E W Scripps Co (SSP) 2012 Q1 法說會逐字稿

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

I would now like to turn the conference over to Tim King. Please go ahead.

Thank you very much, John, and good morning, everybody. We appreciate you joining us for this recap of The E.W. Scripps Company's first-quarter results.

As usual, we are going to start this morning with prepared remarks from Rich Boehne, our President and CEO, and Tim Wesolowski, our CFO and Treasurer. At that point, we will open up the lines for your questions, when we will be joined by Tim Stautberg, who runs the Newspaper division, Brian Lawlor, who runs the TV division, and Doug Lyons, our Corporate Controller.

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 referring to the Form 10-K.

As a reminder, you can always go to Scripps.com for more information. If you click on our Investor Relations link at the top of the page, you can access today's release and financial tables, as well as a streaming audio replay of this call. It will be up there from sometime this afternoon until May 15.

Having said that, here is Rich Boehne to begin today's discussion.

Good morning, everyone, and thanks for joining us. We are off to a pretty good start this year. As you will hear from Tim Wesolowski in just a minute, TV advertising revenue on an apples-to-apples basis grew 12%; retransmission revenue grew 37%; and digital revenue grew 20%. And, those increases, coupled with a decrease in TV expenses resulted in a nice move up in segment profit.

The investments we've made in high-quality news programming are paying benefits. At the newspapers, ad revenue declines narrowed and circulation revenues, thanks again to our commitment to a quality news product, held steady. Expenses were down and segment profit increased.

The first quarter is always the smallest in our business, but it sets the tone for the remainder of the year. As I said, we are encouraged as we look ahead. Now here is Tim for some detail on the quarter; then I will be back to talk about how our key strategies should unfold through the balance of 2012. Tim?

Good morning. While there was an expected net loss in the quarter, the period actually shaped up in ways that give us plenty of encouragement, not just for 2012, but for the long-term prospects of our businesses.

The core TV business is healthy. Our acquired stations are integrating nicely and performing well. And the newspaper business is making progress in its quest for stability.

We are reporting late in the earnings season, and I'm glad to say our first quarter stacked up very well compared with other media companies in a wide variety of key operating metrics. As I go through the numbers, you will hear me refer to reported numbers and same-station numbers. Obviously, that reflects the acquisition of nine new TV stations last December.

Our reported revenue in the first quarter was $207 million, a 15% jump from the $180 million a year ago. On a same-station basis, consolidated revenue moved up about 2.5%.

Our expense line this quarter requires a little explanation. You will see acquisition integration costs of $5.8 million in our P&L. It is a non-cash expense. That reflects a change to the national rep firm that handles national sales at the acquired stations. We canceled the contract with that firm and moved the relationship over to the firm that reps the Scripps stations. The move makes perfect business sense for us and there was no cash payment by us.

However, accounting rules require that we record a contract termination charge; again, this is a non-cash amount.

You've probably seen in the footnotes of our financial tables that we have may have messed up your models a bit by changing the way we handle pension expense. Starting this quarter, we will only include the current service cost portion of defined benefit expense in segment profit.

You may recall that we froze our pension plan in 2009, so there is very little current service cost. Almost all of our pension expense relates to past service. The impact of this in the results of Q1 2011 was less than $2 million, so our year-ago expense numbers don't exactly match the figures that are already plugged into your model.

We've restated the 2011 periods to reflect this change. That is why a full table with quarterly breakdowns from last year is in the footnotes.

So here are the expense numbers that I believe matter most to you. On a same-station basis, our expenses in the quarter were $179 million, about flat with last year. If you back out the non-cash acquisition expenses I just mentioned, our operating expenses were down 3.8%.

On the bottom line, our net loss was $0.08 per share compared to a net loss a year ago of $0.15. Excluding the non-cash acquisition costs, our net loss would have been $0.02, which is the apples-to-apples figure that compares to the First Call consensus of a net loss of $0.03.

Now let's look at the divisions. You expected the news from our TV division to be encouraging, and it was. Our reported revenue increase was 44%, but even on a same-station basis, our top line grew nearly 12% compared to the first quarter of 2011. Same-station revenues were up 15% compared to the first quarter of 2010, the last time political revenues were a big part of the picture.

Not surprisingly, political spending was a big driver of the improvement. We booked nearly $5 million in political ads during the quarter versus a 10th of that a year ago. But the real story here is the strength of local advertising, which was up more than 7% on a same-station basis. At a time when there's a lot of talk about the anemic economic recovery, 7% growth in local spot advertising tells me that our stations are doing a lot of things right at the local level.

Key categories pacing that growth are auto, services and retail.

Of course, the big story in TV this year will be the influx of political ads in the third and fourth quarters. Those of you who follow this business know there is great peril in trying to predict the twists and turns of the election season this far out, but most observers agree it was a positive sign for TV ad revenues when the Republicans settled on a presumptive nominee four months before their convention in Tampa.

Our guidance for the full year hasn't changed. We think it is doable for our legacy stations to exceed the $42 million of political revenue that we reported in the previous presidential cycle. It might be better or it could be worse. It is just too soon to tell.

