Tegna Inc (TGNA) 2001 Q4 法說會逐字稿

Good day ladies and gentlemen. You are listening to the Gannett Company (Company: Gannett Company Inc.; Ticker: GCI ; URL: http://www.gannett.com/) fourth quarter earnings conference call. Now I will turn the call over to Gracia Martore, senior vice president of finance and treasurer. Gracia?

Thanks and good morning.

Did we set this up as Global Crossing? (Company: Global Crossing Ltd.; Ticker: GX; URL: http://www.globalcrossing.com/)

I think so. We try to get a cheap rate and this is what happens. Thanks and good morning. Welcome to our delayed conference call and Webcast to review Gannett's fourth quarter and full year results. We hope you've all had a chance to review our press releases from this morning which also can be found at www.gannett.com. With me today are obviously Doug McCorkindale, chairman, president and CEO and Larry Miller, executive vice president of operations and chief financial officer.

Before I review the highlights let me remind you the fourth quarter of 2001 had 13 weeks compared to 14 weeks in the same interval last year. Also, for the year 2001 had 52 weeks versus 53 weeks. And as well the revenue and statistical report we released this morning for December included four weeks versus five weeks last year which makes those comparisons much less meaningful and not indicative of current trends.

Very briefly, we earned 93 cents per diluted share from continuing operations at the high end of the range we provided in early December. In 2000 we earned $1.11 on a comparable basis. More importantly, after tax cash flow per share was $1.34 in the fourth quarter versus $1.52 in the fourth quarter of 2000.

For the full year after tax cash flow per share was $4.78 this year and it was $5.03 last year on the same basis or a decline of just five percent. And by the way, these numbers were achieved without taking any special charges for investment write downs, restructurings or staff reductions.

Our reported results reflect the expenses we take for those types of items. At the beginning of 2002 we adopted statement of financial accounting standards number 142 which changed the rules for good will and intangible assets. If these new rules had been in place in 2001 diluted earnings per share would have been about 80 cents higher or $3.92 versus $4.22 in 2000 on a comparable basis.

I'd also like to briefly detail a bunch of numbers that will be of some interest. Reported news print expense declined 18 percent in the quarter comprised of a 13 percent decline in usage and a six percent decline in prices. For the full year reported newsprint expense increased nine percent pretty much all due to price.

On a pro forma basis and that's assuming that all the acquisitions that we did in 2000 were owned for all of the year in both 2000 and 2001. Our newsprint expense would have declined about two percent on an 11 percent decline in usage mitigated by a 10 percent increase in usage price.

During our last call we said we were seeing downward price pressures in newsprint prices. And these downward pressures have continued into the first quarter of 2002. In fact we've recently completed a couple of spot deals at prices below $420 a ton and one very small transaction below $400.

While pricing appears to be close to stabilizing few industry observers expect any significant recovery for producers this year. In the first quarter Gannett's usage price will decline in the mid to upper teens and should continue at that level of decline at least through the second quarter and probably longer.

Turning quickly to the balance sheet total debt at the end of the quarter and at the end of the year stood at 5.08 billion and cash and marketables were about 141 million at year end. Our cost of debt now stands at about 1.8 percent. That all rate will change if we do some fixed rate financing in the next few months.

Turning to our share count, basic shares outstanding at the end of the year were 265.8 million, average 265.3 million for the quarter and 264.8 million for the year. Cap ex was about 109 million in the quarter and ended the year at about 325 million. We expect them to continue to be around 300 million for 2002.

And then finally before I turn the call over to Doug I need to tell you that both our conference call and Webcast today may include forward-looking statements that are outlined in tremendous detail in our SEC filings. Doug.

Thanks, Gracia. Good morning all. I'm delighted to report that 2001 is over and behind us.

Our financial results for this quarter and for the year were constrained by what we thought -- think is the worst advertising recession we've seen since World War II. What I'm saying is it was worse than the early '90s. And by obviously the tragic events of September 11. But we are very proud of the results that our managers achieved in these extraordinary times.

