E W Scripps Co (SSP) 2011 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter earnings conference call. During today's conference, all participants will be in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions) As a reminder, today's conference is being recorded. I would now like to turn the conference over to our host, Mr. Tim King. Please go ahead.

Thank you, Shannon. Good morning, everybody. We appreciate you joining us on this call. We're going to start this morning with prepared remarks from Tim Stautberg, the CFO and Treasurer. He'll discuss the first quarter financial and operational highlights, he'll cover some non-operating data and give you a little bit more color on the trends for the benefit of your second quarter models.

Then Rich Boehne, our President and CEO, will add some big picture thoughts as our newspapers and TV stations move through 2011. After that we'll open up the phone lines for your questions. Joining us for that portion of the call will be Mark Contreras, who's in charge of the Newspaper division; Brian Lawlor, who runs the TV stations; and Doug Lyons, our Corporate Comptroller.

Now the commentary you'll hear from our executives this morning may contain certain forward-looking statements and actual results for future periods may differ from those predicted. You can read more about some of the factors that may cause results to differ from what you are about to hear by turning to page 11 of the 2010 Form 10-K. And speaking of SEC forms, we hope to file the 10-Q later this afternoon. As a reminder, you can always go to scripps.com and click on the Investor Relations link at the top of the page.

From there, you can print this morning's earnings release and tables as well as access a streaming audio replay at this call. It will be active later this afternoon and we'll leave it there for a few weeks. Having said that, Tim Stautberg will begin today's discussion.

Thanks, Tim. Good morning, everyone. Every eight quarters, we have the challenge of following the fourth quarter of even-numbered years. In our case, the historic flow of political advertising in the fourth quarter of 2010 provided our operations with some momentum as we headed into 2011. Like the rest of the industry, our newspapers experienced some revenue challenges in the first quarter but they joined the TV stations in outperforming many of their peers in the first three months of the year.

An increase in revenues in the TV division was eclipsed by a revenue decline from Newspapers resulting in consolidated revenue decrease of 2%, down to $180 million in the first quarter. Consistent with our guidance in February, our costs, excluding restructuring charges, rose 5% versus the year ago quarter. That's sequentially down from the year-over-year increase of 7% we reported in the fourth quarter. Pre-tax restructuring costs mostly associated with the Scripps 3.0 project that is bringing the benefits of scale to the Newspaper division were $2.1 million during the first quarter, down from $3.3 million in the 2010 quarter.

As a result, we reported an operating loss of $10.5 million in the period, which is wider than the operating loss of $1.2 million last year. Moving below the operating line, our loss from continuing operations net of tax was $8.9 million or $0.15 per share, compared with a loss from continuing operations net of tax of $2.1 million or $0.04 a share a year ago.

Let's turn straight to the operations and start with the Television division. Despite a tough advertising climate, revenue from the TV stations increased 3.2% to $69 million. Keep in mind that the year ago quarter included approximately $2 million of incremental advertising associated with NBC's coverage of the Winter Olympics. Layer on top of that, the political money associated with last year's mid-term elections and it's a feat to have been up at all. So we're proud of the hard work being done at the stations so far in 2011, including the sales force that are firing on all cylinders and folks who produce the kind of local news that draws attractive audiences across multiple platforms.

You saw in the release that our local advertising was up 3.5% in our TV business, even though our national business, which is about half the size of our local advertising, was down slightly. That is a similar story to what you heard from other ad-supported businesses during this earnings season, although I think the severity of the softness in our national business was less than some others experienced. It's worth noting that the auto category, traditionally the largest ad category at a station, felt the effects of the March 11 earthquake in Japan, thus tempering the end-of-quarter push we often see from the dealers.

Despite that situation, and the tough comparisons with the first quarter of last year where we reported a 65% year-over-year increase in auto advertising, we managed to generate a 10% increase in the category in this year's first quarter. Going forward, we view the earthquake effect as a short-term situation. The business that has been canceled so far has largely been replaced by other advertisers and we believe the supply of cars and parts will be back to normal delivery schedules by third quarter.

Our retransmission consent revenues was up 46% in the first quarter, albeit on a small base. As you know, most of our retransmission consent rights are tied up for years to come in agreements reached before we spun off Scripps Networks Interactive. As old agreements expire, we will negotiate new deals at market rates which will result in a nice bump for us in the years ahead. There aren't any more contracts set to expire inside of 2011, but we do pick up a million new homes at the end of this year and another several million at the end of 2012.