But what I can say with certainty is the first quarter got us off to a good start. We booked $4.7 million in political revenue in the first three months of the year. That compared at $3.1 million in the first quarter of 2008, the last presidential election year.

You know we can't tell much about the full year 2012 from these figures, but I do like this trend.

Our reported retransmission consent revenue was nearly $8 million. Much of the increase from last year, of course, is due to the new stations. But even on a same-station basis, our retrans revenue grew 37% thanks to numerous agreements signed during 2011.

As most of you know, the two biggest contracts, with Time Warner and Comcast, aren't scheduled for renewal until the end of 2015 and 2019, but this category will continue to show steady dollar growth over the next few years.

TV's digital revenues were up 50% to $3 million, and on a same-station basis, they grew a healthy 20% year-over-year in the first quarter, about the same rate they did in the fourth quarter.

Just as the new stations pushed revenues up dramatically, they also increased our costs. Reported expenses in the quarter moved up 30%, but if you exclude the new properties, expenses were down 1%, as we had projected.

When all is said and done, segment profit grew nicely in the first quarter. It increased to $18 million in the most recent period from less than $7 million in the 2011 quarter.

Over at the Newspaper division, our total revenue in the first quarter was $104 million, which was down just 1.7% from the year-ago quarter. That figure is the lowest year-over-year quarterly decline since the fourth quarter of 2006.

But the fact that the year-over-year decline is so much smaller than you are used to hearing in the industry is largely attributable to one large market, Naples, Florida, which had a terrific quarter. Naples is knocking it out of the park and may continue turning in attractive percentage increases as we move through the year, but it is a seasonal market. Because the snowbirds moved out and ad revenue moves with them, the dollar amounts will not have as large of an impact on the segment until next winter.

Excluding Naples, the Newspaper division's decline in the quarter would have been 3.8%, pretty much in line with the decline in the fourth quarter. So the fact is the trend line is slowly going the right way for the division, but we don't want anyone to extrapolate too much from the minus 1.7% figure. It was helped dramatically by a single market that has now begun its off-season.

That being said, there is very good progress being made in the Newspaper division. Circulation revenue continues to be stable, coming in essentially flat for the fourth quarter in a row. The circ revenue total was about $31 million in the first quarter. At $60 million, print advertising revenue was about 5% lower than last year, which compares favorably with our peers.

Local advertising declines were just under 5%. National advertising, which is a very small piece of the revenue pie for Newspapers, was down about one third.

Classified was something of a surprise, slipping just 4% in the quarter. That is the best year-over-year figure in more than five years. Within classified, the real estate category showed the greatest improvement. It was down double-digits in the fourth quarter, but in the first quarter was down just 1.3%. While we are pleased with these numbers, I should again say that the real estate advertising in Naples drove much of this improvement.

The preprint and other line has been down most of the year, but was flat at $17 million in the first three months of 2012. Digital revenue from our Newspaper operations increased slightly to $6.5 million.

On the expense side of the ledger, costs in the Newspaper division decreased 2.5%. There were a number of factors that contributed to that figure. Our head count was down about 10% from a reduction in force in the fourth quarter. Newsprint prices were essentially flat, but our cost for newsprint and press supplies increased 6% due to additional costs associated with the vendors who help us with the print-and-deliver initiative.

As you may recall, we believe a reinvigorated single-sheet print-and-deliver initiative in our newspaper markets will produce several million dollars of incremental and profitable revenue in 2012. This initiative allows advertisers to target down to the ZIP code level.

Segment profit from our Newspaper group was $7.2 million, or 12% better than the figure in the year-ago quarter.

The syndication and other segment is becoming more predictable after a year of significant change in how we operate that business. Revenue in the first quarter was $3.2 million, and the segment swung from a small loss in the 2011 quarter to segment profit of more than $700,000 in the first quarter of 2012.

Now let's turn to the nonoperating items from the quarter. Our days as a debt-free company ended with the station acquisition, but we still have a very strong balance sheet featuring minimal leverage and the ability to stay flexible thanks to cash on hand and additional borrowing capacity.

We've padded our cash position during the quarter, increasing our cash and cash equivalents by about $12 million to a total of $140 million as of March 31. That was done despite debt payments and share repurchases totaling around $10 million.

We had long-term debt of $192 million and current debt of $16 million at the end of the quarter.

We continued our share repurchases during the quarter, but at a somewhat slower pace. We repurchased 600,000 shares at a weighted average price of $9.28. In the past five quarters, we've purchased 7 million shares. There are about $18 million left on the $75 million authorization that is good through the end of this year.

That wraps up the first quarter. Double-digit ad growth at the TV stations, continuing strength in TV's other revenue streams, such as retrans and digital. Newspaper advertising declines that continue to moderate better than the industry. Good expense control in both divisions. And all coming as we approach what is likely to be a heated political season.

Before we take your questions, let me quickly go over the guidance we gave for the second quarter. We expect our reported TV revenues, including the new stations, to be up more than 40% again and our reported TV expenses to be up approximately 30%. On a same-station basis, we expect revenues to be up in the high single to low double-digit range based on the continuing strength of local spot revenue, and we expect expenses to be flattish.

Over at the Newspapers, we expect revenues to be down in the low to mid single digits and expenses to fall at a mid-single-digit rate.