Our newspaper group performance continues to be at the top of our industry and obviously substantially better than the newspaper industry average. Our community newspapers over the course of the quarter gradually returns to the pre-September 11 business levels. But on the retail side we've seen consumers that advertises remaining skittish.

In the last few weeks you've obviously read about the bankruptcy of K-Mart (Company: K-Mart Corporation; Ticker: KM ; URL: http://www.kmart.com/) and the announced store closings by a few others. Right now it's too early for us to say what the impact is, if any, of these actions on local advertisers and how the consumers will spend over the next few months. But we do remain cautiously optimistic on the retail side.

In classified surprisingly automobile advertising remains strong in December and appears to be holding up in January. I think a few weeks ago we would have been a little surprised that it's this strong in January. Employment continues to be soft. However, it does appear to be bottoming. Now that's the same bottoming we told you about pre-September 11. We'll have to see in the upcoming weeks how that plays out.

On the national advertising front, both local newspapers and USA Today are seeing a very volatile picture. USA Today closed the year with ad revenues of about 334 million which is down 22 percent. And it just finished January down 19 percent in paid pages with weaknesses in a number of major categories including travel. February on the other hand should be helped by the Olympic related advertising.

At the local newspaper level we did see some strength in national advertising in January. Turning to our overseas operations properties were strongly additive to cash flow and to book earnings in the quarter and for all of 2001.

Until the events of September 11 and its aftermath our U.K. properties have basically been insulated from the economic forces that had been affecting us here in the states. But in the fourth quarter they did see some softer ad results. While the economy in the U.K. may be softening currently most of the economists over there are projecting a more positive growth for 2002 than we're going to see here in the states.

Turning to television. The stations -- our stations continue to post very strong operating profit and cash flow margins. Obviously among the very best in the broadcasting industry for 2001. Our television group includes some of the highest rated local news stations in the country. That's obviously where we make the money and they continue to be number one or number two in almost all of our markets.

In the fourth quarter our television numbers were impacted by the absence of about 50 to $55 million of Olympic and political advertising that helped us in the year 2000 and also obviously by the advertising recession.

But on the positive note the for the first quarter of 2002 have shown improvement over the last few weeks and our latest for the quarter are up in the mid single digit range. The Olympic sales now appear to be coming in as expected and we think we'll make our budget there. Again, I want to caution you that these are volatile. But right now they are positive. We'll keep you up as the quarter progresses.

Turning to our Internet activities we generated about 71 million in revenue 2001, that's up from 63 million in 2000. Our domestic community newspaper web sites did well even in this environment. The year they made a profit in the aggregate. Also a number of our television stations and our group had profitable web activities for 2001. But at USAToday.com the ad revenues continue to reflect the experience of other national sites and were down considerably.

Looking to 2002 we continue to see conflicting forecasts on the economy. It appears some recent economic data from the government points to a recovery that is about to begin or is perhaps under way. I think they're going to revise some of those numbers and it won't be that positive for a while. At Gannett we can't predict exactly where the recovery will begin.

So we're running our business as we did in 2002 -- 2001 rather and we'll conservatively and we will not spend the money until we get it. We'll get a lot of help from interest expense and newsprint in 2002, particularly in the first half and we're going to continue to control costs as you've all expected from us. If the economy is stronger than we're predicting you'll see a significant earnings picture better than we have budgeted.

In early December we provided you with assumptions of 2002 which we told you were based on macro numbers rather than our typical bottom up approach. We've now completed the bottom up unit by unit budgeting process for the first six months of 2002. We're only doing six months at a time in this economic environment but based upon those budgets we continue to be comfortable with the overall assumptions we provided you at the -- for the full year.

