E W Scripps Co (SSP) 2008 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter earnings report. At this time all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. Instructions will be given at that time. ( Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Mr. Tim King. Please go ahead.

Thank you, Lisa, and good morning, everybody. Thanks for joining us for this call. In just a minute I'll turn the call over to our CEO and CFO for prepared remarks before opening up the lines for your questions, but let me first tell you who is with me on the call today.

Rich Boehne, the President and Chief Executive Officer, will give you a brief overview of the business, followed by Tim Stautberg, the Senior Vice President and Chief Financial Officer, who will discuss financial and operational highlights for the quarter. Joining us for the Q&A portion of the call are Mark Contreras, the Senior Vice President of Newspapers, Brian Lawlor, the Senior Vice President of Television, Doug Lyons, the Vice President and Controller, and Bill Appleton, our General Counsel.

Just a couple of quick housekeeping items. If you can't stick with us for the duration of the call this morning, you can access a streaming audio replay by going to scripps. com and clicking on the Investor Relations link at the top of the page. It will be there later this afternoon and we'll leave it there for a few weeks. You can also use that link to find today's press release and the quarterly financials.

And as always, our discussion this morning may contain certain forward-looking statements and actual results may differ from those predicted. You can check page 3 of the 2007 Form 10-K to read some of the factors that may cause results to differ from what you are about to hear. With that, I'll turn it over to Rich.

Thanks, Tim. Thanks, everybody, for joining us this morning. It became obvious to us late in the fourth quarter that there would be no place to hide from the national economic crisis. As we move through December and into the new year, the pain of the recession began to roll through our TV markets, joining the already weak newspaper markets. There's an old saying, "misery loves company", but there's certainly no joy to be found in this shared experience which is hitting, first, our many good advertisers across the country, and then us as they throttle back their spending plans.

As you'll hear from Brian and Mark in a few minutes, we feel properly equipped for the challenging days ahead, and at the same time disciplined enough to work our long term plan. Where possible, taking advantage of these tough times to increase market share and increase our opportunity to profit when the economy improves. Before Tim discusses fourth quarter results, let me talk for just a moment about what we are working toward, even this these tough economic times. We split Scripps into two companies a few months ago because we believed local media was heading into a period of very disruptive restructuring, resulting in opportunity for some local players. The economic crisis has only accelerated what that evolution started.

Although newspapers and TV stations by the day do more battle on the common ground of the Internet, they still possess some individual opportunities on their primary platforms. At the Scripps newspapers we are moving to stabilize the business model by consolidating as much expense as possible. It's not uniquely local, meaning expense associated with activities that do not directly touch a local reader or a local advertiser.

In this new and highly competitive environment, quality content is our core product, and we believe print can still play an important piece of an overall distribution strategy. There's much to be done before newspapers and print see the advantages of scale, but we are working hard to get there. That doesn't take away from our enthusiasm for digital distribution across the Internet, cell phones, PDAs and all those devices yet to be conceived.

The Internet is a fantastic platform for journalism and public service, and one that will continue to become more profitable day after day. At the TV stations, we are allocating resources to build new audiences and advertising environments on evolving digital platforms. And at the same time we remain focused on the opportunities to increase market share and expand our audience on air. The fact is there are still at least four TV stations in every local market providing good opportunities for the consolidation of expenses without compromising what we offer viewers and advertisers. In fact, the opportunity to improve what we do for customers by bringing more resources to the screen.

I'm sure Brian will talk later about how we are expanding our brands and audiences through internal reinvestment and restructuring. Bottom line, our enthusiasm for local television continues, much to be done but the opportunity is very good.

Before I turn it over to Tim, let me update you on one situation where, unfortunately, we have decided there may not be an attractive future for Scripps. Ten weeks ago we put up for sale one of the best newspapers in the country, the Rocky Mountains News in Denver. Some of the very best journalism in the nation has not been enough to rescue a franchise trapped in an unsustainable business model. Because of the head-to-head newspaper war, the Rocky and the Denver Post subsidized the economic vitality of Colorado for decades with ridiculously low advertising and circulation rates.

