Tegna Inc (TGNA) 2007 Q4 法說會逐字稿

Good day, everyone, and welcome to today's Gannett fourth-quarter 2007 earnings conference call. Today's call is being recorded. Due to the large number of callers, we will limit you to one question or comment. We greatly appreciate your cooperation and courtesy.

Our speakers today will be Mr. Craig Dubow, Chairman, President, and CEO, and Gracia Martore, Executive Vice President and CFO. At this time, I would like to turn the conference over to Gracia Martore. Please go ahead.

Thanks, Amy, and good morning. Thanks for joining us today. Welcome to our conference call and webcast in which we are going to review our fourth-quarter 2007 results. Hopefully you have had the opportunity to review the press releases we distributed this morning. They also can be found at www.Gannett.com.

With me today are Craig Dubow, Chairman, President, and CEO, and Jeff Heinz, Director of Investor Relations. Chris Saridakis, our new Chief Digital Officer, is here as well and we welcome him to the team.

Having just updated you in depth in early December, we will keep our comments brief today. Craig will provide an overview of the Company's quarterly results and talk about some recent developments and our strategic efforts. I will then follow with some details regarding the quarter. Craig?

Thanks, Gracia, and good morning, all. Last year we told you 2007 would be a year of executing on our strategic plan. It was. Today I plan to talk about the importance of some of those accomplishments and the progress that we have made in our transformation. Most impressive, I believe, is that this progress was achieved in an advertising department that has been challenging at best.

Briefly, for the year we generated revenues of $7.4 billion and operating cash flow of just over $2 billion despite the dramatic impact the real estate slowdown and the softening economy had on advertising and the near absence of $112 million in ad revenues associated with the Olympics and the elections we achieved in 2006.

Now to the quarter. At our presentation at the UBS conference in December, we told you are results would depend on the last couple of weeks in December. Despite a step down in advertising demand at the end of the quarter we delivered earning results in the range we provided in December.

That advertising softness impacted our results, as did a variety of other factors. These included an almost complete absence of political related advertising demand. Also, we had the extra week in 2006 that makes all comparisons that much more difficult.

On the expense side, we recorded costs of approximately $38 million for severance and facility consolidations related to a number of efficiency efforts both in the US and in the UK. Additionally, we took a non-cash after-tax impairment charge of about $51 million related to the value of some of our mastheads. The charge is modest and I think it is important to note that it will not have any impact on our operations or cash flow.

But as a result of these items, assessing trends based on comparisons of the fourth quarter of 2006 is more difficult. So, bottom line for the quarter, despite the difficult economic environment and soft advertising market, earnings per share was $1.06. EPS would have been $1.28 excluding the impairment charge.

Total operating revenues were $1.9 billion for the quarter. Once again, we continue to size our expenses relative to the revenue picture. This continues to reflect our twin focus on an appropriate cost structure based on new realities -- but mindful of not confusing short-term cyclical issues with longer-term structural ones; and strategic investing in areas with potentially great growth promise that requires short-term resources, such as Metromix.

In the fourth quarter, (inaudible) newspapers in the US, the slowing economy driven by the meltdown in the housing market in some of our communities all contributed to a very soft advertising environment. As we have highlighted in the past, four states in which we have a presence and the four states hardest hit by the downturn in real estate -- Arizona, California, Florida, and Nevada -- had a larger relative impact on our results.

Classified advertising was clearly the most severely impacted. Local advertising was down in the low single digits on a comparable week basis, reflecting macroeconomic trends that led to slower retail spending late in the holiday season after a positive November.

National advertising was down in the quarter at our domestic community newspapers and USA TODAY, although some categories were very strong at USA TODAY regardless of the difficult comparisons brought on by the extra week.

At Newsquest, our operations in the UK, advertising softened as uncertainty increased in mid December. Their results were skewed by the extra week. But online revenue growth there was substantial in the fourth quarter.

At our Broadcasting segment, revenues declined as expected as we compared against almost $58 million in election related spending that benefited the fourth quarter last year. Here too, while the comparison was very tough, several categories were in positive territory for the quarter. Online was up significantly as well.

As to the rest of 2008, we're well positioned to take advantage of the anticipated political spending that will occur as we head toward November; and the summer Olympics in Beijing will give us a nice boost as well.

Returning to digital for a moment, across the board it has been positive. For the year, online revenue totaled over $460 million. That is larger than many pure play digital companies. It grew significantly in the quarter, although the growth rate was tempered by the absence of the extra week. Companywide, the growth rate was over 11%, driven by increases of 18% in Broadcasting and 31% at Newsquest in pounds. PointRoll was up strongly as well, 34%.

Traffic at our domestic sites for December reached 14.5% of the Internet audience, with almost 24 million unique visitors. Newsquest sites had over 62 million page impressions and about 4.8 million unique users.

Finally, at CareerBuilder, North American network revenue grew for the quarter and traffic averaged 18.6 million unique visitors.