We've also just finished the first period of 2002 last Sunday. So it's a little early to give you the final numbers for January. Remember, we do have some of the toughest comparisons for the year on a newspaper advertising front compared to the first quarter of 2001. But based upon what we're hearing this far -- thus far and assuming current trends continue we are comfortable with First current consensus of 87 cents give or take a few pennies.

Let me stop now and we'll take your questions.

Thank you. Ladies and gentlemen if you have a question at this time, please press the one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Once again, if you have a question at this time please press the one key on your touch-tone telephone.

Our first question comes from Lauren Fine from Merrill Lynch. (Company: Merrill Lynch & Co. Inc.; Ticker: MER; URL: http://www.ml.com/) Your question please.

Thank you very much. I'm wondering just a couple of quick things. One, if you could quantify the revenues that you generated with K-Mart. And if you had to take any type of a reserve in the fourth quarter for any outstandings?

And then secondly, if you could give us maybe more color on . It appears that the U.K. you know ad market has softened very rapidly as you noted. But I'm just wondering if you could tell us whether you expect ad revenues at you know early on in the year to be up or down.

Well, Lauren, on K-Mart they came on very strong in the second part -- or the last part of 2001. So I think they did what about 40 some odd million with us which was up from 2000. We have no reserves.

We anticipated everything and as you would expect us to cover it. And as you know we're one of the preferred creditors and we expect to go on with them and support them in doing what they are planning to do hopefully successfully. We don't know what stores they're looking to close yet. So it's a little early to tell. But I think we'll do OK with them.

In England I'm not quite sure I understood your question. We're looking at a more modest growth in 2002 than we had in 2001. I think the projections are in the single digit -- mid single digit range of four percent or so in revenue growth.

They're seeing a little softness in the employment as we did in the states but less than we did. And after a beginning of a little decline they seem to have bottomed out much sooner and as I said in the comments the economists over there seem to think they're going to have a better 2002 than some of the thinkers who are looking at the U.S. Is that's not what you're getting at, come on back on the line and I'll try to help.

No. That actually was very helpful. And one last question. I'm just wondering if you could characterize the market for acquisitions right now both on television and newspapers. What you're seeing either in terms of you know more willing sellers given how deep the ad recession has been or if people are holding off to wait and see if the cross ?

Now what we're seeing in the acquisition front is sellers on the television side that are asking for prices that Gannett will not pay. They're asking for what I call funny money values based upon projections that cash flow come back to the year 2000 right away. You know all the hype that you normally get from a computer model that doesn't deal with reality. We're interested in some of those but we're not going to be chasing them.

The print side's a little bit more quiet and a little bit more realistic and there are some discussions going on there. But I'd say basically on broadcasting the ask and the bid are pretty far apart.

Great. Thank you.

OK.

Thank you, Ms. Fine. Our next question comes from Douglas Arthur from Morgan Stanley. (Company: Morgan Stanley Dean Witter & Company ; Ticker: MWD ; URL: http://www.msdw.com/) Your question please.

Yes. Two questions. Gracia, in the December statistical report you gave pro forma ROP adjustments for December excluding the extra week last year I don't believe you gave just the total newspaper ad revenue pro forma for that. So ...

Yes. We gave you volume numbers but frankly even looking at a four week to four week comparison you're looking at a different four weeks. This year would have included the Christmas week. Last year would not have included the Christmas week.

So our feeling was it was almost impossible for us to identify a really apples to apples comparison. So what we did give you was the volume numbers. And frankly I think you know the December numbers were probably in line with the trends we saw in November. So, you know and I think the January ones are more indicative of where we're going forward.

Doug, we just didn't want to beat that to death with our managers. I mean we could have forced them to come up with all these analysis but business conditions being what they are we said OK let's get on with this. We see the volume numbers. We know there's an extra week in there. We know it distorts the picture but I didn't want to make work that didn't really bring anything to the bottom line.

