Tegna Inc (TGNA) 2002 Q2 法說會逐字稿

Good morning and welcome ladies and gentlemen to the Gannett 2nd quarter earnings conference call. At this time I would like to inform you this conference is being recorded for rebroadcast, and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers after the presentation. I will now turn the call over to Gracia Martore. Please go ahead Ma'am.

Thanks and good morning. Welcome to our conference call and webcast to review Gannett's 2nd quarter results. We hope you've had a chance to review our press releases from this morning, which also can be found at www.gannett.com. With me today are Doug McCorkindale, Chairman, President and CEO, and Larry Miller, Executive Vice President of Operations and Chief Financial Officer.

Very briefly, Gannett earned $1.13 per diluted share, at the top end of the range of estimates we provided you last month. In 2001, on a comparable basis, we earned $1.08 per share or a 5% increase year over year. As importantly, after tax cash flow per share was $1.33 for the quarter versus $1.28 in the 2nd quarter of 2001, again on a comparable bases.

As you know, and as we've told you previously, at the beginning of 2002, we adopted FAS-142 which changed the rules for goodwill and intangible asset accounting. As a result, the 2nd quarter of 2001's previously reported diluted earnings per share of 88 cents were adjusted upward by 20 cents to the $1.08 that we've been comparing against, to reflect the impact of these new rules as if they had been in place at the beginning of 2001.

I'd also like to briefly detail a few other numbers. Newsprint expense declined 24% in the quarter, comprised of a 25% decline in prices, and about a 1% increase in usage, primarily from USA weekend and our Gannett offset printing folks. In the 3rd quarter, Gannett's usage price will decline in the 20% plus range as well.

As you know, newsprint producers say they plan to raise prices August 1st. We view the timing of this increase as premature given that publisher consumption continue to trail last year. Down 4% through May.

As we witnessed in March 2001, a pricing increase announced is not necessarily a price increase implemented. General consensus points to the catalyst for this announcement being producer need rather than the reality of market conditions. However, the dynamics of supply and demand suggest that a price recovery cannot occur before publisher consumption exhibits sustained strength. Perhaps a more realistic outlook would peg the 4th quarter as the earliest possible time frame for successful implementation of an increase. Indeed, during the past few weeks this opinion is being quietly reaffirmed by many newsprint producers.

Now turning to the balance sheet, total debt at quarter end stood at $4.5 billion, and cash in marketable securities were $79 million. At this point, our [all in] cost in debt remains at a very attractive 3.4%. And we'll continue to enjoy positive year over year savings and interest expense in the third quarter.

With respect to shares outstanding, basic shares at quarter end were 266.8 million, and also averaged that same number for the quarter, and averaged 266.5 million year to date. Capital expenditures were $67 million in the quarter, and $125 million year to date. As we mentioned in the mid-year media review, we expect them to be around $290 million for 2002. But we'll keep you updated on that number.

Finally, before I turn the call over, our lawyers tell me, and we need to tell you, that both our conference call and webcast today may include forward-looking statements that are outlined in scrupulous detail in our SEC filings. Doug.

Thanks, Gracia. Good morning all. As most of you know in the presentation that we made about four weeks ago at the mid-year media review, we indicated that advertising had bottomed and the worst was behind us, and we were beginning to see progressively better results. I think you'll all agree that the second quarter numbers that we release today seem to reinforce this belief, but also our belief that the recovery will be uneven.

Total pro forma advertising revenues for our newspaper segment were down just about 1% in the second quarter, versus being down about 5% in the 1st quarter. Employment classified revenues in our newspaper segment got sequentially better during the quarter. They were down 11% in June. Had been down 14 in May, and down 15 in April. In employment, the numbers still aren't good but they are getting better. Automotive and real estate remained strong throughout the quarter. Retail revenues remained mixed and finish flat for the quarter. Three local categories were soft in the quarter. Grocery, consumer electronics and department stores.