You've heard us talk quite a bit about our faith in the increasing strength of online and mobile advertising. These currently are relatively small categories but they're growing at a fast clip and will be more meaningful in the years ahead. Revenue from those categories alone increased nearly 30% in the first quarter in our Television division. Expenses in the TV division were up 4% year-over-year, down from the 7.5% increase we reported in the fourth quarter. The biggest driver of the increase was the added cost of certain employee benefits that had been suspended in 2009. TV segment profit was $6.3 million in the first quarter of 2011 compared with $6.6 million in the 2010 quarter.

I already mentioned the effect of the Olympics and political revenue we reported last year, but also keep in mind the fact that in January 2010 we were still receiving payments from ABC as part of our previous affiliation agreement. So reporting segment profit that was only slightly under last year's figure is a strong accomplishment for Brian and his team. Before I leave the TV discussion, I want to focus your attention on an announcement we made since our last earnings call.

There's a big change coming in just a few weeks to our operations in West Palm Beach, where we own Florida's highest rated station, WPTV. We entered in a shared services agreement involving Raycom's Fox affiliate in that market. We've already been producing 17 hours of news each week for the Fox station. We'll now provide additional services for most key operational functions except for programming and ad sales. There's an attractive upside for us in this arrangement.

Turning now to Newspapers, our total revenue declined 5.7% in the first quarter to $106 million. That total revenue number compares favorably to many of our peers but still signals a challenge for us in 2011. Print advertising revenue was 7.8% lower in the most recent quarter compared with the 2010 period. As you've heard from others, Easter falling so late in April this year made the comparison tougher for the first quarter but may give a little boost to the second quarter comparison. The big story within the print advertising numbers was the steep drop in national advertising.

The category fell 28% in the quarter, but fortunately, national is a very small piece of the newspaper's revenue pie. It's usually less than 5% of all revenues. But local was also down at a double-digit rate in the first quarter while classified declined less than 4% on the relative strength of automotive and help wanted advertising. Preprint revenues fell 3.3%.

In the first quarter, our circulation revenue held fairly steady, slipping less tan 2% compared with the first quarter of 2010. Throughout last year, we explained that a change in the nature of our business relationship with certain newspaper distributors affected our reported circulation revenue. We've now fully cycled through that change, so the figures in our release are a clean apples-to-apples comparison. You'll notice in the Newspaper financial tables that we broke out our digital revenues which include advertising on our newspaper Web sites, digital advertising provided through audience extension programs, such as our arrangement with Yahoo!, and other digital marketing services such as managing an advertiser's search engine marketing efforts.

In the first quarter, we began reporting revenue from certain of our digital offerings net of the amounts paid to our digital partners. If 2010 revenues had been reported on this net basis, digital revenues in the first quarter of 2011 would have increased 1% and pure play digital advertising would have increased 2.3%. In fact, our digital sales teams have had great success managing SEM campaigns for local clients. During the first quarter, we managed key word campaigns totaling nearly $1 million, more than double from the prior year period.

Turning to expenses, the headwinds from increasing newsprint costs continue to work against us. Prices were up 20% year-over-year, pushing our expense for news print and press supplies up 8%. Throughout 2010, we told you about our disciplined control of employee costs but that line grew 4.8% in the first quarter despite a 3% decline in FTEs, full-time equivalent employees due to two main factors; last summer's reinstatement of the Company match to the 401(k) plan and a seasonal expense related to a change in our menu of health care plans.

We now offer our employees a high deductible insurance plan that is tied to a Health Savings Account. To encourage our employees to take better control of their health care costs, we put seed money into their Health Savings Accounts every January. Far more of our newspaper employees opted for that plan this year compared with 2010, so the expense for the seed money was materially larger in January but won't occur again in the balance of this year.

All-in, Newspaper expenses were 4.9% higher in the first quarter of 2011. Segment profit from our Newspaper group was $5.4 million, down from more than $16 million in the year ago period. In the Syndication and Other segment, revenue rose 8.4% in the first quarter to $5.2 million and we reported a segment loss of $435,000.