Got it. OK. And then just a second question. The total cost of the newspaper division were down I think about 110 million in double digit. Obviously you had one less week. But could you break down the rest of it in terms of what was newsprint and what was just general cost savings and labor related because that's a pretty big number.

Yes. What I can give you, Doug, is reported ex-newsprint pro forma and then pro forma ex-newsprint for the fourth quarter which I think will help you drive to those numbers. Obviously you saw in the newspaper segment reported were down 10 percent. Reported ex-newsprint were down about eight percent.

And then on a pro forma basis -- and there wasn't much noise on the pro forma side in the fourth quarter but pro forma total expenses would have been down about nine percent for the segment. And then pro forma ex-newsprint expenses would have been down about seven percent in the segment.

Great. Thank you.

If you didn't get that, Doug, Gracia will send it to you. You know you just call her up and she'll give you the -- give it to you in writing.

Terrific.

Thank you, Mr. Arthur. Our next question comes from Barton Crockett from J.P. Morgan Chase. (Company: J.P. Morgan Chase & Co. ; Ticker: JPM ; URL: tttp://www.chase.com/) Your question please.

OK. Great. I was wondering if you could elaborate a little bit on the -- one of the points that came out on the pro forma lineage trends which was that the classified in December was up two percent. Was that noise or can we you know start to maybe look for potentially continuation in that lineage trend in classified going into the first half of this year. And then I have a couple of follow ups.

I think it's -- this is Doug, Barton -- Morton. I think it's noise right now. It's too early to tell. And we'll know a little bit when we get our January numbers which I said just closed on Sunday. And Gracia will come out with her normal report and we'll have a little better handle on it. But January is such a weak month that I wouldn't even want to rely on that to give you any trend indicators.

Although as I said earlier we are seeing what looks like a bottom in employment. We are seeing a little better picture on the automobile side. Real estate is hanging in there OK. So, it's a little early to guess at this but we'll see what he January numbers show.

This is truly the area where the four weeks really impact it because you really got that week between Christmas and New Years that's in this year when auto advertising, employment advertising really shuts down, where you had it last year. So, again, it's back to Gracia's point about the four weeks. You can't get comparable data.

Yes.

Let's see how they -- the numbers come in and then we'll be able to chat about how the quarter's going and the rest of 2002 hopefully.

OK. Great. And then another question on the cost side. You know I know you guys don't particularly like to break out you know expenses excluding severance or any other type of one time charges. But a lot of other you know companies out there do.

And just to get a sense of you know what impact that might have had on the expenses this year you know and what kind of benefit we might see next year was there anything in there this year that was particularly significant that wasn't broken out or any sense to sort of get a sense of the magnitude of that stuff in your case?

No. We don't believe in one time charges. We believe in managing every day. And we began to see the economy soften in the last part of the year 2000. So we began to turn the screws to bring things down gradually and in an organized fashion. So, there are no one time hits.

Our employment numbers domestically are down around -- or body count's down about five percent a little less when you bring in the U.K. But that was brought down over the last year or so. And all the other things we do is you know we bring them down if we think our Internet investment is not at the value that we had to invest in it we'd write it off as we see it going down in value.

So you don't have any one time charges in there but obviously we're running the ship as tightly as we think is appropriate and if the revenue picture picks up better in 2002 then were originally projects -- we had originally projected it'll come right to the bottom line. You'll see some very good results.

OK. Great. And then one final question here on the expenses. You know following up on Doug Arthur's question about when you said the total newspaper expenses were down nine percent, seven percent excluding newsprint ...

Pro forma.

Pro forma. Now, when you say pro forma is that excluding the extra week or is there any way to ...

No. That's just assuming that all of the properties we owned in the fourth quarter of 2001 we also owned in the fourth quarter of 2000.

Is there any way to get a sense of -- and maybe this gets into the revenue thing that you can't get at. But any way to get a sense of expense trends excluding the extra week?