And the national front, national advertising at both our local newspapers and at USA Today remained highly volatile finishing down 4% for the quarter. At USA today the ad pages are still being booked very close to deadline, so making predictions about the near term or about future trends is still very difficult.

Turn to our friends in the UK for a moment, News Quest again continued to be an important contributor to our results. In the 2nd quarter, we saw soft ad results in employment though property remained strong. As you may recall, employment was very, very strong at News Quest in the second quarter of 2001, being up double digits. Overall, News Quest's operating profits were again up in the mid single digits, and the newsprint price situation over there has resulted in the decline of more than 11%.

In television, like a lot others, we're having a strong year. The quarter enjoyed heavy automobile and heavy political advertising. Thus far, political has exceeded our expectations, and with the strong position in each of our markets, we are well positioned to maximize the political ad dollars in the second half of the year.

As with USA today, we've seen a very different buying pattern emerging in television. In the past, orders had been customarily booked many weeks out, but that's no longer the case, with advertisers booking much closer to air time. Therefor, are our pacings have been improving for the last several months. Our latest pacings for the quarter are up in the low teens, with July up in the teens and August and September up in the very low teens. Again, though I want to strongly caution you that the pacings are volatile, and the numbers I've just given you reflect where we are right at this moment. We'll obviously keep you updated on our monthly reports as the quarter progresses.

On the internet side of the business, we generated about $23 million in revenue in the 2nd quarter. Our internet activities in the aggregate generated a profit in the quarter, and have generated a profit year to date. That profit making is led by our domestic community web sites and by News Quest. Television joined the group on the plus side with a small profit over all. Year to date, revenues on the internet side have totaled $43 million, which is up 27%.

Over all, we are optimistic but cautious about the outlook for the remainder of the year. We'll get a lot of help from interest and newsprint over the next several months. We hope to be able to report that revenue growth has resumed in the second half of the year, which would allow us to report additional gains in profits and earnings per share.

With respect to the earnings estimates for the remainder of the year, we are currently in the process of completing our budgeting for the second half of 2002. Some of you know we've changed our budgeting from an annual process to a six-month process during these tough times, so we're just in the middle of that. At this point though, we continue to be comfortable with the overall of assumptions we provided you with last December and which we updated at the mid-year review in June. Obviously we'll keep you posted as the months progress. Now I'll stop, and we'll take your questions.

The question and answer session will begin now. If you're using a speaker phone, please pick up the handled set before pressing any numbers. SHould you have a question, please press 1 followed by 4 on your push button phone. Should you wish to withdraw your question, press one followed by the 3. Your questions will be taken in the order that they are received. Please stand by for your first question.

Our first question comes from Lauren Fine. Please state your affiliation, followed by your. question

Merrill Lynch. Thank you. A couple of questions on the cost side. And I apologize, I got bumped out of the call, Gracia, when you were speaking, and I think it was just on newsprint. So I won't ask about that. SG&A costs were higher than we had been anticipating. I'm wondering if you can give us a sense of what some of the factors might have been. Whether it was on bonuses, benefits, or can you isolate compensation expense specifically, and how that looked for the quarter.

Lauren, all of us will jump in, but let me start. The cost side that you're referring to are primarily driven by medical costs, which continue to increase, our pension costs which you know from last year's result and from the results of others is costing us more this year. We also brought on, although this isn't necessarily in that category, new presses in Indianapolis and Nashville and Springfield. And then we had some higher commissions in broadcasting as the revenue picture has improved.

Also, compared to last year, we really turned the screws, as you know, when we began to see things getting tougher. So excluding newsprint, our newspaper segment was down 7% in the quarter , and corporate was down, and broadcasting was down all last year. So the comparables are getting a little tougher. But it's basically those three or four items I mentioned.

Doug, could you maybe tell us in the quarter -- and again if you've covered this I apologize, what non-newsprint costs look like in the q1uarter for the newspaper division?