The joint operating agreement provided a life line for the Rockies and the Post for many years, but the market spoke recently and loudly and clearly that this arrangement could not last as is, at least not economically. We are proud of the Rocky's journalistic accomplishments, but we simply cannot absorb unending and growing losses. Hence, our decision to exit that market. We haven't given many updates about our progress on the sale because having so many parties involved makes the process complex. But I believe you'll hear news from us on this before the end of the first quarter for sure, and not too far out.

The other difficult decision that is worth mentioning is discussed briefly in today's release. We have done a great deal of belt tightening in the past couple of years, but none has been as broad-based as what we announced to our employees yesterday. The salaries of top managers already were cut at the start of this year, but the new announcement broadens the expense savings by affecting nearly all employees, either through voluntary time off, pay cuts, and we have also suspended the 401(k) match for almost all employees and we drastically pared back the bonus potential.

Finally, we notified employees that we will freeze our pension plan later this year after we have decided on the best way to transition those who are close to retirement. This has been a miserable exercise to undertake, but it's one that has to be done to stay ahead of this business climate and to protect our financial health and, hopefully, give us more time and more breathing room to spend focusing on the top line and growth and expansion the way we have for the past 130 years. Now let me turn it over to Tim to walk you through the numbers.

Thanks, Rich, and good morning, everyone. As we mentioned in the release, we are still in the process of finalizing the allocation of the provision for income taxes for 2008 and 2007 between our continuing and discontinued operations. As you'll remember we separated Scripps Networks Interactive from the E.W. Scripps Company on July 1. The final allocated amounts will be included in the Company's 2008 Form 10-K which we expect to file by March 2.

I won't spend much time going over the numbers you've already seen in the release, but let me walk you through some key figures and provide a little extra color on the quarter. Starting with our Television Division, which was our largest contributor to segment profit, revenue rose slightly year-over-year to more than $93 million. While Political came in at a satisfying $26 million, both Local and National were down by 27%. Those categories are often softer in quarters with large sums of political revenue. But even taking into account the displacement caused by political ads, those numbers are far lower than we would have liked because of the macroeconomic conditions. Automotive was down 44% in the quarter. Retail was down 28%. Food declined 12% year-over-year.

There was some good news, Online was up 17% in the quarter. Our expenses at the stations were up slightly compared to last year, despite an increase in programming costs of 15%. So we did a nice job tightening our belts where we could. Production and distribution costs were actually down slightly as we continue to look for ways to improve the efficiency of our stations, but those gains were offset by a slight increase in employee costs due to rising cost of health care.

At newspapers managed solely by Scripps, all advertising categories declined by double digits. Classified, as you know, is the category most under siege these days, and the 31% year-over-year decline is further evidence. Within classified, automotive was off 38% during the quarter; real estate, a similar decline, and help wanted down 56% from last year. Online advertising fell by $1.2 million or 13%, largely due to the sharp declines in the online ads that are tied to print classified.

Online advertising that is independent of classified upsells continue to grow impressively. In fact, it more than doubled in the fourth quarter, reaching $3.7 million. Now while that's a small base upon which to build, pure play online advertising is growing at a very fast clip and now represents 46% of our online revenues, up from just 15% last year.

This favorable trend is fueled largely by our participation in the Yahoo Consortium. We saw our share of local online ad dollars grow through the Consortium's initial efforts involving Hot Jobs, but the real excitement now revolves around the ad serving network that launched last fall.

With the behavioral targeting features of this network, we can offer advertisers a way to reach highly motivated consumers who have demonstrated a recent interest in specific goods and services and topics. And Yahoo brings us the scale to make this a very compelling proposition for local advertisers. All but four of our newspapers are now selling on this network, and those last four will be up and running by mid-March. The initial success has been undeniable. As each new paper comes online, they hold sales blitzes in their markets and they have sold millions of dollars of incremental revenue. It was $1 million in Ventura during December and $1.7 million in Naples just this past month. To be clear, I'm not suggesting the Consortium is the panacea to the industry's woes, but our early indicators give us plenty of reason for excitement and optimism.

For the quarter, total newspaper revenues declined by 17% compared with the prior year period. And advertising revenue was down 20%. Those are the same percentage declines we reported for the third quarter, so there was no sequential deterioration. How is that for a silver lining?

We reported a decline in newspaper expenses of 2.2%. Without the severance that we paid for the reductions in force we announced in November, that figure would have been down 6.1%. Newsprint prices were up 41% versus the fourth quarter of 2007, but our overall newsprint expense declined slightly due to reduced consumption.