No. And again we could beat that to death with our managers but it's work that doesn't bring any money to the company. So, we've experienced this every seven years and we just don't beat it to death and we go on about it. I mean I'm sure some of our managers would know that but to ask every Gannett property to come up with that analysis is just not a money making idea.

I can probably assure you that we didn't loosen up on any expenses in the fourth quarter. And you know what our trends look like on expenses over the last three quarters. So they were as tight if not tighter in the fourth quarter.

OK. Great. Thanks a lot.

Thank you, sir. Our next question comes from Kevin Gruneich of Bear Stearns. (Company: The Bear Stearns Companies Inc.: Ticker: BSC; URL: http://www.bearstearns.com/) Your question please.

Thank you. I was just wondering if you could talk about your debt plans in the near term. You talked about potentially fixing some debt and as you look at it today would you expect some of that to occur in the first half of the year and what amount?

Yes, Kevin. Obviously we've been very fortunate to be able to have all of that debt outstanding over the last 18 months at rates that have gone at six-and-a-half at the beginning of the year to 1.75 today. We have as we've mentioned in the past a shelf registration in place for about a billion five. And we'll be looking very very carefully at that over the next few months and don't be surprised if you don't see us do something along those lines.

Along the lines of a billion five?

Potentially. You know a little more, a little less. We'll just have to see where the market conditions are at the time and what we think makes the most sense.

Great. Thank you.

Thank you, sir. Our next question comes from William Drewry from Credit Suisse First Boston. (Company: Credit Suisse Group; Ticker: CSGKY; URL: http://www.credit-suisse.com/) Your question please.

Thanks. I had a couple questions. First off congratulations on a great execution in a crummy quarter. Great job. Two questions, Doug. One is could you give us a final tally on where the acquisition came in for '01 whether it was diluted to book EPS 142 or not? Any update on the numbers from cross selling between the TV and the newspaper in the Phoenix market?

And if you had any additional comments on the TV margins. I think they came in at around 50 percent EBITDA margins for the fourth quarter and I was surprised that they were that high considering how weak the ad market was. Was it all cost-cutting -- cost cut driven or did revenues come in a little better than you expected towards the end of the quarter? Thank you.

OK, Bill, if I can remember all of those things. Central did better than we expected in the fourth quarter and for the year and was positive. Obviously it was cash positive. It was also book positive.

Now, part of that was helped by the interest rates that Gracia just mentioned which were obviously lower than we had expected. But is a very positive acquisition, both Phoenix and Indianapolis are doing better than we had hoped. There's a little bit more work in some of them than we anticipated but a very positive acquisition would be happy to do another tomorrow if you happen to have one in mind.

On the -- what was your -- on the broadcasting question, yes they are controlling expenses. I'm not -- I don't have the calculation in front of me but they're executing very well. And you know they were complaining that some of the stations were down to a 50 percent cash flow margin down from 57 or 58. So it's better than selling widgets. And the numbers are as you expect and with this little pick up we're seeing in the first part of 2002 I think you'll see us return to the even higher margins as we have in the past.

What's your third question?

It was just getting an update on the cross selling numbers in the Phoenix market. I think you said four-and-a-half million at the ...

Yes ...

... at the conference in December.

Yes. I -- the last I heard it was still at about that range. Actually we're going to go down there and get an update in the upcoming weeks.

So we'll be able to tell you more in about two or three weeks but it -- the last I heard it's still about four-and-a-half million. That's an incremental which is what we really want to count. Getting the same advertisers in both mediums at bigger discounts is not a positive to us. We want new revenue and it's about four-and-a-half million of new revenues.

Great. Thank you very much.

Thank you. Our next question comes from Steve Barlow from Prudential Securities. (Company: Prudential PLC; Ticker: PUK; URL: http://www.prudential.co.uk/) Your question please.

Good morning. Just on the U.K. again a little bit. Could you talk about just revenue growth in the U.K. in the fourth quarter? It sounded like it was softening but could you give us an indication of what it might have been? Was there any currency effect either for the quarter but probably more importantly just for the whole year in the U.K.?