I think they were about flat.

No, non-newspaper were up about 3.5%.

Oh no, yeah, non-newspaper, they were upo 3.5%

I'm sorry.

3.5% non-newspaper -- non-newsprint costs for the newspaper division.

Got it. Okay, thank you.

Thanks.

Thank you. Our next question comes from Kevin Grunic. Please state your affiliation followed by your question.

Thank you. I just -- Kevin Grunic with Bear Stearns. Just a clarification on that, Doug. That 3.5% up on non-newsprint cash cost, and then a follow on the TV cost. You know, I assume that sales commissioned had a good deal to do with the cost increase. But can you talk about the other costs there including programming costs? What that was for Q2 and review?

Okay. Let us look that up, Kevin.

it probably, on the newspaper side, would have been a little bit lower than the 3.5. But it was purely cash cost.

Yeah. That's book number, Kevin, not a cash number. The three and a half on the newspaper side.

Syndication is up 3 1/4 to 3 year to date.

Syndication is up 3% on broadcasting. The broadcasting costs were up a little over 6%, but most of that is the commissions on the increase in revenue.

And some of the medical.

And again medical [INAUDIBLE] is allocated over there too, as Larry is pointing out.

Okay, terrific. Thank you.

Okay.

Thank you. Our next question comes from Barton Crockett. Please state your affiliation, followed by your question.

Hi. It's Barton Crockett with J.P. Morgan. I was wondering if you could go back to the question that always seems to come up on these calls, which is the M&A environment. You know, obviously, you know, prices for at least some of the publically traded companies are down a little bit. I know in the past you've expressed some concerns about the asking prices. I'm wondering if that dynamic has changed a little bit and if there is any particular types of accommodations that might seem a little bit more possible or interesting at this point.

No, the environment hasn't really changed, Barton. We're getting a few more calls from privately held media companies, but nothing significant. And there is still the general discussion. But everybody now is having to wait at least on the cross-ownership front for the FCC to act. And as you know, they've announced another delay, which I expressed my emotions about it a couple of weeks ago. And it now looks like the spring of 2003. So the discussions are more low key, awaiting the outcome of that decision. Which I think will be positive but it's just taking time.

Okay, great. And then if I can follow up on a separate issue. In the past you've talked about sort of a normal experience coming out of a recession and the help wanted line. As I recall, being that you had returned to peek help wanted advertising levels maybe 8 to 10 quarters after the onset of the downturn in that line. I'm just wondering, given the job recovery at this point, it seems relatively muted. What your current thinking is about how this recovery may or may not mirror what you've seen in the past.

Well, I think we'll still hold with that assumption, because when we talked about the multiple quarters, it was based upon the historical patterns, and this one may be slower in coming out. But historically, others have done the same thing and have gradually have picked up. As I said in the prepared comments, we are beginning to see a little bit of a pickup in employment. It's still negative, but it is beginning to pick up. So this is certainly not a V or a U recession but probably what I would call a sloped L, with the tail going up in the right direction. It's picking up. So I think, barring some big surprise that we're not aware of, that it will follow the pattern of the last 30 or 40 years, that it tends to even out that way and just peek and valley at different times.

Okay, great. I'll leave it there. Thank you.

Thank you. Our next question comes from Peter Appert. Please state your affiliation, followed by your question.

Hi, it's Goldman Sachs. Doug, my sense is that you sound maybe somewhat more cautious than a month or so ago. Is that a fair assessment?

No. Maybe I have a cold, Peter.

[laughter] Okay. it was your [INAUDIBLE] to be more specific the second half guidance, I guess, that led me to that conclusion.

Well, we're right in the middle, as I said, of the six month planning, and I don't want to jump the gun. We're going to know something in the upcoming weeks or so, and Gracia's monthly letters will give you the trends. And we'll be meeting and chatting, and we'll be giving you the information. But I don't want to predict until we finish with the process. Because, as you know, we do it from the ground up, and it's great when you can have 130 or 140 locations throughout the U.S. and the U.K. coming in and telling you what the real world is all about, as opposed to what the government tells us it's about.