Expenses for corporate and shared services will be about $8 million, and, as we said in the release, we believe we will end 2012 with minimal net debt.

Now I will hand it back to Rich.

Thanks, Tim. Before we take your questions, let me focus on a few developments you can watch for over the coming months.

First, we're continuing an aggressive buildout and launch of new digital products for all of our markets. Our driving goal is to reimagine our core brands for the fast-growing digital audiences and platforms, desktops, laptops, smart phones and tablets. This effort includes both the new digital products and an expansion of our ad sales force to penetrate the digital opportunity in our markets.

We are also expanding our digital offerings and categories, such as weather and traffic. And we are determined to build a second revenue stream through subscriptions for many of these new digital products. Much more to come as we move through the year.

Also coming soon -- actually, very soon -- is the launch of our first full-scale social game, Campaign Story, which will take advantage of the insatiable appetite for political intrigue in this presidential election year. You can get more information at 519games.com, the site of our games company, launched this year in partnership with our friends at Capitol Broadcasting.

Thanks to good cash flow and a strong balance sheet, we are in position to make prudent investments in attractive opportunities, opportunities for which we expect a return that builds value for shareholders. As you heard Tim say, this should be a good year for further improving our financial flexibility, which we believe to be a strategic asset and an advantage in this marketplace.

Also this year, you can expect us to begin to deliver on the opportunity in the four new TV markets we added at the beginning of the year. Denver, Indianapolis and San Diego are among America's most attractive media markets. Bakersfield is a small market with promise, and we've begun to meet and plan with Azteca, our network partner for the five Spanish-language stations we picked up in Colorado and California. All in all, so far, it is very good in the former McGraw-Hill markets.

We are also positioning the Scripps TV stations to be the best place for candidates and issues supporters to invest their precious resources in this critical election year. Coupled with what we do on air through our Democracy 2012 public service programming, our skills at placing political advertising makes us the go-to place for campaigns.

At the Newspapers, we continue our focus on simplifying the business, consolidating back-office functions and attracting profitable revenue. We have purposely reduced the number of products we sell in each market to make it easier for our advertisers to impact their desired audiences and to be more profitable for us.

Across the Company, we continue to invest in high-quality journalism content. Not only is it much of the reason for our strength in local television ratings and the driver of the stability of our valuable newspaper audiences, it is also the foundation of our new digital products, which will seek to network our communities like never before.

As we like to say at Scripps, what matters most is what you put in print and put on the screens. That commitment to high-quality media content that creates high-value environments for advertisers has been the backbone of our investing strategy for many years, and that commitment continues to drive our decisions as we manage the relentless innovation of these new platforms.

As I said at the beginning, we are off to a good start in 2012, and we look forward to working on your behalf to increase the value of the Scripps enterprise. Thanks for joining us today, and, operator, we are ready for questions.

(Operator Instructions) Alexia Quadrani, JPMorgan.

Thanks. It's Townsend Buckles for Lexi with a few questions. First on the TV side, Brian, can you talk about how much of your ad growth came from auto, both local and national? And you mentioned bringing in new advertisers to Television. Is this mostly from newspapers or other mediums that you are gaining share?

Auto category, I don't have it broken it -- well, I guess I can have it broken out here by local/national. But auto was up double digits in the first quarter on the same-station basis, as well as with our news stations.

In terms of the breakout, a lot of the growth -- probably the biggest growth came from factory foreign. Obviously, some of the Japanese automakers last year were challenged after the tsunami and the earthquake, and they are obviously aggressively going after increasing market share. So we saw a strong growth there.

The other area that we had very strong growth was individual dealers. And I guess this gets to your second point about attracting new advertisers. We've had a very focused approach on the development of new dollars, adding new advertisers to television. And we added -- I will say just in first quarter, we added over 40 new car dealers to our television stations that were not there a year ago. So a very concerted effort in this quarter. I've pointed and highlighted the factory foreign, but I can tell you every other category, the domestic factory and the domestic dealer groups, were all positive as well.

Thanks. I guess for the overall growth rate on a same-station basis, can you just give a sense of how much auto drove that increase, so we get a sense of the magnitude?

Auto was plus 12.

Okay. Well, I guess just as a percentage of your total ad base.

Oh, it is just over 20% of our total business.

Okay, thanks. And just moving to the Newspaper business, can you talk about what is really going right down in Naples? Is that an overall market that has bounced back or something that is unique to the paper?

We will let Tim take that.

Yes, thanks, Townsend, for the question. And Naples is on fire. The leadership down there has really approached this market with vigor, as we headed into the winter months with a strong push, incenting folks in the proper way and getting everybody focused on the right things.

So they are making things happen. They weren't comfortable just sitting back and letting stuff come across the transom. And we have really reached out to a lot of new advertisers, small and midsized businesses in this market. A big push in print-and-deliver advertising in this market.

This is actually a market that has stabilized and starting to grow again. And just the confidence that you can feel and hear about from local businesses is a positive. We are starting to see some really good things down here in Naples, and expect that to continue the balance of the year. But its impact will not be as great as we head into the summer months. Although they are not letting any excuses get in the way of continuing revenue growth for this market.