And then you talk about 71 million of Internet revenue. What portion of that is in the U.K.? Or is any of that part of that? And then I'll switch to TV to follow up with Bill. Any changes in your programming expenses or will we sort of assume that five percent body account overall for the company? TV got the same sort of hit that the newspapers did?

Let me start on the exchange rate, Steve. In the fourth quarter the exchange rate was 144 versus 145 in 2000. So pretty much a wash. For the full year the exchange rate we would have used was 144 versus 150. So you can do the math to figure out what the impact would have been.

On the revenue side we again suffer from the fact that there was the extra week last year versus this week. But my sense and Doug and Larry can jump in here is that revenues certainly softened in the fourth quarter hard to determine what the impact of that -- absence of that week was.

But I think that you know they saw in the help wanted side further softening than what they had been seeing even at the end of the third quarter. But you know I think all in all still a good result out of in the quarter and for the full year very, very positive to the bottom line.

Yes. Probably mid single digits for the quarter, Steve, you know ...

.

Yes.

Yes.

They did clearly better than we've been doing in the states. Did we cover all your questions? I'm not sure.

Internet revenue and then TV programming versus bodies up on the margins.

Yes. The piece of Internet revenue from the U.K. does anyone know that? No it's …

It's about four million.

Yeah, maybe about $4 million, something like that up to 71 million. The body count in broadcasting clearly was not down the same percentage as it was across the company. So, when we have a five percent drop in full time equivalence, most of that came out of the newspaper side. The body count and broadcasting is down but not that great. And I don't have an exact break up for it.

On programming costs I don't -- you know I don't know what's -- there's nothing particularly going on there that's giving us any concern. Is there something you're focusing on that's -- that I'm not paying attention to? Our programming ...

I wouldn't want to presume that I am. No it's just -- it's really a matter of since the margins actually were much better than I thought ...

Yes. I mean they were up somewhat for the year a couple of percentage points but it's not like some of the craziness we saw back in the '80s. So I mean if there's something specific maybe we could get back to you but as a general statement it was not a concern for us.

I think ...

Steve ...

... the other half of the question really related to the payroll. And it's not -- obviously it's their margins. They cannot cut payroll like everybody else across the company. But for the year their payroll was below the prior year ...

Yes.

... slightly.

It just wasn't down the five percent ...

Right.

… the whole time with Global .

Right.

And, Steve, I made a mistake. Internet revenues would have been more like nine million.

Thanks.

Thank you, Mr. Barlow. Once again ladies and gentlemen if you do have a question at this time please press the one key on your touch-tone telephone. Our next question comes from Jim Goss from Barrington Research. Your question please.

Hi. I was wondering about national advertising. It appears that USA Today is taking a somewhat bigger hit than the national advertising at the local papers.

And I was wondering if you could comment on the dynamics involved. Is it the national frame versus more of a local spot issues? Or is it the categories involved like travel? You know maybe if you could talk about that. And then is there -- comment on the rebound potential in USA Today versus local papers in that score. And then I have one follow up.

Well, Jim, as you know and on the local front national is a very small piece of the pie, six, seven percent of our revenue picture. So if we see a little bit of a pick up there as we did in January. It's more noticeable. In USA Today as I said earlier the travel category which is it's bigger -- biggest category did not rebound in January. They are seeing some pick ups, some of it's Olympic related, in February.

And the other big categories like technology and entertainment also did not come in. They are getting a sense of activity though. It's a little early to predict but they are getting a number of contracts signed. They just haven't spent the money yet but the positive result of people signing up for future spending is a good sign. But we haven't seen the cash yet so we won't spend the money until it comes in over the transom.

OK. And the -- I don't know -- another matter you eluded to the issues on an earlier question. Do you have any timing expectations right now as to some of the key ones across ownership obviously? Or any other ones that are important to you?