Okay, great. Can you quantify the expectations for the political dollars in the second half Doug?

No. Except to tell you that they are clearly stronger than we had estimated. It's going to be a very strong political year. The money is coming in from locations we did not expect, and from the and in the location where we did expect it, it's coming in greater than we had planned. So it looks like it's going to be a very strong political year.

Is that sufficient then to give you some upside from an earnings perspective in that broadcast group in the second half?

Well as you know, the television group is not the major driver of the Gannett company. It's been very, very helpful in the first half , and I'll tell the broadcasting folks that you'd like the earnings to increase, and they've got to do better. And I'm sure they will be very happy with you.

I think your estimates have already pushed us.

[laughter] There's the cautious one, Peter.

Okay. Thanks.

Thank you. Our next question comes from William Drewery. Please state your affiliation, followed by your question.

Thanks. It's CS First Boston. Just three quick questions, all related, Doug. One, can you just give us any sense of any regional differential on the newspaper advertising trends? Do you see any particular region stronger than any other? I think at midyear you might have mentioned that the Southeast was looking on the near-term a little weaker. So, just wanted to get any color there.

Two, any more specific guidance on help wanted? IE, can you it turn back to positive some time in the 3rd quarter? It sounds like maybe there's a chance sometime in the second half, but could it happen by the end of Q3?

And then, just on that year to date number for internet revenue of $43 million. How much of that is help wanted classifieds online? Thanks.

Bill, I don't know the answer to the last question. Maybe someone else here does. We don't have that right in front of us. If we don't have it now, we'll get back to you.

On the regional issue. the East Coast, New Jersey and Eastern United States -- mid-Atlantic area, we're solid. Not quite as positive in the Gulf Coast area. And still a little softness out in the West, which as you know was the last to decline. So I would say New Jersey, New York, middle part of the country are doing fine. Led by New Jersey and the East Coast. But a little softness down on the Gulf and out in the West. You have any --

I was going to say I think that Gary Watson had indicated at mid-year that there was more of a bigger paper versus smaller paper, than a regional difference. That the smaller papers are coming out -- didn't go down as far and are coming out a little bit more. In fact, I looked through the employment classifieds for the quarter, and it looks like there's probably a dozen or so units, more on the small side, that are actually positive year over year. So I think it's more -- that's the variance than a lot of the regional stuff. But on the local side certainly --.

But, our New Jersey properties are doing very well. You know, we've got a big presence in New Jersey, and they're doing well.

To get to your help wanted employment question, I don't know whether it will come out in the 3rd quarter. You know, the 3rd quarter is not a time when a lot of people are hiring normally, so that will be a month to month issue. If we see some pick up, we probably won't see it in any noticeable way until September. But we'll just give you the numbers as they come in Bill. But just I don't know.

Okay, great. Thanks very much.

Oh Bill, on the internet employment. I would say that for our community newspaper group, that employment would be the biggest piece of it. But obviously at USA today, that would not be a big factor for them on the internet side. And the same in the UK where employment would also be a bigger factor.

Got it. Great. Thank you.

Thank you. Our next question comes from Stephen Barlow. Please state your affiliation, followed by your question.

Prudential Securities. Ratings on TV and the May book. Can you go just over what the news was. Did you remain one or two in all of markets? And back to cost. Can you give us any sense of FTE changes year over year for TV and newspaper, whether those numbers are down. Thanks.

Dave, I don't have the books in front of us, but the May book was the best book in television Gannett has had in recent history. We're number one and number two everywhere and we've done very well. We can get you the exact books but the numbers are very good.

I think there was only one market between morning and evening news where we were not number one or number two.