That is good to hear. And Tim, looks like you're making good progress on the cost structure. Can we expect costs to continue running down mid-single digits in the back half, or at least at a pace greater than the revenues? And I guess bigger picture, how close do you feel you are at getting the business as efficient as it can get?

Townsend, I would say that between now and the end of the year, we're expecting costs to be down low to mid-single digits. In Naples, if we continue to grow, it is tough to keep those costs down just because we are printing a lot more volume of advertising. But in general, we would expect that run rate to continue to be below last year. And we expect to continue to drive efficiency wherever we can, but redeploying those resources where they matter most in driving value, which is on the content side and on the sales side.

Everything else, we just need to be ruthlessly efficient. But we need to make sure what we put in our printed newspapers and in our digital products is attractive and drives audience. And then we need to make sure we have first-rate folks out there, offering our audiences to local advertisers and pushing hard on the revenue side. So those are key ingredients we don't want to shortchange.

Thanks, guys.

Michael Kupinski, Noble Financial.

Thank you for taking the question. You've identified the prospect of achieving $42 million in political for the legacy stations. Do you have a handle on the amount of political that you might receive from the McGraw-Hill stations? Is it possible to generate $18 million, roughly, from those stations?

$18 million sounds pretty aggressive, based on the models we are looking at. I think we would safely put that -- I would add $10 million to your model. There is a lot that still needs to be determined. Quite frankly, today is a big day in Indiana, where we have our television station in Indianapolis, where Lugar is in his primary today. The outcome of that, if Lugar were to win, I think we'll see moderate spending; if Lugar were to lose, that would really kick up that race.

And so there is a bunch of things that we are still continuing to track. It is a little early on those new stations. But I think if you want to put a safe number of $10 million into your model, that is kind of what we are working from.

And then if you look at the second-quarter guidance, certainly the legacy stations, the guidance looks pretty strong. In fact, a little bit better than what I was looking for. But if you factor in the guidance there, it looks like the McGraw-Hill stations might be a little softer. Is there anything there that you can -- might be some of the reasons why we are looking for a little bit softer growth there?

I don't know that we are necessarily looking for specifically softer growth there. I think that many of the things that we are doing to build value through audience are just going to take a little bit of time. But we've been very proactive in the first four months; we've begun to initiate a lot of the programs that we think will create value, especially as it relates to ratings. Increasing ratings will be the biggest driver of long-term value for the stations.

And so kind of hard to get that quick momentum three or four months into owning these stations. I think our value will continue to grow with them through the year, but I would not -- I certainly wouldn't classify them as soft as we look at second quarter, Michael.

Okay. And if you look at the amount of political generated in the first quarter, would you say that -- and obviously, the lion's share came from the legacy stations -- did you get much political from the McGraw-Hill? I know that the ratings there aren't as strong, but did you get much political there?

No, we really didn't get a ton there. There was not a lot of spending for the Colorado primary, which would have been probably the biggest presidential opportunity of the markets that we're in. California hasn't happened yet. Indiana is today. So it was really Colorado, and there really wasn't a ton of spending.

Colorado's prominence is now beginning to elevate, and I do think that market, along with as we look at Florida and Ohio, are going to be strong drivers of our political revenue through the remainder of the year.

Okay. And can you give us an update on the progress of the development for programming for the TV stations? And has that started now? Are we starting to see some expenses kicking in related to that, or is that just more of a third-quarter phenomenon?

No. Quite frankly, by the time we hit third quarter, a lot of our expenses will already have been realized. And so that would -- much of our investment there in terms of solidifying the product, building out sets, hiring all of that has already begun, and folded into the numbers we've already seen.

And then just in terms of the digital pricing strategy in the Newspapers, you alluded to that a little bit, that you're expecting something by the end of the year. So part of that strategy is largely a 2013 event. We are not to assume much revenue impact this year, right?

Yes, Michael, that is correct. We are expecting that we will be up and running on all of our digital platforms, and then looking at subscription models, that packaged digital access by the fourth quarter. But it's really a 2013 benefit to us financially.

Okay, great. Thanks for taking the questions.

Craig Huber, Huber Research.

Good morning. A few questions, if I could. What was the percent change year over year of your programming costs on the TV side, excluding the acquisition of course?

We were down more than 20% in our programming costs first quarter to first quarter.

And for the full year, what are you expecting, please?

Again, more than 20% decline. I will point out that the better than 20% is obviously on a same-station basis. If you look at the programming expenses that are added in from all of our new stations, they still -- we still have a savings in there relative to the cuts that we've made.

Okay, good. And then on the auto side, you mentioned down -- I'm sorry -- up 12% in the quarter. How is that trending, auto, in the same-station in the second quarter, please, for TV?

We are pacing positive.

Is that better than that 12% number or in that range?

Well, you know, it's early. We are not pacing up more than 12%, but it's only May 8. And a lot of the business comes as you work toward the back side of a quarter. Many of these auto dealers, especially -- I spoke earlier about the success on the individual dealer side -- they live month to month. And as you get toward the end of the quarter, there is people who are obviously trying to drive market share and move products. So normal trending is that we do an fair amount of automotive business within the quarter. We are already pacing up, and I expect that we will have some positive results there.