The continued growth of our digital revenues highlights the promise of our transformation and our focus on the digital front. Our overall mission in transforming the Company is straightforward. We will provide must-have news and information on demand across all media, ever mindful of our journalistic responsibilities. And we believe that there are tremendous opportunities in the media space as we fulfill that role. Digital clearly is a key to that.

In any transformation, execution is the tough part, and we know it. Over the past 18 months we have executed on a number of fronts, including infrastructure, content, social networking, and site standards. We remain committed to being the provider of local news and information in all of our markets, and we will look to expand that content nationally when we find those opportunities.

Our transformation is firmly underway. Our online stalwarts -- CareerBuilder, Classified Ventures, and PointRoll -- continue to grow. CareerBuilder remains the clearly leader in online employment. They are expanding internationally and announced earlier this week the launch of CBJobs.es, a new online jobs site dedicated to serving the recruitment and job surge needs of employers and workers in Spain.

Classified Ventures is investing in its brand. Actually, look for the ads from both CareerBuilder and Classified Ventures Cars.com during the Super Bowl this weekend.

PointRoll revenues and bottom line are up nicely this year; and more on those developments in just a minute.

We reach more people in our markets through a variety of publications and platforms than we ever did with a single platform. Judging by nearly $0.5 billion in digital revenues, we're moving towards successful monetization of these efforts. We're giving our audiences more options. We standardized our Web offerings, added social networking through Pluck, improved our video offerings, which have grown dramatically through our affiliation with Maven and thePlatform, and expanded our mobile and text solutions.

A strong foundation and infrastructure are for the most part now in place. We have an unparalleled ability to gather and disseminate news and information through a powerful combination of core and digital assets. We can now leverage our local content to offer national scale to advertisers.

Great examples of this were highlighted in the fourth quarter. We announced a joint venture with Tribune Interactive to expand the Metromix brand and we acquired a controlling interest in Schedule Star LLC and HighSchoolSports.net. We expect to invest in them as we did with IndyMoms.com -- take the local content, develop it, and showcase it through a national brand.

Clearly, there is an awful lot going on at Gannett, particularly in digital, which brings me to Chris Saridakis, the former CEO of PointRoll, a rich media company. Chris is here to help shoulder the load in turbocharging our digital efforts.

His title is Senior Vice President, Chief Digital Officer for the Company; and his job, along with Jack Williams, as President of Gannett Digital Ventures is to take us quickly to the next level. That means customers, and customers have always been the focus for Chris. He understands technology and marries that with consumer behavior to create solutions for advertisers.

Not only does he bring a lot of knowledge, ideas, enthusiasm to the effort, but also most importantly he is ready to execute much of the same way as he did with PointRoll. We're very excited to have him on board.

And a final note. We announced that Sue Clark-Johnson, President of the Newspaper division, will retire in May. Sue leaves us after 40 years at the Gannett Company during which she was instrumental in influencing the direction of our newspapers and most recently our groundbreaking information center efforts. Hers was the energy behind their successful rollout. Her legacy will be one of great stamina and execution. Sue, thank you for all of your efforts and your leadership.

With that, let me turn the call over to Gracia.

Thanks, Craig. Before we go into detail on our quarterly results, I have the pleasure of reminding you that our conference call and webcast today may include forward-looking statements and our actual results may differ. Factors that might cause them to differ are outlined in our SEC filings.

This presentation also includes certain non-GAAP financial measures; and we have provided a reconciliation of those measures to the most directly comparable GAAP measures in the press release and on the investor relations portion of our website.

Now I would like to focus a little deeper on our quarterly results, particularly on the expense side. As Craig mentioned, comparing this quarter to 2006's fourth-quarter reported results will not be very helpful in assessing trends. So where possible I will discuss the results on a comparable basis, 13 weeks to 13 weeks for the quarter.

In addition, we included in our revenue and statistics release today revenue comparisons for the month, quarter, and year on a comparable week basis. One reminder, we noted last year that the extra week added about $0.05 in earnings per share in the fourth quarter last year.

Let's begin with the Newspaper segment. As Craig mentioned, the advertising softness late in the quarter had an impact on our results and exacerbated some of the cyclical trends we were experiencing in our markets. Revenues from local advertising were down 3.3%. National advertising and classified advertising both were down over 11% for the quarter, all on a comparable week basis.

At our domestic newspapers, advertising was 9.3% lower on the same basis, resulting primarily from the real estate slowdown, which continued to drive the decline, particularly in the states we have discussed before -- Arizona, California, Florida, and Nevada. The declines for the classified categories in those states were generally 2 times higher than the rest of our markets. In fact, properties in those states accounted for 40% of the decline in ad revenue and over 50% of the impact on NIBT in the quarter, after adjusting for the 53rd week for our domestic community newspapers.

National advertising's decline reflected a little tougher environment for USA TODAY, with ad revenues down excluding the extra week. However, some categories in the quarter -- financial, advocacy, and packaged goods -- were up strongly in the period.