That's one of the reasons we're getting the political dollars, because if you want to reach the audience and you're a politician or a political activist, you obviously go to the lead stations in the market. So, we may be doing somewhat better on the political front than some others who are lower down on the totem pole in our markets. But we're doing very well there.

On your FTE question, we are down somewhat but I don't have the exact percentages here. Do you know, Larry?

No, but do it from an overall payroll. Payroll's up about 1% and for year to date, it's flat.

yeah. I don't know whether you heard Larry. Payroll is up only 1%. for the quarter, so obviously the body count had to be down to get to that number. But we don't have --I don't have the FTE right in front of us.

Thanks.

Thank you. Our next question comes from Amanda [Harmosey]. Please state your affiliation, followed by your question.

Lazar [INAUDIBLE], thank you. I was wondering. Are you planning any changes to your pension plan return assumptions, and if so, how much do you estimate that would cost you?

Amanda, our pension fund assumption -- earnings assumption for last year was 10%. But we in fact changed it at the end of the year for this year to be 9.5%.

And do you anticipate keeping it at that level going forward?

We are just going to have to see what the market does over the course of the year. And then we and others take a look at where the numbers come in universally, and then make a decision. But that's a decision made very, very late in the year.

Gracia is in charge of the pension. So if you relate to her bonus in you'll see how well we do versus the assumption.

[laughter] Which fortunately isn't published anywhere.

Thank you. Our next question comes from Douglas Arthur. Please state your affiliation, followed by your question.

Morgan Stanley. In terms of your outlook on newsprint, the industry figures suggest that inventory levels at the consumer level are at 10-year lows. Obviously days of supply is high because consumption is short. Can you talk in just general terms about your inventory position and how comfortable you are if demand does pick up? Can you also update us on the Cincinnati Monster.com situation? Thanks.

Doug, I'll address the newsprint situation. I can probably pretty well assure you that our inventory levels are not at 10-year lows, and I can probably also assure you that we have sufficient inventory to make us pretty comfortable for the next several months. When you talk about inventory levels, I think one of things that you you need to take into consideration universally for the industry is how much the industry has done with reductions, and where consumption has stood year to date, which is down 4%. So I think those are some of the factors that impact inventory levels as well . But we're very comfortable with our inventory level, and feel very good about the rest of the year on that front.

On Cincinnati, Doug, Gary Watson covered that at the mid-year meeting. There is no change. We think we're doing very, very well against Monster's efforts there. But I don't know of any new developments, unless you have something in mind.

No, I just wanted to get an update. Also, a follow-up on the interest rate outlook. Given the fact that the rates have backed off more since you started fixing stuff, do you -- does that imply that you may stay more in commercial paper than you otherwise might have thought for the rest of the year?

We feel very comfortable with where we stand right now, and we'll continue to monitor it. But, we sure love 1.8% commercial paper.

Great. Thanks.

Thank you. Our next question comes from Phil Melville. Please state your affiliation, followed by your question.

Hi. New York Life. Just a quick follow up on the prior question on the debt. Do you have about $2.7 billion in CE currently? Because I believe you were about $1.8 billion in public debt?

Yes, that's correct.

And you don't plan to tern any of that debt out in the public markets at this time, it sounds like.

Not currently. You have to realize that when you look at the enormous amount of cash flow that Gannett generates -- And free cash flow that Gannett generates. $2.7 billion of commercial paper is something that we can, assuming no acquisitions and no share repurchases, we can dispense with in, you know, three to four years. So we feel comfortable at the moment, but that's something we're always looking at.

Do you have any headroom under your current ratings for any debt financed acquisitions?

We believe we do have headroom.

And in terms of future financing then for any -- if you do anything, would you be able to share with us -- do you want to maintain your current ratings? Or would you be willing to go down to a tier two rating given the amount of CP that you have on your balance sheet?

We very much like being an A1B1 commercial paper issuer, and having strong investment grade ratings.

Okay. Thank you.

Just a reminder ladies and gentlemen, if you have a question, you may press one followed by the four on your push-button phone at this time.