Can you maybe just update us, if you would, on your plans here on the TV side for mobile?

I think we continue to work on that strategy. There is a couple of different facets to mobile. There is the live, over-the-air television as part of Pearl and MCV, with the dial product that is being introduced, which is the mobile that comes off of our television towers.

And we have four markets that are lit up currently; West Palm Beach, Kansas City, Tulsa and Detroit are streaming a mobile service now. I think that is probably chicken and egg; we are a little bit ahead of the consumers. But I expect the branding and the products associated with the dial product are now going to be -- are beginning to hit the market.

On the digital side, there is a lot that we do related to mobile that is pushing to specific mobile devices. We're I still think the only broadcast group in the country that can do live streaming to mobile devices. That business is up and running, and served us very well during tornadoes in the first quarter in several of our markets. And is also a profitable business for us.

And we continue to make other investments as it relates to mobile streaming, both live and extensions of our content on those devices.

So I think we have multiple business strategies around mobile. And so we continue to be very aggressive in all of those spaces.

Then Tim, if we could jump over to in the Newspaper side, could you just talk a little bit further about -- the Company is having good success now taking out (inaudible) the mid-single digits on the cost front on the Newspaper side. What areas are you tackling there? And then also, can you may be quantify for us how much the digital investments hurt the numbers in the current quarter, please?

Sure, Craig. I would say that the areas that we continue to focus on are some of the back-office functions and activities in our businesses on the production side, as well. On the distribution front, to the extent that we can take a look at the logistics of our carrier distribution and being more efficient with route structures, that is certainly an area to go after and to continue to work to refine. So all of those are important to us.

Also, as we are rolling out common platform for advertising and circulation revenue and having a -- standard processes and standard platforms, that will yield savings, not only from software maintenance costs, but also just the support necessary for those systems.

Right now, we have across our 13 newspaper markets at least two dozen or more different revenue systems that are on different servers that require support. So there is still a push to be more efficient and to take activity that doesn't add value out of the system. So those are all incremental improvements.

That is the biggest area of focus right now. And as I mentioned earlier, to the extent that we continue to put resources to work on the sales side and on the content side, we want to make sure that we are fully prepared for the programming to those digital platforms with compelling product and not shortchange ourselves as we enter into this new era.

I can't remember the second piece of that question.

If you just ball park for us what you think the digital investments were on the Newspaper side in the quarter, so how much that actually hurt your numbers.

I don't know that it actually hurt our numbers in the first quarter. I think that our investment in digital has been pretty steady-state. We were just reallocating resources towards the development of these paid applications on the smartphone and tablets. That is the big push there, but it's coming from other resources. Now from an enterprise standpoint, which Rich and Tim Wesolowski might be able to address, we are investing there for the whole enterprise.

Craig, it's Rich. And as Tim said, we combined all of our digital resources into one organization, and are focused on consistent products across all of our markets. So while we are making an awful lot of progress very fast, we've been able to reallocate a lot of our expenses. And the net new investment at this point, you're not even quite seeing show up in the financials. It is a really good investment story for us. Now, we will see how that plays out in the future as we -- and if we need to put more money in. But at this point, through reallocation, we are able to invest and not increase our overall expenses.

(inaudible) back on Naples for a second. If you could just quantify for us -- how much was the ad revenue up there in the quarter? And maybe you could just talk a little bit more, Tim or Rich, about -- I guess the initiatives that your folks down there in Naples are doing to help drive more revenues there. Is it -- is it more of like 50-50, the market is doing better for you guys, but also you guys are sort of reinvigorated, processing new people down there? What is going on, please?

Go ahead, Tim.

Sure. Craig, the ad revenue in the Naples market was up double digits. It was up 11%, 12%. It is a function of this is a very upscale market, with well-educated, affluent. So there was a periods starting in '08, '09, where it struggled, like a lot of other markets. But really the confidence has returned here. I think prices on a real estate standpoint have stabilized, and that has unleashed a lot of transactions.

And it is that activity which a lot of the businesses here in the Naples market will see and respond to and invest with us.

It is also the fact that in our Naples market, on the sales side, they have strong leadership and the right mix of products and a real efficient way to go to market, which is, frankly, what we are looking to do in all of our newspaper markets. But here, you have a really wonderful market that is contained. The TV stations in this market are largely run out of Fort Myers to the north. And so it really is a great newspaper market for us and one that we expect to continue to drive great results.

Craig, it's Rich. As we've talked about quite a lot, long-term, we have a lot of faith in the Florida market. And Florida is on sale right now, and it's an opportunity as more people get tired of the cold weather up North and decide they still want to find a place down south, we really think it is going to be a very good place for us to have media properties.

Great. Thank you.

Eduardo Atorino, Benchmark.

That's close (laughter). I had -- programming as a percent of total costs, what, about 25% or so for TV?

Give me a second here. I can get you an exact number.

And I guess second half costs for the stations would be down year-over-year, the old stations.

I think we are targeting to be in the flat range.

For the second half?

Well, for the full year.

Okay.