Let's turn now to some non-operating items. Our balance sheet continues to distinguish us from our newspaper and TV station group peers. We're still debt free and have more than $180 million in cash on hand. During the first quarter, we made our first purchases under the $75 million share buyback authorization we announced late last year. During the quarter, we repurchased 713,000 shares at an average price of $9.28 and have $68 million left in our current authorization.

In addition to the share buyback program, other uses of cash during the quarter included our decision to deposit an additional $8 million in cash collateral with the insurance company administering our workers compensation program. And we also canceled an expensive letter of credit that served to backstop that program. We also paid several accrued items that affected our net working capital during the quarter.

As we look ahead at the expected performance of our operations in the second quarter, we believe TV revenues will improve in the mid-single-digit range. Judging by the current trends in our newspaper markets, we believe we will report a year-over-year decline in revenue, but we think the decreases will not be as much as the 5.7% we reported for total revenue in the first quarter. On the cost side, expenses at both newspapers and our TV station stations in the second quarter are expected to increase due to some of the factors that affected the first quarter.

Our release stated that the increases would be mid-single-digits at the TV stations and low- to mid-single-digits at the newspapers. Our corporate and shared service expenses, which crept up to $9 million in the first quarter, should return to their run rate of $8 million in the second quarter. With that, let me turn it over to Rich.

Thanks, Tim. As I said in the release, the first quarter came in about where we expected. The primary variance resulting for weakness in local newspaper ad revenues Mark will talk more about that in a few minutes. Surprisingly, clarified was not necessarily the culprit. Television revenues, as Tim discussed, performed well, more than overcoming tough comparisons with the year ago quarter. That's after taking into account some softness in auto related to the production issues in Japan.

Here's what's most important to know looking into the following three quarters of 2011. Now with good financial stability, no debt, and the ability to make prudent investment where's we see attractive returns, including investments in our own upside through share repurchase, we're able to stay on course with restructuring and rebuilding our current businesses. In the Newspaper division, we are most of the way through a broad reorganization that will streamline processes and focus resources on the two most important drivers of value, audiences and revenue streams.

A vital piece of our newly designed machine, however, is yet to be fully implemented, all new operating systems that provide the business intelligence needed to maximize revenues, bundle sales across products and markets and improve the deployment of resources. Like many in the industry, we have been very decentralized and our systems have been locally autonomous. This project will fix that. It's the last mile in our reorganization and given that it affects all of the revenue running through the division, it has to be done right. Once completed, we'll have a much cleaner platform for driving revenue. And Mark can talk more about the schedule there in a few minutes.

In the TV division, the major focus is moving as quickly as possible to improve the value of the content we produce for both on air and digital audiences. Our strategy is to be a provider of quality news and information content that drives larger and more valuable audiences. Our goal is to be different, set apart from our competitors, which is a real challenge in an industry where local news programming has migrated toward sameness for many years. This goal to set our stations apart also applies in time slots that have been dominated by syndicated programming for many years. We're moving quickly to recapture those hours, dramatically lower our costs, and more efficiently drive revenue through programming that we own and own and produce.

To get where we need to be and to set up our stations to increase cash flow and improve margins, we have been investing through the P&L. You're seeing that burden in 2011 but we believe it will pay off as early as 2012 when we have the opportunity to capture more than our share of political advertising and bring much of it to the bottom line. In both divisions, we also are investing in new digital products and revenue streams. Despite the headwinds in local ad revenues, especially in newspapers, we must build market leading products for digital and mobile devices and be prepared to defend our position as that marketplace develops for consumers. You can expect to see more investments there in the future.

Bottom line, we have a lot to get done in 2011 if we want to take advantage of the economic recovery and opportunity that the political season presents in 2012. The best news is we have a strong balance sheet to support our internal needs, invest for the future and demonstrate faith in our own abilities through share repurchase. Shannon, that concludes our prepared remarks, and we're ready to take questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) The first question is from the line of Alexia Quadrani with JPMorgan. Please go ahead.

Thank you. A couple questions. First, really on the outlook that you're seeing in the second quarter, what's really driving the better performance you're seeing in the broadcast side? Some of your peers are not indicating a pickup the way that you are. And then also in the print side, the moderation declines, is that mostly from the Easter benefit in Q2 or is there something else there as well?