Turning to the consolidated income statements, Scripps reported a loss from continuing operations before taxes and minority interests of $19.4 million, a significant decline from nearly $45 million in income a year ago. Included in that figure are two large non-cash charges. First, we took a $31 million non-cash charge to write down to fair value certain long-lived assets in our television segment. We also wrote down the value of our investment in our Colorado newspaper partnership by $11 million.

Looking ahead, you'll notice that we again declined to provide guidance for the current quarter, a practice that will probably become standard for us, until the economy stabilizes and our results become more predictable. All we can say at this point is that the revenue and expense trends we saw in the fourth quarter are continuing into the new fiscal year, with the diminishing classified revenue at the newspapers and the declining automotive advertising at the TV stations being most pronounced.

Just a few more numbers to review. As of December 31 our bank debt stood at $61 million. Capital expenditures in the fourth quarter were approximately $34 million, and the full year figure was in the neighborhood of $90 million and will drop to about $52 million this year. That's a lower figure than the $60 million we had previously projected due to aggressive pencil sharpening in every area of our capital spending, particularly our efforts to reduce in every way possible the cost of the big ticket item, the new plant in Naples which will come online in the second half of the year. For 2010 and beyond, the maintenance level for capital expenditures should be about $25 million a year.

We talked a little about the pension plan in our November call, and I'd like to fill you in on on its current status. At the end of the year the asset value of all the Company's pension plans was $145 million less than our accumulated benefit obligations under the plans. That's primarily the result of the sharp decline in the equity markets during the second half of last year. As a result, our pension expense will increase to $41 million in 2009 compared with $15 million in expense in 2008. Because we contributed more to our plans than was required in prior years, we are able to use that credit to reduce our cash outlay in 2009. We'll fund about $5 million in contributions this coming year, but that funding requirement will jump to $46 million in 2010. The freezing of our pension plan later this year will help on the liability side of the equation, and a little healthier stock market would help all of us on the asset side.

Before I finish, I would like to remind everyone of the refrain we've repeated countless times over the past year. 2009 will be the most difficult year in the memory of anyone working at the company today. This year represents the perfect storm of financial and operational challenges. Most of the conditions we have known for a long time, such as the increase in capital expenditures in Naples, the absence of political advertising at the TV stations, and the fact that we entered the year with newsprint prices at historic highs. Layer on to all of that brutal economic conditions that have advertisers slicing their marketing budgets and you can see why we're all eager for it to be 2010 where we'll see the return of political advertising and a maintenance capital number closer to $25 million. With that, let's open up the lines for your questions.

Thank you. (Operator Instructions) We'll go to the line of Alexia Quadrani from J.P. Morgan. Please go ahead.

Thank you. A couple of questions. The first, could you let us know what cost you think might be involved in closing the Rocky Mountain News if the sale wasn't achieved?

And second, putting the Denver property aside, if you're just looking across your other portfolio, the newspaper side of your business, are there some properties that are really trending well below average that you have the opportunity to either sell or close or are the rest of the properties pretty much sort of trending in line with the rest of the business?

Good morning, Alexia. This is Rich. On Denver, we are probably not far enough along to give you an exact number of what it would cost to shut down or exit the market. One of the reasons for that is it's not clear to us as we sit here today which way we might go and what our method of exit might be. So it's probably just a little bit premature, but I can tell you it's not a number that would materially change our plans at this point. And then Mark, go ahead.

On the property by property review, Alexia, as you know this is a unique environment in trying to assess valuations for newpapers, and we are working hard to make sure that every newspaper on a stand-alone basis is financially viable. Obviously, the trends that are affecting metro papers are affecting our metro papers, but even our small markets, and I think small markets around the country everywhere, are experiencing classified softness.

So we are very, very focused on making sure that each and every market, as an entity, is financially viable. And that is one of the reasons for the steps that we took on the expense savings because that will give us some added breathing room as we go through '09.

And then staying on newspapers for a second, what is your view on newsprint pricing for '09 and if you can remind us how you LIFO in terms of accounting?

Alexia, it's Tim. I think we're FIFO at this stage.