Hold on. I'll have the number here in one second. Yes, about -- just a little under 20% of our total cost in the first quarter. So I'm sure a year ago, it would have been more than 20%, Ed.

Okay. Now that you've owned the McGraw-Hill stations, did you find anything good or bad that you didn't expect?

I think we found a lot of good. We are really excited about being in these markets and these television stations. I think these are good television stations.

They are.

Some mission-driven journalists. We've got good sales teams there. And I was happy to see that our first-quarter revenue and cash flow performance was better than expected. So we feel really good about them. We've been executing our plan, no surprises. We are very much on plan in terms of the things we wanted to do, with clearly a focus on building a content distribution platform that will allow us to realize significant cash flow on all platforms.

And so I think we are absolutely on plan, and actually, probably more excited today than we even were in October, the day we got the phone call that we were going to be acquiring these stations.

Did I miss circulation numbers for newspapers, did you give that? Circulation, I got it. Okay, it is in the press release. Okay. Yes. Found it. Never mind. Thank you.

Thank you, Eduardo (laughter).

Barry Lucas, Gabelli & Company.

Great. Thanks very much. I have got several, actually, this morning. If we would start with Tim on the print side. Tim, we've had several reports already in the first quarter from The New York Times and A.H. Belo with regard to success on pay walls and getting paid for digital content. And I know it feels like you're a couple of quarters away from that. Is there anything you can take from those comments, whether it was Moroney or The Times, that help you or can accelerate deployment of digital subscription revenues?

Barry, I would say that certainly all of the experiments that are going on -- and frankly, I don't think that they are experiments anymore; they are real-world business activities -- we are taking all of that into account as we are developing and refining how we go to market.

We believe, and have from the early stages, that bundling with our home delivery print editions, full access to all of our digital platforms is a key ingredient. The bundling approach that the cable systems businesses have done, we look to as a guide and think that is the way to go. The a la carte approach in addition to print may not work as well.

So we have a lot of lessons that we can glean from what is going on at Belo, New York Times and elsewhere.

It will come down also to what you actually have on these different digital platforms and how we program to them. This is a big project. It not only is important to have the right apps for the tablet and the smartphone and also have a strong website that is intuitive and thoughtfully approached, but also from a newsroom standpoint, having our newsroom resources realigned to program to those different devices in a way that optimizes the consumer experience. With the leadership of Adam Symson at our Scripps Digital Group, we are very comfortable and confident that when we roll these out in the third quarter and then start to look at going to market from a subscription standpoint in all of our markets in the fourth quarter, we are going to have a lot of benefit of past experience from the likes of Belo and others. And are very encouraged by the opportunity to start to build revenue streams, like our TV folks have with retransmission consent and our Scripps Networks friends have with the affiliate (inaudible) revenue streams in addition to advertising. So there is a lot of benefit to us. But it's important that we make sure we program these platforms thoughtfully and provide good value.

Great. Tim, you touched a little bit on Naples. It's good to hear the market recovering and maybe take some lessons that will learn in the market. But this would be for either you or for Brian, but are you seeing similar trends up either in the Treasure Coast or Tampa or West Palm, so Print or TV? Has Florida bottomed, and is it about to improve?

I'll jump in real quick, and then I'll let Brian talk about the TV markets. The Treasure Coast on the other side, which is Stewart, Fort Pierce and Vero Beach, actually is a bigger market area. And three plus distinct communities, not seeing the kind of strength there that we are in Naples, but there are pockets. And so I think it is still early stages; I think a lot depends on the market. But Brian can jump in on Palm Beach and Tampa.

Barry, it's Brian. Similar to what Tim is saying, I don't see a consistency across both of our Florida markets. West Palm is very strong. It was our fastest-growing spot-only market, taking out political. And then when you add in political, it was a huge market. It was our biggest growth of any of our markets in the first quarter.

Tampa was a little bit softer. Still positive market for the quarter, driven a bit by political. But their spot market was softer and not as aggressive as the West Palm Beach market.

Helpful. As long as I've got you, Brian, and not to quibble, but this is the easiest quarterly comp, I think, on auto for the television stations because most of the dealers or dealer groups would have been pulling out the Japanese nameplates. So you're just being cautious on what you're seeing in auto, or it is slow to evolve? How would you describe that?

Barry, last year, automotive was -- actually for the last two years, automotive has been up double digits every single quarter. Some of them going back two years ago were 30%, 40% growth. The reality is we keep growing on top of that.

And so I think plus 12 is a pretty good quarter, on top of a full year of -- a full two years' of growth every single quarter. And as I said earlier, I like our pacing for second quarter. I think it will wind up being a very positive story, as well.

So I'm just copping a little, huh? Retrans, you picked it up a little bit. You described Time Warner and the Comcast deals. Anything in the shorter run that can help you, DIRECTV, DISH, that can -- in a renewal that could help amp up that number a bit?

Nothing else in '12. All of our deals that will get us through all of this year are done. And you saw that 30% plus growth same station. So I expect that we will have a very nice year.

Some of the deals you referenced will be coming up as well as others, '13, '14 prior to us getting to Time Warner, and so as those come due. Of course, we have not been able to fully capture those because of our prior agreement. I think those will add events that will allow us to have jumps at the point that we are able to renew each of those.

