 2007 to almost 10 million monthly page views and it now has a strong roster of Blue Chip advertisers.

Last year we rebalanced our portfolio of business.

We sold assets generating gross proceeds of $615 million, including the sale of our broadcast media group and our radio station WQEW, AM.

The proceeds were used to pay down debt.

We continue to regularly review our portfolio of businesses to determine if they are meeting their targets for financial performance, growth and return on investment and remain relevant to our strategy.

Another area of strategic focus is to increase our operational efficiency and to reduce cost.

Last year, our operating cost, excluding depreciation, amortization and the additional week decreased 2%.

We are determined to to reduce cost from our year end 2007 cost base by a total of $230 million this year and next, excluding the effects of inflation and certain one-time costs.

We plan to remain very focused on costs, particularly in this softer economy.

Those are the highlights of the year.

Let me turn now to the details of the quarter.

Today we reported fourth quarter EPS from continuing operations of $0.37 compared with the loss per share of $4.59 in the fourth quarter of 2006.

In the 2006 fourth quarter, we had two items that make quarterly comparisons difficult.

One was a non cash charge of $5.11 per share for the write-down of intangible assets at New England Media Group.

Second was, as Catherine mentioned, an additional week due to our fiscal calendar.

In the fourth quarter of 2007, we had a non cash charge of $0.3 per share for the write-down of the company's 49% investment in Metro Boston, which publishes a free daily newspaper in the greater Boston area and a non cash charge of $0.4 per share for the write-down of intangible assets at the Worcester Telegram & Gazette, whose results are included in the News Medial Group.

Excluding these special items, fourth quarter EPS from continuing operations in 2007 would have been $0.44 compared with $0.46 in the fourth quarter of 2006.

In the fourth quarter, operating profit, before depreciation, amortization and the items I just mentioned, decreased 6% to $159.2 million compared with $169.8 million.

Let me turn now to revenues.

Ad revenues at the New Media Group decreased 5.6%.

Real estate advertising, our largest classified category, continued to be effected by the nationwide slowdown in the housing market.

At the Times Media Group ad revenues decreased about 3% in the quarter.

While we saw an irrelevant in ad revenues in October and November due to strong national advertising, December was noticeably weaker, down 13%.

We believe part of this was due to an overall softening of the economy.

Part was due to fewer days in which to buy advertising before Christmas and fiscal December, and part was due to the shift of our T holiday publication into November in 2007 from December in 2006.

National print categories that performed well in the included financial services, which benefited from strong branding and retirement campaigns as well as ads seeking to restore consumer confidence, hurt by the sub-prime mortgage crisis.

Entertainment, which had a very strong October, particularly with color ads and fashion which had a good quarter due to continued spending by luxury advertisers and a strong performance by our T holiday magazine.

In total, luxury print advertising, which makes up about 10 to 11% of the times media group revenues was up mid to high single digits.

The main national print categories where we saw declines were technology products, where several large advertisers reduced spending and more dollars shifted online; healthcare, where a host of pharmaceutical companies did not repeat campaigns that ran in the prior year; and transportation, as airline print expenditures were down from their very strong showing in the fourth quarter of 2006 when they introduced new campaigns.

Classified advertising decreased in all three major categories.

Real estate, recruitment and automotive.

Revenues were down due to decreasing advertising from mass market and department stores.

New products benefited us in the quarter.

One area where we had notable success was in the introduction of international T magazine which focused on fashion, beauty, travel, and home design.

In early December, we launched T online, an exciting new web offering that was acclaimed by readers and luxury advertisers it targets.

We plan to continue to develop the T franchise.

The New England Media Group continues to grapple with the soft advertising climate, fourth quarter advertising revenues decreased 10% due to weakness, particularly in the classified and retail categories.

Ad revenues in the national category declined in the fourth quarter as a result of the technology, pharmaceutical and media category.

Retail advertising declined in the quarter due to weakness in department stores, food and drug stores; and consumer office supply outlets.

Overall, classified advertising at the New England Media Group was soft in all three major areas,real estate, recruitment and automotive.

As in other U.S.

cities, real estate advertising declined in Boston due to the soft housing market.

New products targeting luxury categories helped offset some of the ad revenue declines in the quarter.

Fashion Boston and a new publication called Lola, which covers local restaurants and shopping, added to revenues.

Both of these publications have attracted new national and local advertisers.

At the Regional Media Group advertising revenues decreased 11% mainly due to lower levels of classified advertising.