Our view is that we are operating in an environment in the fourth quarter where -- actually, all of last year where we went up either single or double digits every single quarter and we are now at historically high rates. Our anticipation for '09 is that we see some softening of that, but still on a year-over-year basis we are probably going to be up for the next quarter or two and then see a softening as we go through the year. Is that right? And I think you'll hear a similar refrain across the industry as consumption, because of circulation copies and classified lineage, continues to diminish.

And then just lastly, a quick question on the TV side. Sorry if I missed this. Did you talk about your pacings in TV?

Our pacings for first quarter are probably in line with what we saw in fourth quarter. We haven't seen any material change in the business, taking out the political business.

Thank you.

We'll go to the line of Craig Huber with Barclays Capital. Please go ahead.

Hi. Just a couple of housekeeping questions first. Then I have a follow-up. In your Newspaper Division, adjusting for one-time items, what was the non-newsprint cash cost percent change in the quarter, please?

Hi, Craig, it's Rich. We'll work on that for a second. Do you want to go on to your next question? Mark is working on your numbers.

We know non-newsprint cash X severance is 6.1% and I'll dig up the -- X the severance.

That is non-newsprint.

Non-newsprint cash expenses X severance was down 6.1%.

That's what you need?

Yes, that's what I need.

That's the number.

For newsprint, what was the percent change for price in the quarter year-over-year and then also the consumption, how much was that down?

Price was up just at about 40% and consumption was down roughly 30-some percent year-over-year. That's Q4 '08 versus Q4 '07.

Okay. And then what was your cash level at the end of the quarter? You have a debt number of $61 million. What was the cash number?

Craig, it's Tim, about $5 million in cash.

Okay. And then lastly, just to be totally clear. You have a section about expense control initiatives at the end of the first paragraph, talks about $20 million. Is that a total number you're trying to say or just these other changes the sentence talks about? Seems like a small number.

Yes. We are getting a verification on the cash number. I might have grabbed just cash. We probably have some short-term investment as well on the balance sheet that would increase that number. You are asking about the $20 million --

Yes.

That was tied to the specific initiatives that were mentioned in the release itself that were just acted upon. But in the planning process that we undertook starting in the Fall, there were lots of other initiatives and expense reductions that are contained in the budget plans that we have for this year. So those would probably double that number, if not be much higher. Just depends. We are getting -- going the other way, you've got pension expense going from $15 million to $41 million. That's hurting the profitability of the company in 2009. That's a non-cash charge. I'd mentioned thatour funding of our plans would be $5 million in 2009.

Just for clarity here, what does this $20 million figure refer to? Maybe more importantly, what are you trying to say your incremental cost savings are for 2009 versus 2008? What were your plans there?

We don't. What we are saying is that the initiatives that we announced to our employees yesterday, the fact that senior management and other managers across the company reduce their salaries by 5% to 15%, potential bonuses were cut by up to 75%, broader employee base are seeing 3% to 5% reductions, pension freeze, suspension of the 401(k), all of those items reach $20 million. Now, there are a number of other things that we've done to tighten our belts - not filling open positions and other things like that that give us additional expense reductions.

But doesn't it seem -- do you guys think you feel you have a lot more cost savings? You had roughly $850 million, give or take, the pro forma cost in 2008. $20 million, do you have a lot more you can get to here, given the environment?

We do. We were just calling out specifically a number that ties to those. Now, we are not giving any other guidance on the year other than the capital expenditures and pension contributions. We are not giving specific expense and revenue guidance for the different divisions of the Company, but you can bet in an environment like this that we are scrubbing every line item that we have, and we'll continue to look for expense reductions.

My last question, please, if I could. On this Naples plant, can you update us on how much that is hitting your CapEx line? What was it in 2008 and what should it be in 2009 for Naples?

Craig, it's Rich, let me say something about the Naples plant. If you look at Naples, even in the worst national recession in memory and a recession that hits Florida much harder than almost any other section of the country, we have a business down in Naples that is both profitable and still strong, and one that needed a little bit of capital. And we had no choice starting at about three years ago but to put in a long-term plan that required better production capabilities, including giving us an opportunity to launch new additions and to expand north into the Bonita area and capture the long-term growth in Florida. So Naples is a profitable, good business even in this environment, and we still have long-term faith in Florida as a place to generate value for shareholders.

Craig, the numbers for Naples. It's about $40 million in 2008 was spent in the construction project there, and about $35 million will be spent in the first half of this year to complete that project.