Well, cross ownership is taking longer than any of us who are interested in that topic would like. As you know we've been talking about it forever. I'm guessing now summer, late summer at the earliest.

It -- the next comment period is due in a week or two or couple of. I -- they keep adding time to it and keep delaying the process. We're still very optimistic about the outcome but it's simply going slower than anticipated or going slower than you and I would do in a normal business environment because we're dealing with our friends in government.

Does it relate to Mr. as one of the articles suggested? And if you don't get it done by then do you run into a problem with late fall and the new elections and the other changes that could impact the whole process getting done?

We don't have any reason to believe that he's delaying the process. He's just making sure that everyone is heard and so all the bits and pieces are on the table. But I don't know what'll happen if it gets beyond September. I haven't really focused on that yet.

There's a lot of support on both sides of the aisle changing the rule and getting back to reality. So maybe even if it drags on a little bit it wouldn't change the outcome. We're not hearing any negatives. We're just hearing that it's taking longer than any of us would hope.

All right. Thanks very much.

Thank you, sir. Our next question comes from Mandana Hormzi from Lazard. Your question please.

Good morning. I have two questions. One regarding just sort of theoretically is your preference still to pay down debt as opposed to buying back stock? And second I was wondering whether there was any early read you had on the upfront market?

Our preference is to do whatever makes the best amount of money for us. And with debt at 1.75 percent we're paying it down but as you heard earlier we are looking at fixing some. So, we've got enough cash flow that we can do both if the economics makes sense to buy back the stock. And we run that model about every couple, three weeks. And so we have authority to buy back.

So we could do both but right now we're going to pay down the debt a little bit for a while. And we also want to see where the acquisition market goes. As I responded to Lauren's question earlier right now the bid and the ask are pretty far apart on television. But there are a lot of assets around. So we don't want to spend the money until we see where those pieces come together. And what happens on an more realistic front.

On the upfront market -- do I have any -- I don't have any input on that. We haven't heard anything one way or another other than what I mentioned earlier with the that gradually just improving a little bit but we'll have to get back to you on that. I don't have any answers.

Thank you.

Thank you, ma'am. Our next question comes from Michael Kupinski from A.G. Edwards & Son. (Company: A.G. Edwards Inc.; Ticker: AGE; URL: http://www.agedwards.com/) Your question please.

Thank you. Regarding the television , Doug, could you talk -- maybe break that out between local and national? And then if you can talk about any particular categories that you're seeing strengthen?

Well, local is doing better than national. Obviously for February with our big NBC station holdings we'll see very good results for Olympics and a couple, three weeks ago we were a little bit more concerned about it. But it is coming in on Olympics and therefore we think we'll make our budget.

What's a little bit stronger than we didn't anticipate is automotive. After all the activity in the fourth quarter we had expected some softness in -- coming into January here but automotive is holding up pretty well. As you know that's a big piece on the television front. So, local most positive, national in certain categories following and just generally a sense of pick up.

And you know with March being -- right now in our March are about flat with March of last year. And it's -- here we are in the first weeks of February. So that may improve a little bit from there. So, those are all good signs, not aggressive, not coming in over the transom, not big numbers but certainly more positive news than otherwise.

And on the autos is that both domestic and foreign that you're seeing the strength?

Yes, but the softness we had expected to see was on the domestic front and that's the one that's continuing to be OK.

OK. Great. Thank you.

Thank you, sir. Our next question comes from Edward Atorino from DKW. Your question please.

Gracia, will you share with us what type of rates the banks are talking about if you had to fix something soon?

Too high, Ed.

That's always Doug's answer.

Yes. Right.

Unless it's advertising revenues. You know we're looking probably in the three to five year maturity. So you know anywhere in the four-and-a-half to five-and-three-quarters range depending on what maturities, what moment in time you're looking at it, what new company has a problem that royals the market, all those sort of interesting variables. But that's about the range right now.