Real estate, recruitment and automotive advertising declined significantly, much of this was related to the down turn in the Florida and California housing markets, which we began to see in the fourth quarter of 2006 and has effected not only real estate but recruitment and retail advertising, including home improvement, home furnishings and department store categories.

About two thirds of the ad revenues of the Regional Media Group came from newspapers in Florida and California.

In the fourth quarter of 2006, real estate advertising revenues rose 3% at our Regional Media Group and this past quarter fell 25%.

Similarly recruitment ad revenues declined 31% of the group.

Total circulation revenues were up 3% in the quarter, mainly because the New York Times increased its prices in the fourth quarter of 2006 and the third quarter of 2007.

Overall, the Times and our other newspapers are executing a circulation strategy that rebalances the copy mix away from other less profitable other paid circulations to highly profitable individually paid.

As we execute this shift we do expect to see copy declines but by pursuing this strategy we have realized and will continue to realize significant benefit to our expense performance.

Last year we added a new national print site for the Times in Salt Lake City and we are seeing increased copy sales in that market.

This month we opened another site in Dallas and a third site is scheduled to open in the first half of this year.

We expect each of these sites will reduce distribution and other costs as well as increase national circulation.

Other revenues at the news media group rose 5% similarly as the result of rental income from space we leased out in our new headquarters and additional commercial printing revenues.

In the fourth quarters, the New England media group began its multi-year contract with GateHouse Media to print two of its daily papers in the Boston market.

The group already prints several newspapers, including Metro Boston and The New York Daily News.

Our About Group had another strong quarter.

Total revenues grew 35% to $30.7 million because of higher advertising rates and increased volumes in both display and cost per click advertising and the acquisition of Consumersearch.com.

Excluding acquisitions that we acquired since the fourth quarter of 2006, revenues grew approximately 23%.

Excluding depreciation and amortization operating profit for the About Group grew 25% in the quarter to $15.4 million from $12.4 million.

The ongoing development of content verticals across all of our websites has helped the Times Company become the tenth most visited parent company on the web in the United States with 48.7 million unique visitors in December, up approximately 10% from December of 2006.

Our reach represents nearly 30% of the online audience in the United States.

Last month, Nielsen online again ranked nytimes.com the number one newspaper web site, a position it has long held At 17.2 million unique visitors.

nytimes.com is nearly twice the size of the next newspaper website.

Our digital businesses grew 18% in the quarter, excluding the additional week and generated $95.2 million or 11% of the company's revenues.

Revenue growth for our online properties has been higher than our peers.

This is mainly because of the high quality content of nytimes .com attracting a diverse base of national advertisers and the About Group generates most of its revenues from fast growing display and cost per click advertising.

This gives us a more diversified revenue base then many of our newspaper peers who are heavily reliant on up selling classified print advertising to the web.

Approximately 49% of our digital revenues comes from display advertising, 21% from classified, 16% from search, and 14% from other sources such as online archives.

Looking at 2008, we can see continued challenges for print advertising and a faltering economy.

To date in January, the percentage decline in advertising revenue is trending similar to that of December.

Our strategy has been to carefully focus on preserving and enhancing the value of our core newspaper brands at the same time that we position our company for a strong and vibrant future and in an increasing digital world.

While results will vary from quarter to quarter, we believe that over the long-term the strategy we are executing and our approach, careful and deliberate, respecting the essence of our brands and the value we place on quality journalism, will increase shareholder value.

Now, let me turn the call over to Jim.

Thank you, Janet.

As Janet mentioned, we continue to tightly manage expenses in the fourth quarter.

Operating costs, excluding depreciation and amortization declined .6% primarily because of newspaper and compensation expense.

News print expense decreased about 25%, approximately 14% of the decline resulting from lower prices and about 11% resulting from decreased consumption.

The Times reduced the width of its printed pages in August and the Globe did so in the fourth quarter., per the discretion our news print consumption.

With regard to compensation expense our head count was 3.8% lower.

The decline in overall costs was partially offset by higher staff reduction costs and professional fees associated with Company's new headquarters and expense reduction initiatives.

Staff reduction costs in the fourth quarter was significantly higher than those in the same period a year earlier.

They amounted to $17.8 million compared to $8.5 million in the same period a year ago, a swing of $0.4 per share.

Depreciation and amortization in the quarter totaled $46.7 million versus $54.6 million in the same period a year earlier.

The decrease was mainly attributable to lower accelerated depreciation expense for the assets at Edison, New Jersey printing plant, which we are in the process of closing.