Okay. And also if I could, just following up on Alexia's question here, I'm still not clear what the answer is about are there any newspapers that are losing money besides Denver -- losing money or close to it here that are in jeopardy? That you may have to shut down or try to sell off to somebody.

Craig, this is Mark. The answer as we sit here today is no, and again, just to be clear, one of the reasons we felt strongly about these cost saving measures is to move heaven and earth to make sure that that remains so. And one of the things in terms of expenses as it will affect newspapers, the dollars that we are talking about today are the '09 effect. On a run rate basis, we are going to see the actions that we take in '09, bear even more fruit as we go into 2010 as well, because our intention is to keep a very tight lid as we go into 2010 as well.

Then, just lastly. I apologize for the delay here. But the $75 million you are spending in Naples here, do you really think you are going to get proper returns of, say, 15% a year off of that. You're calling an incremental of $10 million?

Craig, this is Mark again. Let me just say something about that market. If you look at that DMA, the Fort Myers-Naples area, it has about the highest number of foreclosures in the country. We think that that is a short-term bubble, just as it went up and became a frothy bubble a couple of years ago. Long term, though, that is an area that still has housing growth ahead of it, that still has a population that consumes media, particularly newspapers at an above average rate beyond any other market that we have.

So we anticipate that not only will the core business return to some health, but we'll also have some commercial printing opportunities and have about the best equipment in that area. Which we are finding in other markets as kind of weaker commercial printers go out of business and we can pick up some of that business. It comes back to us at even higher margins than we had in the past.

Craig, it's Rich. We'll try to -- if there are others in the region who would like to work out printing arrangements, we'll work with them as well. The good news is, and it sounds terrible to say, but Florida is getting more affordable by the moment and it had become very unaffordable at the top of the cycle. So with a little bit of recovery, we really think that as has been the case for the past hundred years, people will continue to move to Florida.

Great. Thank you very much.

Thank you. We'll go to the line of John Kornreich with Sandler Capital. Please go ahead.

A few questions, let's just do them one at a time. On the Classified numbers, they just don't seem to add up. I think you said it was all down 32%. Auto down 38%, real estate down 38%, employment down 55%. I mean, Other would have to have been up 50%.

John, this is Mark. I'm going to dig up the other 40%. But Other is up, primarily because of foreclosures and legal notices, but it's not a significant dollar amount.

I'm just saying 38, 38 and 56 somehow adds up to 32.

For the quarter, John, total classified revenue was down 31%, and I can get that to you by category. Auto down 37% or 38%, real estate down 36%, employment down 55%, and we'll dig up the other for you, but it was up.

Okay. Next question. Do you see your total net debt in '09 being up meaningfully or more closer to flat?

Depends on how 2009 goes, John, but it could be up a bit.

Not $100 million?

What's that?

You don't see it near $100 million?

It could get there earlier in the year, but then in the back half it might come down because we'll likely be spending $25 million, $30 million, probably $25 million in the first six months.

Okay. So the CapEx is front loaded also?

Right.

John, this is Mark. I have an answer for you on the other. The other was up 15%.

Okay. On the pension expenditure, I think you said it was $5 million this year, but then it jumps to $40 million-something in '10. Does it stay there for awhile?

It goes to $46 million, and then it ratchets down to about $40 million and then drops. The good news is because we'll be freezing the pension, the accumulated benefit obligation number will be the number. We won't be adding to that liability, at least in terms of years of service, but it also depends on how the market behaves and performs. So you go through that evaluation at the end of every year with the actuaries. But as we sit today and look out, it's a $5 million funding in 2009 and it jumps to $46 million in 2010 and comes back in towards, I think, mid-$30 million.

Okay. On TV pacings, you said it's looking similar to the fourth quarter. The fourth quarter you said X political was in the 25, 26, 27 area, but if you adjust for the fact that political did have a displacement factor, whatever it is, half, quarter, third, whatever, that means the first quarter really is materially worse than the fourth quarter.

John, this is Brian. I think the displacement figures you are quoting are much higher than what reality became. We probably had two markets that were significant in the political in October. Those markets are the Ohio markets of Cincinnatti and Cleveland, and those are probably the only two markets that really spoke to any kind of displacement.