Hey, Alexia, it's Brian. We had a good first quarter related to our top four categories, being services, auto, retail and travel and leisure. All four of those categories and all of the micro categories below those were up in first quarter. And all four of them are, again, pacing really well for us second quarter. We had a good April in each of those categories and May and June, while we still have a fair amount of business to write, continue to look positive there.

And, Alexia, this is Mark. On the Q2 outlook, without question we'll get a slight bump because of the Easter switch, probably a little over a point. But in addition to that, we anticipate some additional efforts and results from some digital initiatives that we think will begin to help the top line.

And then, Mark, staying on the printed side of the business, the ABC data came out recently, they reclassified everything which has made it a bit confusing for us to read year-over-year. Could you give us a bit of color on, I guess, what you are seeing in terms of circulation volume versus price, I mean, your circulation revenues seem to be a bit better than expected, a bit better than the industry, too. I'm trying to get a sense of how much that is from pricing or volume?

Sure. As we've said before, we're putting renewed emphasis this year on stabilizing our print circulation and we're devoting more start money to that. We started -- we're on track and have great confidence that by the end of the year on a run rate basis we'll be flat. In terms of the rates that we're getting for home delivery, they're up anywhere from 3% to 5% this year reflecting some of the pricing actions that we took last year. But, again, it's really a one-two punch. It's pricing that we did last year coupled with renewed resources to starts, and we're seeing churn rates that are still very, very low. So we're very encouraged by the circulation story there.

All right. Thank you.

The next question is from the line of Craig Huber with Access 342. Please go ahead with your question.

Yes, good morning. A few details I was curious about on the newspaper advertising front. What was the real estate classified category down year-over-year? And then also, for your print overall, in the quarter we just finished, down 7.6%, I guess with the digital in there, how was that outside of California and Florida?

Craig, this is Mark. Let me get you the state by state question first. If you looked at the first quarter, the, in total California was about two to three points worse followed very closely by Texas with the rest of both Florida, Tennessee and the other states really below, better in other words, than the division average. The story in California, I think you already know. The story in Texas for us was that we had two big furniture retailers go out of business and that affected us in the first quarter.

Okay. And then the real estate question if you have that?

I do have the real estate. Sorry. For the quarter, it was down about 12% and if you look by region, really, Tennessee and California were performing, down almost double that rate. Actually, Florida's close to flat and Texas was down mid-teens. So it's really a mixed bag on real estate, Craig.

Okay. Appreciate that. And can you just speak a little further about the costs on the newspaper side the rest of the year. I guess, can you quantify this extra health care spending and having the benefits here in the first quarter? I guess that's not going to repeat, you're saying?

Craig, it's Tim. I'll comment on the employee health care side. You know, we expect, frankly, the change in the health care menu offering to actually save us money over the course of the year, but it's front-end loaded as we put $1,200 into family accounts for HSAs per employee. We had a big increase in employees taking advantage of that. So there was a one-time seed money expense that's non-refundable to the Company. We should expect to recoup that in the savings throughout the balance of the year.

That hurt your employee costs in, let's say, a percent or so in the quarter?

I would say that's probably right. Yes, yes, in the first quarter. And, again, it's, every year we do this but we saw at least an increase of close to 40% of the newspaper employees that took advantage of switching into that. It's largely the only plan we have in terms of the high deductible HSA.

And then on the TV side if I could, your guidance for the quarter of revenues were up 4% to 6%. How did April do? Was it materially better than that?

It's Brian, Craig. I think April was in line with that, and our pacings for May and June look very healthy at this point.

In other words, you're pretty comfortable at this stage with the up 4% to 6% number. Last question if I could, on the TV programming side, what is your latest expectations for overall programming costs percent change this year including Oprah later this year?

I think we're looking at --

Down.

We're going to be down about mid-single-digits for this year. You know with Oprah going away in September, but keep in mind that also going into the programming expense this year is the network comp that we're paying to ABC and NBC. So even with that, the decline of Oprah and some of the other changes that we've made will result in a mid-single-digit decline in programming expense this year.

Very good. Thank you.

Your next question is from the line of Ed Atorino. Please go ahead with your question.

(Inaudible) at the end, programming's what, 25%, 30% of costs TV?

Yes that's probably right.

Yes. Could you elaborate a little bit on the streamlining processes in the newspapers? Is it sort of front loaded with costs and then you get some declines or is it sort of spread out over the course of the year? How does that work?