The operations at Edison will be consolidated with the operations of our newest printing plant in the New York area.

In the first quarter of 2008 we expect about $5 million in accelerated depreciation with the plant consolidation project.

Because of the Edison plant that's expected to close in March, we anticipate that accelerated depreciation will stop after the first quarter.

Moving to cap-ex, spending in the fourth quarter totaled $84 million including $16 million for our new headquarters, and about $32 million for the plant consolidation project.

For the year, capital spending totaled $375 million, including $166 million for our new headquarters and $97 million related to the plant consolidation project.

In closing, I would like to return to the topic of costs.

As a result of the steps we have taken over the past few years, we've significantly reduced cost and realized productivity savings.

Last year we exceeded our goal of reducing costs of $65 to $75, excluding inflation buyouts.

Janet mentioned, we expect to decrease our cost base by approximately $230 million in 2008 and 2009, excluding the effects of inflation and one-time charges, as compared to our year-end 2007 cost base.

Approximately $130 million of that amount is expected to be achieved this year.

Some of the anticipated savings will come from the initiatives we've have mentioned, such as the consolidation of printing plants, paged with reductions and the shift away from less profitable circulation.

But the majority of the savings are expected to come from initiatives that will include standardizing, streamlining and consolidating processes and shifting staff to lower cost locations.

Areas that present the greatest opportunity are general administrative, production, technology, distribution, and circulation sales and we continue to look for cost reduction efficiency opportunities throughout the organization.

Our cost initiatives will be carefully managed so that they do not adversely affect the quality of our journalism, the smooth functioning of our operations and our ability to achieve our long-term goals.

We're carefully executing and monitoring these cost initiatives and are on track to achieve these savings while continuing to explore opportunities to make our operations more cost effective.

In closing, recognizing that the media marketplace is in the midst of a significant transition and the economy is showing signs of weakening, we believe it is more important then ever to continue to exercise strong financial discipline as we execute our business strategy and allocate capital.

And with that we would be happy to open it up to questions.

Thank you.

[OPERATOR INSTRUCTIONS] We'll take our first question from Alexia Quadrani with Bear Stearns.

Thank you.

A couple of questions.

First just following up on, Jim, on your comments about $130 million dollars in savings in 2008.

Could you give us a bit more color as to when some of these savings will materialize as the year progresses and then I have a follow up.

We do have detail plans for each of the items that make up that $130 million.

Obviously, as we close the Edison plant after the first quarter, obviously things will begin to accelerate.

But we would expect to see cost reduction initiatives throughout the year, but certainly taking a step up once we close the plant.

In terms, I think you mentioned that the January trends are very similar to December, Company wide in terms of advertising revenue, could you comment specifically on how national is trending in January, what you've seen so far?

At the New York Times it's trending down, but we're seeing a slow start to the year.

January typically is a period when our advertisers are finalizing their plans.

We expect national to perform much in the same way as it did last year.

You may wall there are categories that are extremely challenged in the national set.

Tech Telecom will continue to be challenged this year.

We expect the luxury segment to perform well this year.

May be not quite as strong as last year, in light of the economy, but nevertheless up in the mid to single digit range.

And entertainment should do modestly well this year as well.

What are your anticipations for the financial services category and then specifically on this category; could you give us a sense as to how much national and financial services and how broad based your customer base is there.

Financial service his a very good year and a extremely strong fourth quarter.

And it's off to a remarkably strong start in January, but given the uncertainty in that whole segment, we're not really sure what to look forward to in the remainder of the year.

Financial services category is 7% to 8% of our total revenue base.

Okay.

Thank you very much.

We'll take our next question from John Janedis with Wachovia.

Hi, good morning, thank you.

Scott, as a follow up, what are you hearing from larger advertisers who typically give you that sense of the annual spending plan?

Are they telling you they budgeted for recession here or just a slowdown?

It's hard to make a sweeping generalization but I'll do it with the caveat that we've been making for the last few years that this media environment is extremely volatile.

Visibility isn't great and that's because advertisers is their spending plans they react very quickly to changes in their strategy or changes in the environment and marketplace.

After a period of uncertainty at the very end of last year and then turning the corner into this year, we're getting better line of sight into their spending plans for the year.

They've seemed to incorporated economic uncertainty into their spending plans, and with that in mind, the categories that were generally good for us last year., we expect to be good for us this year in low growth to modest growth and the categories that were a challenge last year we're expecting to be continued to be challenging.