Anything else, we were able to work within the quarter and retain the dollars. So displacement was nowhere near what it's been in the past for us and we were able to really sustain what business would have been there. Of course, many advertisers avoid the quarter or avoid the month and we have not seen that come back.

Okay. Last suggestion, I just breezed through the press release very quickly. I didn't see a balance sheet. You usually have a balance sheet in your press release. Maybe I missed it.

No, you didn't, John, and it's our intention going forward to do that. We are still working on the tax provision between the discontinued operations and E.W. Scripps. So we are still finalizing that, but you are right.

Okay. Thanks. That's it.

Thank you.

Thank you. We'll go to the line of Scott Davis with J.P. Morgan. Please go ahead.

I had a couple of questions out of curiosity on the TV side. The first one is could you give me a sense for how much of the revenues are coming from local advertisers versus national, and then I have a second one.

Fourth quarter?

Fourth quarter or just in general. I'm trying to get a sense of how it's changed over the years. I assume more local as the CPNs are higher and the national advertisers say I have other choices, I don't have to pay the higher local CPNs.

In fourth quarter, including the political, 44% of the overall dollars were on the local side. If you were to back out the political, roughly 65%.

Is local?

Is local. Correct.

My second question is can you talk a little bit about the pricing strategy that you are trying to employ? And I guess I say it in a context of, on the one hand you can hold pricing as best as you could because you don't want to set a bad precedent for when the economy improves, but on the other hand there's the potential of the lower pricing and to attract perhaps an incremental national advertiser who said forget it, I don't need to bother doing a national spot with a TV station, I can just go to the network. So I'm wondering how you balance, what could be an arbitrage situation versus not wanting to give away your future.

Sure. We take a look at each market individually. We have some shows that are high demand shows. Some of our network programming on the ABC stations, events like the Super Bowl. Some of our morning news or newscasts where we dominate the market ,and there's typidally a higher demand in the market for those. And so based on demand we are able to sustain or drive the unit rates.

We are very successful selling out the Super Bowl on our three NBC stations and surpassing our revenue target on those, because the demand was good. But we are also obviously aware of the soft conditions.

So on the places where there's not demand or we're not the market leader in some of the day parts, we certainly price for flexibility with the idea that we try and fill up as much of that inventory as possible. We have clearly moved off of our pricing structure of the past in order to maximize our revenue right now.

And when you've lowered the pricing, has that produced and incremental buy from a local advertiser or a national? In other words, has the gap narrowed to the point that the national guys could be interested?

Absolutely. I would say the answer would be both.

Okay. Thank you.

Thank you. (Operator Instructions) We'll go to the line of Barry Lucas with Gabelli & Company. Please go ahead.

Thank you. Good morning. A couple of quick questions. Just looking at programming expense which you highlighted up 15% for television, what contributed, what renewals were in there and what should that programming line look like going forward?

It's Brian again. I think the biggest factor of us being plus 15% is going into last year we had contracted with the Martha Stewart show which was 100% barter. We moved away from that program in the '08-'09 season, picked up a couple of other syndicated shows like the Doctors which have a cash expense on it, so that's what drove the programming up 15%.

Those are long-term contracts and we clearly have identified our programming costs as one of the high expense drivers of our Division and we are looking at that long term, but it has to be a long term play. In many of the cases, if you look at some of our better syndicated shows, the Wheels, the Jeopardies, the Oprahs, programs like that, we have agreements now that probably extend anywhere from 2011, 2012.

And so programming is something that on a long term basis we expect to be able to bring those costs down and the costs are significant. So through local program development or just better leverage with the syndicators, we expect to dramatically change that line. That said, I don't see immediate improvement in 2009. Just because our contracts go beyond that.

Does that mean they are up low single to mid single digit?

We were able to go back and renegotiate with a couple of our syndicators to try and get a little bit of relief in 2009, but we are still up in the high single digits for the first two to three quarters until we get to some of the new agreements with the Fall season.

Okay. Thanks. On the Yahoo agreement, you spent a little bit of time the other day talking about and detailing what's gone on and you provided some color. When did APT and the new platform go live?