Ed, this is Mark. In general, what we're trying to do is operate by function as well as by geography. And so the up front costs involve installing systems that allow to us look at the business holistically across markets. So the net effect long term is going to be that we would experience both better revenue performance and lower costs, but 2011 for us is a big year. We're on track to install both advertising and circulation systems in one of our mid-sized markets and our plan is to roll that out during 2011. The remainder of 2011 and the bulk of 2012.

So you're still going to see increases in the same magnitude as first half in the second half or a little less?

Well, as the year goes on, I mean, we've got some additional costs since we don't have those systems in to give us the efficiencies. So as time goes on, and I'm really talking about Q3 and Q4, you'll see some cost drop off and then you'll see additional cost drop off throughout the balance of 2012.

Okay. Back to TV. Looking at 2012, you'll have the full year without Oprah and I imagine some of the other stuff may flatten out, so you could have a pretty nice, comfortable cost outlook in 2012 I would suppose, is that correct?

Ed, it's Brian. On the programming side, which you just referenced, we'll go through the full year without Oprah. We've also previously announced that we're parting ways with "Wheel" and "Jeopardy" in the fall of 2012 with some internal developed strategies for those time periods. So we're looking at our programming expense being down at least 20% in 2012.

Wow. Do you have the Olympics? I'm trying to think if you have any NBC affiliates?

We do. We have three NBC affiliates. We'll have the Olympics from London next year.

So you get political plus some politics plus costs. It should be an interesting year.

Agreed.

Thanks.

Your next question is from the line of Barry Lucas with Gabelli and Company. Please go ahead.

Thanks, and good morning. A couple of housekeeping questions, Tim. Can we get CapEx in the quarter and what you think it'll be for the full year now?

For the quarter, I think it was $1.5 million. We're going to put out the Q later today, Barry. Does that sound right? $1.5 million, Barry, and I think our forecast for the full year is still $15 [million-ish.] So as we get further along, we'll see how many projects end up getting pushed into 2012, but we're doing a fair amount of work. We have some digital upgrades, some automation projects in our TV station group that we will be putting together this year. So $15 million is probably a good place holder.

Okay. And are you capitalizing any of those costs that are going into the restructuring or --?

No.

No. So those are all flowing through the P&L?

Correct.

Okay. All right. Just for Mark, you hit some of the highlights on the regional variances in newspaper. What are you seeing in help wanted if you could sort of parse that a little bit that might be helpful because we keep hear good things about -- I won't say good, but better things about Florida?

Yes, Barry. In general, we were up almost 14% for the quarter. Florida was still down a little over 10%, but Tennessee was up about 12% and then, actually Texas was up almost 20% and California about flat. So really, the fourth and the first quarter in help wanted and really probably going back to the third, as well, were pretty strong. I don't want to signal that that's going to continue past the middle of this year. I'm cautiously optimistic about it but I don't want to take that to the bank. Hope that's helpful.

Good. Thanks. Just a couple of quick ones for Brian on the TV side. The big culprit, I'm guessing, was Toyota in terms of cancellations. But I guess what I'm trying to get after listening to [Bob Prey] there yesterday was what gives you confidence that the supply and inventory disruptions are going to be relatively short lived?

Barry, it's Brian. In first quarter, there wasn't much of an impact. I think March 17, is that right, March 11, was the date of the tsunami and earthquake over there. So we didn't really see any cancellations. What we did not see at the end was the traditional heavy, maybe that last push of money.

We have had a fair share of cancellations through second quarter but we've been able to kind of make most of those up. We have seen a little bit of a rush of some of the Korean automakers who have put some of that money back in. But I guess all of our tracking and the conversations we've had have led to us believe that the parts challenge, and that's what it is, a parts challenge, and the cars that will be built in America but they're having a hard time getting them out of Japan, was going to be an eight to 12-week issue. So we continue every day to gauge that.

We're watching closely with a potential impact, if Japan was to shut down a second reactor, we're hearing from Toyota that may have an impact. They're watching that. But from everyone else we're talking about, we believe that it's probably an eight to 12-week issue, which would take us through second quarter but should start to put production back online in third quarter. But we're watching it closely.

So the sense might be that is as the Japanese automakers come back online with new models for 2012 that given their past history that they might be going after market share again and potentially step up the pace or is that too optimistic?