All those adjusted a little bit for economic uncertainty.

I don't believe anybody has factored in a recession into their spending plans.

Okay.

Thanks.

Just a quick follow up.

Where are you on the shift away from third party.

Does that get you some sort steady state sometime this year or next year or how do you think about that?

Circulation.

I'm sorry, circulation.

We're continuing to scale back on that.

We continue to retain that are good revenue programs for us and effective for our advertisers, but we continue to implement, as Janet has already said, a circulation strategy that will allow for some modest declines as we restructure our circulation base.

I would point out, in addition to growing revenue last year, circulation revenue -- we continue to on grow our core circulation base.

We have of a total of around 1.1 million home delivery subscribers, we have over 800,000 now that have a tenure of 2,000 or more and this is a number that was growing steadily over the last number of years and that continues to grow the core strength of our circulation.

Thank you very much.

And we'll go next to Craig Huber with Lehman Brothers.

Yes, good morning, just a follow up on your comment there that you said none of your advertisers have factored in a recession, into their advertising plans.

Just in light of the December and I guess January numbers roughly down 13%, 14%, are you signaling then if you actually do in recession maybe we're in one right now but you expect that to get potentially worse going forward?

.

I will reiterate that I made a sweeping generalization.

Classified categories as you might expect are much more challenged by this environment than retail and national.

So obviously we expect -- that's factored into our outlook for real estate,help wanted, and to a certain extent automotive.

But again national down 8% in the month of December.

Retail down 14 to 15 , and obviously they're taking a hit here as well.

I

I would caution about the December numbers because of the caveats that we've already described and that were in our press release.

You're saying in January, similar trends, right?

In total.

In total.

But my point earlier was that there was hesitance in the first couple of weeks as advertisers were taking the measure of the economic climate and finalizing their spending plans for the year.

We've seen-- our communication is that we're starting to understand their spending plans now and we don't believe that hesitation we saw the first couple of weeks built into January is going to continue.

So your forward bookings perhaps you do have some visibility for February and March, do you perhaps feel a bit better there?

Is that what you're saying?

A bit better, but remind you that we have different comps in January, February and March.

January of last year was one of the stronger months on a comp basis.

I think we are comping against a much stronger comp than we will see for the remainder of the year.

And then lastly if I could ask a procedural basis, given that your company has been news a lot, the last week, prior to today.

On your Board of Directors, your nominating and governance committee, it's my understanding that they can accept or reject any people that are put forth, nominated to be-- the four board of directors, of the 13.

Is that true they actually end up reject, not allowing somebody or a series of people to be put on a proxy to be voted on by outside shareholders.

There's no way those folks could be voted in.

Craig, as we indicated in our press release, our Board's nominating and governance committee will review the nominations and make a recommendation to our shareholders in due course.

Beyond that, we really don't have nothing add.

We regularly meet with our shareholders and we're going to continue to do so to keep them abreast of what indeed is happening at the Company.

We've always done that and we certainly will continue to do that.

Okay.

Thank you.

And we'll go next to Karl Choi with Merrill Lynch.

Hi.

I have a few questions here.

The first one is I wonder if you can give me the percent of change in non newsprint cash costs in the quarter?

Non news print cash cost in the quarter company wide were up 2.6%.

A lot of that increase was driven by a much higher level of buyouts in the quarter as we've stated previously.

If you were to exclude buyouts in the quarter, our cash costs would have been up about 1.1%.

That's not the trend that you've seen throughout the year and that's really the result of a few difficult comparisons the quarter, which we don't expect to be recurring going forward.

we do have some duplicate cost as we transition some of our work overseas which is a critical part of our cost system in both '07,'08.

We mentioned that we got some professional fees in the quarter, which are non-recurring that are for special projects that are occurring both in the fourth quarter and some carryover in the first quarter as well.

And there were some year-end compensation issues, which both adjustments in the current year and prior year going opposite directions which created a fairly large spread on the compensation line, which is non-recurring as well.

But overall when you cut through it all I think we still continue to do a good job of manage very light tightly on that line.

Back to the revenue line for a second in the New York Times in the national category.

Sounds like what you're seeing -- I am trying to figure out did any category actually weaken in the months of December and January because the weak categories that you mentioned seem to be the ones that were week all year long.

Are they that much weaker or did the categories change in performance?

That's such a hard question to answer, especially in the national categories.