Barry, it's Mark. I think our first blitz that we had was in November in Knoxville, and our plan is to have everybody up by the end of the first quarter. But the real encouraging part of this is that every time that Rusty Coates' folks, he's the guy that runs our internet operation, goes out and has blitzes with our local management teams, they will set goals and those goals, in every single case, have always gotten exceeded. And one of the reasons is that the value that that brings to an advertiser is something that we have never been able to bring to the table. It's an extra amount of accountability and targeting that has gotten very positive response.

If you think about the times we were rolling these out, November, December, January, in this environment, to have Naples sell $1.7 million in the matter of a week speaks, I think, to the real long term compelling prospect that this product line and this stream of revenue represents to us long term.

Assuming Yahoo really remains committed to it, and I'm not sure that's really going to be the case, but why isn't it a game changer?

Because it allows our sales reps really to focus not only on selling audience, but also creates a discipline on CPM that we never had before. So if you think about what they are selling, they are going to an advertiser and -- say it's an auto dealer -- and saying to them do you want to reach people who have looked at autos either on any part of the Yahoo network which is very sizable on our newspaper website, and you'll get only those eyeballs.

In most of our markets, and I think this is true across the country, the Yahoo audience is much bigger than any one of our local websites in terms of number of eyeballs, and that's something that we could never bring to the table, as well as the ability to sell regionally in creating deals with neighboring publishers that we've never been able to do before. Hopefully, that's helpful.

Yes, it is. Last area, more philosophical, I guess, but we may agree that Florida is an attractive place to live and it certainly has historically been a great growth market, but you've got issues in Tallahassee on real estate taxes and financing of homeowners insurance and things like that that are outside of your control. Is there anything in the political process that is changing there, aside from declining home prices, that can help reflate or restart housing demand in the state?

I'll let Mark talk. This is Rich. We have just not focused too much on hopes for political help. I guess we are at our core free market folks, and have just been more focused on what are the long term trends and have been willing to build into our plans even more short-term pain if that is what is required to get through this crisis down there in Florida.

So there's no -- we are not fooling ourselves that this is going to be a quick turn if there are quick solutions either in Tallahassee or from Washington. Our faith is long term and we think we have what we need to get to the other side and enjoy those days when people do move back and move in and acquire homes at great deals and can plan their lives down there.

Barry, the only thing I'd add -- this is Mark. The only thing I'd add is if you look at the two states in the newspaper group where we have been most hard hit, California and Florida, I don't think it's a coincidence that you will see the most eager acceptance of any kind of Federal plan on the part of Governors of California and Florida, and it's precisely to the point that you are making. But, again, this is a kind of a once-every-several-decade phenomena and we do have faith, ultimately, that the political system will figure out a way to make the underlying economics of both of those two states healthy again, but it's going to be a several year process.

Thank you.

Thank you. (Operator Instructions) We do have a follow-up question from John Kornreich. Please go ahead.

I am a little confused on the corporate overhead line. If I am reading this correctly, it was $42 million but it was only running $28 million annualized in the fourth quarter. Where are we headed for corporate overhead in '09, in '10?

John, it's Tim. The last year number is a number that you can't rely on. That included us prior to the spin. And in the fourth quarter we had really good experience with our Workers' Comp and generally liability reserves. We have a captive insurance program and our experience was very good in the fourth year 2008, and when we did our reserve adjustments there was a benefit to us at Corporate.

What I would tell you for 2009 is that number looks more like mid- $30 million, and our goal is to get it down towards $30 million just as quickly as we can. And that number does include a fair number of shared services that we provide to support all of our newspaper and TV operations around the country. We just haven't taken the time to go in and charge out and spend a lot of time on the cost accounting and what whatever friction that might create haggling about it, but you should know that that's just not a number supporting 15 or 20 people here. We are supporting a lot of the operations with those resources.

Okay. Don't lose hope. Look at the Tampa Bay Rays and the Arizona football team. Maybe you can get out of the office and go to spring training where hope springs eternal.

Thanks, John.

Thank you. We have no further questions at this time. Please continue.

Lisa, thanks so much for your help today and thanks to all the callers for your interest in Scripps. I think, Lisa, you have some wrap-up information to share?

Yes, thank you. This conference will be made available for replay after 11:00 a.m. today until February 26, 2009 at midnight. You may access the AT&T Executive Playback service at any time by dialing 1-800-475-6701 and entering the access code 985059. International participants may dial 1-320-365- 3844 with the access code 985059. That does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.