Well, I would say that that's clearly a fair statement if they get the production going and they want to try and drive market share to make up for what they would have lost in this 12-week window, clearly, they would need to step up their spending. I think, we clearly haven't seen that yet. I think it's early to guess that but I think strategically thinking that frame of mind makes perfect sense.

Last question, and I'll jump into queue, and, again, for Brian and Rich, really, for longer term television, you've got household coverage of roughly 10%, and the net -- the relationships with the networks have clearly changed. So bigger picture, what do you see for TV whether it's spectrum usage or critical mass? Do you have enough critical mass? How do you feel about the lineup, the portfolio and, really, the direction of the business?

I'll speak and then I'll let Rich jump in. I love our footprint. I think we're in the right sized markets. We're in markets ranked 60 up to 10. These are good revenue markets. We're big enough to have leverage, we're the second largest ABC group.

We're small enough to be nimble which gives us a lot of agility and allows to us have personal impact on the success of our news operations. We continue to, I continue to look out, look at markets that geographically or strategically make sense and if there was an opportunity, I think we would discuss that. I'll let Rich touch on that a little bit more. But I think -- we just signed new five-year deals with both of our networks so we're covered for the next couple of years. Yes, the business model has changed.

But, again, we are paying them a percentage of our dual revenue stream that we now have through retransmission. We believe that we're really comfortable with that relationship right now. We think it supports the network affiliate model, we believe in that strongly. We think being network affiliated stations, which none of our ten stations are, make us better, drives more value to our shareholders. And so we like our footprint. We know who we are and I think any future advancement there would be consistent with the kind of Company and the kind of stations we run.

Hey, Barry. It's Rich. Obviously, we like the local TV business. But we've spent a lot of time looking at instead of having a 10% footprint would we be in some way advantaged by having a 20% footprint, let's say, for example. And we just have not been able to find places where we think there is leverage available by just having a larger station group.

So if we could find stations that present a great return on investment opportunity that's the way we would look at it. I think we have sufficient scale at this point. I can't think of any negotiations we've been in whether it's the network or retransmissions or anything else where we have been disadvantaged in any way because we reached 10%. So the other way to invest in the station business is to buy in our own shares and invest in the station group that we already own and own more of that. So I don't think just size and footprint is necessarily where we're focused at this point.

Great. Thanks for your comments, Rich.

The next question is from the line of Alfred Anderson with Alfred Anderson. Please go ahead with your question.

Good morning. This is a question primarily looking at the cash flow side of things. The first question is are there any plans afoot to recommence a dividend to shareholders?

Hey, Alfred. This is Rich. We talk about that with the Board each and every quarter when we look at our cash and we look at cash flow from operations. So we have an upcoming Board meeting, we'll discuss it again. Obviously, at this point we have opted to focus a little more on making sure that the businesses are stable and growing before we commence a regular dividend again. But we look at it all the time.

Okay. Second question is I noticed that you bought 713,000 shares, but the outstanding shares at the end of the quarter were up 3,613,000. That sort of implied that there's been a 4,300,000 increase in the number of outstanding shares. Maybe that's not the right way to put it. If the shares went up 3.6 million and you bought 713,000, can you explain why that happened, why did you have that increase?

Sure, Alfred. It's Tim. The increase in the share count is driven by the vesting of shares that were awarded to employees under the long-term incentive plan, primarily a grant back in March of 2009. But in the spring of every year, there are grants made to employees and management that vest over three- and four-year periods. So that was part of the vesting process. All of that is detailed in the proxy statement where you can see shares granted and how those will vest over time. I think that will continue into next year and then tail off a bit the year after.

And, Alfred --

Go ahead.

It's Rich again. Bigger picture, we've always favored an executive compensation, we have favored equity over cash feeling that it was in our best interest to be conservative on the cash side and to align the executives with the shareholders.

Understand that. I remember very well the grant back in 2009. The worker's comp payment that you made to the insurance company in lieu of the letter of credit, how much was that payment?

Alfred, that was just a very straightforward efficient finance move. We had cash on our balance sheet that was earning very little and, frankly, we could move that money to Travelers which administers our worker's comp program, and we could get rid of and cancel a letter of credit that was costing us nearly 300 basis points a year. So not only do we eliminate 300 basis points of fees on a letter of credit that was close to $8 million, but we also have an earnings credit coming from Travelers for leaving that money with them. So it was a couple hundred thousand dollar swing favorable to the Company by making that move.