They spend differently in the holiday season then retail categories and I would recommend that you look at the performance in aggregate for both December and January and not at the specific categories because of the idosyncrasies of their spending seasons.

Next question is on the headquarters building can you update on what is your latest thinking in terms of potentially returning some cash to shareholders?

Our thinking and our statement will be consistent with what we'll said repeatedly, which is we evaluate this thing over this regularly to the extent we have a clear use of cash, we will do a transaction and continue to evaluate both market conditions, use of cash and many other factors in evaluating that but right now we have nothing really to add to that.

Last question.

Any update on whether the $60 per ton increase in newsprint prices is going through the first quarter?

We certainly are seeing a tightening of the market as everybody else is and we certainly expect upward pressure on prices.

To what extend -- that's about as much as we can say there.

Certainly a tightening market and it's certainly a different market than we saw in all of 2007.

Great.

Thank you.

We will take our next question from Fred Searby with J.P.

Morgan.

Yes, a couple questions.

One is--you may or may not be willing to answer this, but in looking at divestures potentially, and pruning the portfolio, what would you reconsider, particularly the Boston Globe, noticeably and secondly can you comment on the monster deal?

I know you're in a extremely difficult and facing headwinds that side but your thoughts how that's progressing or maybe helping you think about your business model.

Thanks.

As I think we have said before we don't comment on acquisitions and divestures, but we constantly evaluate our portfolio, not only for strategic fit but certainly for financial performance, and we will continue to do that.

I think that's certainly evident by our actions last year in regard to our Broadcast Group, our sale of our portion of Discovery Times and certainly the sale of WQEW.

I think what we are doing is focusing on continuous improvement both on the cost line at The Boston Globe and The Worcester Telegram & Gazette and looking at new product development, both online and in print that will assist them in growing their business going forward.

In regard to the Monster partnership, I'm going to have Martin give you an overview in regard to that.

Just to give you a quick overview.

As you may know each property has launched a co-branded website featuring Monsters job search, and match technology as well as related tools and content to help job seekers advance their careers.

What that brings us is really three things, a much greater level of scale of marketing power and technology.

On the last piece, on the tech piece, the idea obviously is to arm our sales forces across the Company with capabilities and products more importantly that they never had before and that ramped up than learning curve and sales capability ramped up through the latter half of 2007 and into 2008.

In addition there are transitional impacts with Monster because of the agreement we have with them with respect to to client conflicts.

So we cycle through those transitional impacts, particularly Boston as we get out to the second quarter.

As we get out to the implementation date last year.

So what you'll begin to see as we go forward for the year is we cycle through those transitional impacts, the sales forces are up the learning curve now on all of the new products that they're selling and that will be a governed, to some extent as you suggested, by whatever recession forces are hitting the job market.

So I can't sit here and tell you exactly what percentage growth we'll be seeing on the digital side as a result of the Monster deal, but I can tell you that it's a good thing we did it because if we hadn't, the recession impacts would be much greater.

It's also important to note that Yahoo partnership, of course, will be in place as well with many of our newspapers.

Of course the regionals and The Worcester Telegram & Gazette have joined the consortium and many will be coming online with that partnership in 2008.

Quick follow up question conceptually; as the economy continues to deteriorate and weaken, x out the cyclical classified, but on the display side or even national advertising, or the do you think print will continue to suffer disproportionately, that buyers will pull money out of print over the faster growing in theory, higher ROI, kind of interactive and this younger skewing TV, et cetera?

The economic climate will probably take a couple points off of what we would have otherwise seen in print this year and online will be effected much less by that climate, but I think our advertisers are still trying to determine exactly how to shift their dollars across the platforms in the environment.

I would also say that with the introduction of new products both on print and online we're going after categories that are remaining strong and we have every intention of that being the case going forward.

And many of our advertisers are really buying both print and online and we are creatively pulling packages together for them that really benefit both the print and online activities and certainly the way in which we are selling has become much more integrated, but I think that Scott's comments are appropriate that print may be evented a bit more than certainly the fast growing online but we will be doing everything to make sure we're enhance both of these platforms..

And just as a reminder, you mentioned cost-per-click, we have a significant cost-per-click business at about.com and that's driven by our Google Ad Sense relationship which we re-upped in 2007.

Great.

Thank you.

And we'll go next to Paul Ginocchio with Deutsche Bank.

Good morning, this is Dave Clark for Paul.

A couple of quick questions, first, could you talk a bit about the average print ad rate that you have implemented for 2008 for your major papers, and second, we haven't heard about the IHT recently, if you could you just give us an update on the trends there.