Our next question comes from Jim Goss. Please state your affiliation, followed by your question.

Barrington Research. I was interested in a little more color on USA Today. Your ad revenues are off considerably relative to your local newspapers, as well as a bounce we're seeing a little bit in TV and radio. And your prices seem to be holding a little bit. I was wondering if you could talk about the specific dynamics there, and how you think that's going to play out for the balance of the year.

Jim, if we knew how it was going to play out for the balance of the year, we would probably feel a little bit more comfortable. As I indicated earlier, it's a very short-term window with the advertisers, and they are making decisions on a shorter basis than in the past. As you may recall, travel is a big category for USA Today, and it was down in the 1st quarter. It's still down in the second but much, much less. So we're beginning to see it come back a little bit. However, it also dropped in June, so it's bouncing around.

And then the entertainment and automobile categories together are pretty big. Entertainment was soft in the beginning of the year. On a year to date basis, it's a little negative, but in the 2nd quarter it was flat and it was quite strong in June. So -- and automobile is down but down a little bit less. So things are bouncing around on the whole national front, and of course that's all of USA Today.

That's also taking place on the national front in our community newspapers but it's a less significant item. So it's just -- week to week, month to month. They are getting some contracts. People are signing up for ad positions, but so far they are not spending the money on any sort of predictable long-term basis. But it is picking up slowly, but definitely not in the same strength that we are seeing in the community newspapers.

The other two areas Jim, that we mentioned earlier, technology and financial that are down. And I think that's consistent with what you see for any of the national newspaper advertisers. Their results on the financial and technology side. The stock market isn't helping financial advertising at USA Today or other places.

On the tech side, you know, we had some pretty good numbers in the 1st quarter because of some of the merger discussions, and then it dropped off in the 2nd quarter. So if you'll pick up the tech and financial advertising, we'll report better numbers. Is that a deal?

That's a deal. One other thing, if I could. Could you quantify the political spending in the TV group in the 2nd quarter and first half for this year versus last year? or anything, any flavor you might provide there?

There wasn't any last year of any magnitude. So it's up big time numbers. Do we have a frame of reference for this Gracia?

Yeah. I mean, you know, obviously in the first and second quarters, there is some political advertising, several million dollars But it's not a big number. The big numbers are going to be in the 3rd and fourth quarters. And last year we would have had marginal political dollars that would be, you know, issued related. But that was a couple of million dollars versus several million this year.

Yeah. The big hit we got this year, Jim, was obviously from the Olympics in the 1st quarter. So it's been a combination of Olympics and politics, with most of it coming from the Olympics in the 1st quarter and the first half. But the political is picking up each quarter, and as we said earlier, it looks like it's going to be a strong political year. But most of it, as Gracia just said, will come in in the second half of year.

Okay, thank you.

Thank you. Our next question comes from Michael Kapenski. Please state your affiliation, followed by your question.

A.G. Edwards. Thank you. I was wondering Doug, does USA Today tend to benefit from strong political advertising? Not that you get much political in the paper, but possibly as national advertisers are displaced from television? And I do recall that in the last election, USA Today did get a little political though. Can you remind me how much that was in 2000? And then I have one more quick follow up question.

I don't know what U.S. Today got in political. Whatever it was it was [INAUDIBLE]. And no, USA Today doesn't seem to get any political advertising at all, and doesn't seem to have any positive active impact when the political is being spent on television. I mean, everything you say may be the case, but we have no signs that give us any indication that that's happening in fact.

Okay. And could you tell me how much employment advertising is in terms of total newspaper advertising, and particularly if the percentage is similar to past economic cycles?

Help wanted is about -- year to date about a third to 35% of total classified.

And classified is 40% of the total, or something like that?

35 to 40, yeah.

So you've got one third of 40% whatever that comes out to be. 12 plus percent of the total picture.