Great. Thanks very much.

Howard Rosencrans, Value Advisory.

A couple of different questions. Can you talk a little about the reverse retrans side of the equation?

Howard, it's Brian. For competitive reasons, I'm not going to get overly specific with you, but our deals with our networks were renegotiated more than two years ago. And at that point, that was part of our conversation. I think we've publicly said that we are in fact sharing some of our retrans with the networks. I'm not going to say to what degree, but we do believe that this new business model forges a very healthy relationship in the network affiliate partnership. And we think that that builds a strong business and a strong business model moving forward for both of those businesses.

And so we have renewals for several more years out with both NBC and ABC. Reverse retrans, if that's what you want to call it, is part of those models, but it is something that we are very comfortable with. And the costs are something that we certainly can manage.

So you don't think you are benefiting unusually from sort of a timing issue where you are capturing a lot and not giving back much? Do you think -- is that a fair way to represent it if I'm being clear?

Yes, I think that's fair. Yes, there is no timing here.

Everything sounded very encouraging on the call -- I guess on -- well, on the call so far. I guess I am a little surprised you weren't more aggressive with your repurchases. Why slow them, given all the good stuff we are talking about? I mean, the stock was up in the fourth quarter, but we've done a pretty good job of giving that back by now. Are you going to be -- what are your price points?

We can all sit here and do our models and figure out that buying stock at these levels is pretty drawn accretive, given zero borrowing costs. And it's not as if -- you guys, as you commented, will have no net debt. So why aren't we moving more aggressively?

We buy inside of a program over a fairly long period of time. So we are not attempting to go in and react to ups and downs in the short-term market. So we are working against an allocation that we had in place. And I'll let Tim Wesolowski come back and remind you of where we are in the share repurchase.

In general, we like share repurchase. We are investing in ourselves, and over the long term it has worked out very well for us. Go ahead, Tim.

Good morning, Howard. Thanks for your question. Yes, we -- the Board authorized $75 million worth of repurchases in the fourth quarter of 2010. We've got about $18 million left, and my expectations are that we would be using that throughout the rest of this year as the repurchase authorization that was done in '10 expires at the end of '12.

So we buy consistently over time. We just have not attempted to be in there taking advantage or trying to play the market each and every day. But, like I said, in general, we are very committed to continuing to invest in ourselves.

Okay, I guess we will go beat up the Board and get them to be --get a bigger authorization, because it looks like a pretty attractive situation. Thank you.

Michael Kupinski, Noble Financial.

Just a couple of follow-up questions. I was wondering if you finalized your thoughts on the Spanish stations at this point. I mean, how are those trending for you, and any thoughts on what you had thought of as an option value on the value creation of those stations?

Michael, it's Brian. We continue to be really excited about the opportunity of getting into the Spanish-language business. These are good markets that we are in in the state of Colorado; we have multiple sticks there. In addition to that being in California, both Bakersfield and San Diego, provides great upside for us.

I think last time I said our number one priority was just getting our arms around these television stations and the angle that will provide the biggest upside. And so we've focused a little bit more there.

What we have done is named a head of our Spanish Language focus. Ed Fernandez, who runs our station in Detroit, is taking on a larger role for us, and he is a former general manager at the Telemundo station in Chicago. He knows the industry and that side of the business very well. And I've asked him to kind of spearhead our analysis and focus on those specific stations to see what the upside opportunity is.

And based on his expertise, knowledge of the market relationships, we see his insight allowing us to have a more aggressive strategy moving forward. And so he is in the process now of doing his evaluation, with myself and a couple other members of a team we've put together. We are getting to know the Azteca people pretty well, and we continue to think there is big upside. And we are just finalizing our strategy there.

Okay, great. And then in terms of what is going on in Washington, can you maybe address a little bit of your perspective on the spectrum auctions and repacking issues? And then also the prospect of posting political ad rates, what your thoughts are. I know that -- I think that is just for the top 50 stations, if I recall, if this might affect you. Any thoughts there?

On the spectrum auctions, we've said all along we are not a seller. We are committed to our communities and we think there is a tremendous opportunity for us to use all of our spectrum to be able to serve our communities better, whether it is through mobile opportunities, extension of multi-cash channels, perhaps data streaming and things like that. And so there is still obviously lots of information that hasn't been disclosed about what those prices and all would be. But we don't see ourselves as a seller. We've been in these markets for a long time and will continue to be in the markets for a long time.

As it relates to putting the political data online, that rule was just announced in the last two weeks. It is at the OMB currently for review. I think we understand what the commission is trying to accomplish. We do believe that there is a better way to disclose the information. The FCC desires to make public, without publishing online, every rate for every unit for specific moments in time in a political window. And so I think we are hoping for continued discussion on this topic. We think it is an important topic.

Okay, fair enough. I'll talk to you soon about that, I guess, in more detail. All right, thanks.

Edward Atorino, Benchmark.

I've got sort of a Mickey Mouse question. Could you just break apart depreciation and amortization between news and TV? It is usually in the press release. I don't see it. I need to fill in a blank on my model. I'm sorry. (multiple speakers) total.

Let's see here. Hold on a second.

I'm sorry.