Thanks much.

Thank you, sir. Our next question comes from John Cornish from Sandler Capitol Management. Your question please.

Good morning. I got a couple of questions. Assuming the stock stayed in the mid 70s for a while, what would be the conditions you would want to see for resuming your share repurchase? And then a couple of quick numbers questions. I missed the net debt outstanding at the end of the year. And can we get some cap spending guidance also please?

Well, Gracia, give John the last one.

Sure. On the capital expenditures as I said about 300 million for 2002. On ...

Net debt at end of year.

Net debt was 5.08 billion.

OK. Thanks.

John, on the buy back of the stock as you know we would just take a look at that compared to other alternatives and right now with some of the assets moving around in the marketplace especially on the broadcasting front we're just going to sit and see where these pieces come down. But you know if the cash keeps coming in as you well know and there's nothing to do with it we'll go back into the market price and decide to reduce the outstanding.

But I don't want to give you any parameters right now because we don't have any. There're just a couple of other things on the plate that are more important to us than buying back the stock at this time. Now, as you'll recall a year or so ago we bought back a billion dollars worth of stock in the first quarter of 2000 and we could move along more aggressively in the upcoming future if all the pieces came together.

Given their level of free cash flow and the level of interest rates today, what kind of -- I can't understand what kind of investment would be more attractive than buying back your stock, given your reluctance to do acquisitions and given where interest rates are.

I didn't say I was reluctant to do acquisitions. I just said I was reluctant to overpay.

.

And there are a number -- a number of television opportunities out there and some print opportunities that would make a lot of sense for us and if the cross ownership rules go away in the not too distant future there are also a number of opportunities for some bigger discussions that may require us to look at the use of some money. So I -- you don't want to close that door too early until we see where the pieces come together.

Thank you.

Thank you, sir. Once again ladies and gentlemen, if you do have a question at this time please press the one key on your touch-tone telephone. Our next question is a follow up from Douglas Arthur of Morgan Stanley. Your question please.

No. I'm covered. Thank you.

Thank you, sir. Our next question is a follow up from Brian Shipman from Robertson Stephens. Your question please.

Thanks. Not sure what I'm following up on but a couple questions. One, can you give us an update as to your take on where the FCC review is at. And two, has management's stance towards doing potentially further deals in Europe changed? In other words, would you be willing to extend anything into continental Europe at this stage? Thanks.

Brian, on the FCC review are you talking about the cross ownership discussion we had a few moments ago or are you getting at something else?

Cross ownership and what you're seeing or hearing on the duopoly side as well.

Well, as I mentioned earlier there's some comments due and the process is taking longer than we had anticipated. We're not hearing anything new or different on duopoly or 35 percent cap on the broadcast stations. I mean it's all on the table. But we're not hearing anything particularly different. I'm not quite sure what you're getting at ...

I guess just in terms of expectations in terms of timing.

Well, timing as I said earlier probably late summer is more realistic. I hope it's sooner than that but late summer is what we are hearing from the folks who pay close attention to the FCC.

Great. Thank you.

On your European question we get presented a number of transactions all the time. I said sarcastically that generally if the Europeans don't want to buy their assets and then somebody tries to unload them on folks in the U.S. So a lot of the stuff we see I think is not worth pursuing because there are very sophisticated buyers in Germany and France and the U.K. itself.

Having said that we are seeing some assets over there. We'd be a cautious acquirer of those assets as we were with the U.K. assets. We'd have to have the management team that could run it and could make it as successful as our U.K. acquisition was. We're not seeing anything that meets that criteria at this time.

OK. Thanks a lot.

This concludes our question and answer portion of the program. Analysts with additional questions should contact Gracia Martore at 703-854-6918 or by e-mail at gmartore@gannett.com. Members of the media with questions should call Tara at 703-854-6049 or by e-mail at . Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may disconnect. Good day.

Take care.