But how much was the total payment, that's really the question?

It's not a payment, it's a deposit. It's $8 million.

It was $8 million. We're looking at the balance sheet and trying to figure out whether you are cash flow positive based on the decline from, say, $200 million at the end of the previous quarter to $180 million now. You spent $6 million or $7 million on buying back shares. I'm wondering where the other big decline, the total decline of about $20 million in cash outstanding, where it occurred. There's another sort of $13 million missing. Was that due to operating losses or extraordinary items? Why do you have a $13 million additional decrease in the balance sheet cash?

Sure, Alfred. I'd also say that this afternoon we'll be filing the Q, which will detail in a cash flow statement all of the information that'll help you find those pieces and parts, but broadly speaking, the first quarter expenses that are accrued at the end of the year that are then paid, there's bonuses that are accrued that are paid. We had also accrued the ABC programming expenses and then paid those in the first quarter after we signed that deal with ABC late in the year. So there were lots of cash going out to pay for expenses that had been accrued, but all that's detailed in the cash flow statements that are filed with the Q this afternoon.

Thank you. Final question. I noticed that corporate and shared services were up almost 21%. What are they and why did they go up so much?

Sure. Most of the increase, our standard run rate for corporate and shared services is about $8 million a quarter. The increase in the first quarter this year is that several of our more seasoned executives are nearing requirement age and under our long-term incentive plan, once you reach retirement age, the shares that are granted under that program cannot be forfeited. Those go to the employee if they retire.

So we expense those immediately. And so there were several executives, including our CEO, whose expense tied to their grant of shares was accelerated in the quarter. Now that will not recur throughout the balance of the year.

I think most of us at age 55 still feel like we're fully in the game, but according to the IRS, we're called retirement eligible.

Okay. That completes my questions. Thank you.

All right. Thank you, Alfred.

The next question's a follow-up from the line of Craig Huber with Access 342. Please go ahead with your question.

Yes, concerning newsprint in the quarter, what was the percent change for consumption and what's your outlook for newsprint prices for the rest of the year?

Craig, this is Mark. Consumption was up about four points. Price was down 20. I'm sorry, price was up 20 and consumption was down 4.4. Yes, I reversed those. Again, in terms of the outlook for pricing, Craig, on a year-over-year basis, Q2, Q3, and Q4, we experienced 20% in the first quarter, you can take about 10 points off of that for each subsequent quarter in terms of year-over-year pricing increase.

That should be negative, it will just moderate.

Yes, but the pricing effect will be down about ten points.

Are you guys planning on an increase later this year for newsprint?

Yes. We have one planned for mid-year. Again, if you look at what actually happened last year, that'll still be a moderation in the year-over-year percent increase compared to 2010 when we get to 2011.

Okay. And then your comments about Easter, I think you said would help by a percent for the month of April, is that what you were trying to say, and how did the whole month of April do for your newspapers' ad revenues?

I don't think we report monthly results, but I think directionally, you can say that we're seeing some improvement. Again, it's not huge.

Versus March.

Yes, versus March. March versus April is a point, a point and a half better.

Okay. And then also on the TV side, I think you said auto up 10% for the quarter we just finished. In your guidance for the new quarter here, what are you expecting the auto category to be up or down year-over-year and what was it in the first quarter as a percent of TV revenue, was it about 20%?

It was 21% of our total revenue in the first quarter. We were plus ten in first quarter. I don't think we're going to be that high in the second quarter. April was right in that range, but May and June, I think, I'm not as optimistic just based on I don't expect -- we've taken some cancellations. We've been able to make up a lot of that, but I'm not expecting the strong second wave from the imports. So I would expect that we'll probably finish the quarter up in automotive, but to what degree, I think it's still early to call. But, again, April was in line with first quarter.

Okay. Great, thank you.

The next question is also a follow-up from the line of Ed Atorino with Benchmark.

That's all right, I'll talk to you later.

Thanks, Ed.

If there are any additional questions, please press star one at this time. Mr. King, please continue. There are no further questions.

Shannon, we appreciate your help this morning. We thank everybody for joining us on the call this morning. Thanks.

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