Great. Thank you very much. And I think in the past, you had said that classified advertising had been up in the last decade about 30% of total advertising versus about the 40% that we have now. Is that the case?

Yeah. I mean, obviously in the '99-2000 time frame, employment was up there. But as you know while employment has fallen in the last year, real estate and auto have in fact on the classified side been better. So that's kind of moved the percentages as well.

I don't think it was 30% of the total advertising picture.

You would have to go way back.

In the early 90s.

Sometimes it has been 30% of the total picture.

Right, okay. Great. Thank you very much.

Okay, Mike.

Thank you. Our next question comes from Krista Soberg. Please state your affiliation, followed by your question.

Hi again. Most of my questions have already been answered, but on a couple things. Obviously, Electronic Media made some comments about [INAUDIBLE] and yourself. I don't expect you to comment on that specifically. But if you could indicate to me what the economics of the deal would look like, or the type of things that you would look at for an MNA deal. And the second question is more related to -- do you guys anticipate expensing your options or anything of that nature in the back half of the year? I know the "Washington Post" came out, obviously, with their buffet relations there. But it hasn't really affected you much in the past in terms of over all change, so I was wondering what your outlook was there. Thanks.

Krista, on the Electronic Media story, I think you'd better ask the investment bankers who set that story up what the economics were, because we weren't part and parcel of story. We are not in discussions with [INAUDIBLE]. So somebody set that up, and you'd better call them for the math.

[laughter] Okay, thanks.

On the stock option issue. You know, it's in our annual report what the effect is. And I think if the world changes that we have to do it, that's fine with us. But I'd like to make sure the world does it on a comparable basis, so we don't have the silliness we had with 142, where we're reporting apples and apples and other people are reporting apples and oranges.

So, if we're going to go that way, we need to restate prior years so you are comparing the expense. And i also think that maybe you all on the phone and some of the accounting profession can take a look at the reality of looking black shoals, because black shoals was never designed for this sort of a use, but it's become the easy answer. And you've got a lot of options obviously underwater now, that to be expensing them doesn't make a heck of a lot of sense.

So, we'll go with the flow. We'll do the most conservative thing, as we have with 142. But we're waiting to see which way the trends suggest.

Perfect, thanks.

Thank you. Our next question comes from Douglas Arthur.

Just a follow-up on classified. I guess the [INAUDIBLE] at the mid-year review suggested that they could face some tough comps in the second half in real estate and auto. Looking back at your second half in '01, auto was reasonably strong. Real estate was very strong. Wondering if that -- if you think tough comps will be an issue there. And then could you just sort of detail the year to year performance in Phoenix and Indianapolis as much as possible. Thanks.

Well, the comps will be tougher, Doug, in the second half because those categories were relatively strong for us. I think they were relatively strong for almost everybody in the industry that was doing a good job. So we agree with what [INAUDIBLE] said, assuming that, you know, real estate continues to be strong when it apparently is going to do. Umm --

Indianapolis.

Oh. Indianapolis and Phoenix, yes, yes, yes. If you guys want to bring us any more transactions like that, we're very, very satisfied. They are contributing to the Gannett picture. Obviously we're being helped by interest rates, but our expenses will reduce there. Phoenix was the last to see the slowdown of our major papers, and it's a coming back a little bit slower. But Indianapolis moved earlier in the negative, and it's moving earlier into the positive. So all of the numbers coming out of the Central acquisition are positive from our point of view, and we're very pleased with the transaction.

Of course, we've got a new press coming on in Indianapolis. And I mentioned earlier that's actually just getting started when I responded, I think to Lauren's question earlier. So that's going to help the expense picture in Indianapolis, too.

Great. Thanks.

Thank you. If there are no further questions, I'll turn the call bag to Ms. Martore to conclude.

Thanks very much for joining us today. If you have any further questions, we will be available. I'll be available at 703-854-6918. Thanks for joining us. Bye-bye

Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for participating, and have a nice day. All parties may disconnect now.