Thank you.

The ad rates are in the low single digit as far as the increases are concerned, the color advertising is -- about mid single digits and in regard to the IHT, we had a very fine year at the IHT in 2007, not only from the standpoint of strong ad revenue growth but introduction of new products.

As I noted in my remarks, Dave, we introduced the international T in that market in December and did very, very well with very strong luxury advertisers support and it was very well received.

We are going to be doing that eight times, in fact, in 2008, and the IHT has a very strong following in regard to the luxury goods segment and also financial services.

We have done a lot in regard, not only to improving the product, the daily product at the IHT in recent years but we've also done a lot in regard to cutting the cost base at the IHT, which has certainly added to the portfolio in regard to the stronger performance of the IHT overall.

There is a lot of work being done in regard to integration with the New York Times both on the news side and on the business side, from a selling perspective and content creation.

T magazine, in fact, is a perfect exam of that because some of the content in international T is from our T magazines here in the United States.

From a standpoint going forward, there also is a lot of strong integration between IHT.com and nytimes.com as well.

So in both areas, both print and online there is more synergy that we're seeing between our global foot print and what we have here in the states.

Great.

Thank you.

And we'll take our next question from Peter Appert with Goldman Sachs.

Thanks.

Janet, is it possible for to tell us if you've had discussions at this point with the investors who are making the proposals with regard to the board additions, and, if so, any specific suggestions they're making to you?

We are in touch with all of our shareholders, Peter.

It is really a practice of the Company to constantly reach out to all of our shareholders and we are in the process of doing that and have done it in fact all year long my it's very important needless to say for any company to have good relationships with shareholders and to listen to their suggestions.

We have every reason to believe that there are a lot of good ideas out thereto that we want to hear about and you will see us continue to do that going forward.

Okay.

Fair enough.

Thank you.

Jim, something more mundane then.

The fourth quarter tax rate was relatively low.

Could you explain what drove that and then the expectation on the tax rate for '08 would be above what you've been doing in recent years.

Any specific reason for that?

Well, the fourth quarter tax rate is a result of Finn 48.

You end up adjusting your tax expense based on statutes expiring and so on, so, unfortunately creates a real lumpiness in tax rates and that's just the way it happens and it's really a quarter to quarter thing.

If statute expires in the quarter you're going to get a large tax rate.

That's largely what drove the fourth quarter.

On a going forward rate Wednesday see our rate being the 40%, 41% range that we think is kind of a normalized rate going forward.

There's lots of things that factor into that and the stock market could actually have an impact on that because there's certain programs they have that create some permanent differences, that in in the past, the past year have actually created favorable impacts on tax rates, and you don't anticipate those going forward, but if those things continue in that same way there could be some upside there, but sometimes works the other way as well.

This would explain why looking back over the last several years it's been more in the 38%, 39% range.

That's correct.

You can't always count on those moving in your favor.

Janet, or Scott, should we anticipate another certain price increase for the New York Times in '08?

I don't think we have a practice of forecasting price increases.

So I think I would say no comment.

Today is the day though that you could start that precedent.

I'll pass on that option.

Thank you.

And we'll take our last question from Scott Schimpf with Lehman Brothers.

Thank you.

A question on credit ratings.

Historically you've targeted a Single-A ratings but that appears doubtful, given industry trends and where you're currently rated.

Now, it's tough, its' rare even for a newspaper company to be investment grade rated.

The question is, as the agency is getting more negative on the sector, will you proactively ake actions to defend your investment grade rating or you are willing to accept a below investment grade rating if that's what it comes to.

Our performance largely dictates the ratings and to the extent we can do everything we can to perform, our performance will reflect that.

Would you take steps to defend your investment grade ratings if the agencies threatened to download you below investment grade?

We might consider that, yes.

Would that involve deleveraging or could you expand on that?

We've deleverages quite a bit and our free cash flow once we get past a high level of cap-ex will go up strategically and that will put us in a much better position.

Our balance sheet right now is pretty conservative and we expect to continue to maintain a conservative balance sheet to allow for the flexibility we need to invest and grow the business.

Okay.

Thank you very much.

And that's all at the same time we have for questions today.

I would like to turn the conference back over to Miss Mathis for any additional or closing remarks.

Thank you so much for joining us.

If you have any other questions, please give me a call.

Bye now.

And ladies and gentlemen, that does conclude today's conference call.

We thank you for your participation.

You may now disconnect.