You know, actually, Ed, I think we are going to be talking to you later on this afternoon. We might have the number for you by then, if that's all right.

Terrific. That's no problem.

[Alfred Anderson, Alfred Andersson Family --.]

Good morning. Thank you very much for taking my question. I like this earnings call, a lot more interesting than the past ones.

I have some questions about the full-year political advertising. I notice that a lot of your TV stations are in some swing states, like Ohio, Colorado, Florida. Then you've got TV stations in Cleveland, Indianapolis, San Diego, Denver, Detroit, West Palm, and I guess Tampa, too. You mentioned that you had $42 million in the last election cycle from the previous Scripps stations, and you forecast a range of at least $10 million from the additional McGraw-Hill stations.

And the first question is how much were the McGraw-Hill stations' political revenues in the last presidential cycle? And then following on from that, whether a range of possibilities for political advertising for this entire year might run in the neighborhood of $60 million to $90 million, whether you think that would encompass the entire range of possible outcomes.

You dropped off a little bit there; I had a hard time hearing you. But let me take on a couple of the questions there.

Related to our acquisition of the new stations, as you go back and look, I think the guidance we've put out, $10 million, is probably in about the range of what they did in 2010. It is below what they did in 2008. But every election cycle is specific to markets and races, and they were driven in 2008 by specific races that were highly competitive in -- specifically in Denver. Those variables do not exist in this cycle, and so that money won't be in that state. And so as a result of that, we've modeled based on -- we look at every single market. We look at every single race. We look at where the markets -- where the competitive situation is positioned. We look at what -- the races that are open. We look at what is toss-up, what is considered to be lean, what is considered to be solid, and we model the support of each one of those. It is really a science, and we spend a lot of time -- I think our head of sales is the best in the business. He knows the political business like nobody else in the industry.

And so we are very acute in the way we attack our modeling for political. And so I think we are comfortable with the guidance we've given on the new stations.

In terms of -- I think as you were trailing off, you talked about $60 million to $90 million. Your high end, we don't see. Again, it comes down to specific races in specific markets. We are a business with a finite amount of inventory. We don't add -- we can't add new pages like a newspaper, and so we have to model a business. While some markets start early -- we're talking right now about the fact that Ohio and Florida have started early. Some of those will build. Some of the other ones you outlined, maybe a Michigan or an Arizona, may be late to the game.

And so all of that advertising may come in a six-week window, and so you are limited to the election laws on how you are allowed to price that business, as well as you work within the finite amount of inventory you have. So I think we model all of that. I feel comfortable with our guidance. I hope to be on the positive side of that guidance, but the opportunity potentially add 50% or 100% to our guidance I would say is probably not realistic.

Good. I understand what you are saying. Where I was coming from is if you had $42 million from your previous stations and now you have the influence of the super packs coming up into what promises to be a very exciting election year, and then you add on the new stations at $10 million, we've got $52 million more or less guaranteed, if things were exactly the same as sort of previously.

But you are expecting -- most people are expecting something much tighter, so $60 million with the full-year political would seem to be a low number. And I just tried to establish a range of what the top end might be, going up to $90 million. But apparently, you're not -- even though you model it all very carefully, you can't really give out the numbers because you are quite uncertain yourself about how much these super packs are going to affect the total advertising revenue. Is that more or less correct, my assessment?

Yes, I think the one thing you want to keep in mind is while super packs may bring more money to the political cycle, it would be great if they were all spending all of their money now. We know that the candidates and the parties are going to backload all of theirs until the last six or eight weeks. But much of the super pack money is brought into the same cycle and into the same window of those six to eight weeks.

We already sell out all of our inventory within those weeks. Obviously, we are aggressive news stations and so our news dayparts are coveted by political candidates. And so all of our unit rates -- all of our inventory is sold out and our unit rates are maximized as best we can. So even though there may be more super pack money in the system, our ability to drive up or add additional units probably doesn't exist to the degree we wish it could.

Okay, I get that point. That is very interesting. Time will tell. Thank you very much for taking my question. You have a great day. We are looking forward to the big bonanza.

Oh, one final follow-up on that. The TV revenues, I've sort of assumed that almost goes straight to profit, doesn't it? You don't have very many incremental costs -- once you take this political advertising, book your space, you don't have any extra costs associated with that, do you?

That's correct.

Okay.

On the political, I think what you get from us as a Company, that is we are very transparent, and if we had exact projections, we would give them to you. We are very well-positioned. We will get more than our share. Just the money moves very fast and it comes in a very tight window. If we get closer and we have a better feel for it, certainly we will change our guidance. But you are just getting a good, transparent look at a Company that we think handles political spending better than most.

I was looking at it as a shareholder. As you know, I own quite a few shares. In fact, I bought some yesterday. And if you take second half of the year and you have, on top of your regular operations at least, an $80 million profit, and you've only got -- was it 5 million shares, 5.5 million shares -- looks like quite a large per-share profit coming in for the full year (multiple speakers).

Hope so.

Okay. You have a great day.

There are no more questions on the phone lines at this time.

John, thanks very much for your help this morning. And to everyone else on the call, we appreciate your interest. We will talk to you again next quarter.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.