At Newsquest in the UK, advertising trends were promising, but softened in the last few weeks of December. Local and national categories, which had been positive and moving in the right direction, stalled a little. Excluding the extra week and on a constant currency basis, Newsquest finished the quarter with total revenues about 5% lower.

Turning to the Broadcasting segment, pro forma revenues were down 18% on a comparable week basis. The decline reflects the relative absence of politically related advertising demand that totaled almost $58 million in the last quarter of '06. If you exclude that political advertising, net times sales were down in the low single digits, although categories including packaged goods, telecom, medical, and banking were up nicely.

At this point, pacings are down in the middle single digits for the first quarter. As always, keep in mind that pacing information can be volatile particularly in a political and Olympic year. We fully expect stronger results in Broadcasting this year because we are well positioned in our markets for the much anticipated political spending as well as Olympic. But the results will not be spread evenly across the quarters.

We will keep you updated in our monthly results, but let me remind you that in the first quarter the Super Bowl will not be on our CBS stations as it was last year. In addition, Indianapolis, the other Manning's team, is not playing this year; so our Indianapolis paper won't have the benefit of a couple of million dollars from that event that they had in '07, as Barbara Henry keeps reminding us.

Moving now to expenses, two items in the quarter had a significant impact there. The first was the impairment charge Craig mentioned at the outset of the call. We completed our impairment testing of goodwill and other intangible assets during the close of the fiscal year. The result was a modest non-cash impairment charge of $72 million pretax or $50.8 million after-tax, worth $0.22 of EPS.

The write-down is related to the value of certain mastheads from some of our recent acquisitions in the US and the UK. As Craig noted, these non-cash charges have no impact on our operations or our operating cash flow.

The second was $38 million in pretax severance and facility consolidation costs related to continued efforts to achieve efficiencies and better align our expenses to our revenue opportunities across all of Gannett.

If you include the impairment charge and the severance expenses and the extra week in 2006, total operating expenses were 7.1% lower for the quarter. But excluding that impairment charge only, they would have been down 11.6%.

Newspaper segment expenses were significantly lower as well, down about 6.5%. Newsprint expense declined over 25% due to lower volume of about 19% and lower newsprint prices of 8%. On a pro forma constant currency cash basis, excluding that non-cash impairment charge, Newspaper segment expenses were actually 13.3% lower in the quarter.

In our Broadcasting segment, expenses declined 11.3%. And as you saw, corporate expenses were down 17.8%.

One comment regarding newsprint. Throughout 2007, we realized favorable domestic newsprint price reductions. It appears that cycle has ended, however, with prices poised to rise. Producer capacity rationalizations and curtailments are substantial factors in this price shift. However, industrywide webwidth reductions and basis weight conversions will act to temper these curtailments. Gannett will continue to work with all of its domestic producers to develop a reasoned approach that affords stability for both industries.

Last year at Newsquest, European market prices rose moderately, but are expected to decline in the mid to high single digits this year.

Before we move to the balance sheet, let me detail another item that impacted the presentation of our results this quarter. We have a new line item in the nonoperating section of our income statement called Equity Income in Unconsolidated Investees, Net, into which we reclassified our equity share in the operating results of our newspaper partnerships. These are Texas-New Mexico and the California Newspapers Partnership in which we hold minority investments, and the Tucson JOA. In the past, these were reported in other operating revenue.

We also reclassified our portion of the equity earnings of our online and new business investments including CareerBuilder and Classified Ventures to that same line item from other nonoperating income. So that line item now includes our share in those partnerships and the equity earnings and losses from our online and new technology businesses.

Turning quickly to the balance sheet, total debt at year end stood at $4.1 billion and cash was $77 million. At this point, our all-in cost of debt is 4.7% with commercial paper at 3.8% and falling.

Capital expenditures for the quarter totaled approximately $77 million, and we finished the year with $171 million of CapEx.

With respect to shares outstanding, shares at the end of the quarter were 230 million, and the basic quarterly average was 231.4 million. We repurchased 2 million shares in the fourth quarter and 4.8 million shares for the year.

Looking ahead, as we discussed with all of you last year, the economy has clearly softened, adding a lot of uncertainty into the equation. We're facing continued cyclical headwinds as we gauge the consumer's ability to weather the overall state of the economy, particularly the housing market and higher oil prices. We can't predict what the impact of the Feds' recent actions and other stimulus initiatives will have over the next several months on this economy. So our plan is to focus on managing what is in our control as we work through to the eventual turn in the cycle, as Gannett always has done.

Now we will stop and take your questions. Amy?

(OPERATOR INSTRUCTIONS) John Janedis with Wachovia.

Thank you. Good morning. Gracia, can you just talk about pricing changes in '08 for classifieds in the four markets you have been talking about now for the last few quarters? Are you pushing through increases in the low singles, or maybe dropping rate in an effort to drive volumes? Thanks.

John, frankly, it varies market to market and newspaper to newspaper. We are very mindful of each market's individual characteristics. In some we can press pricing and in other areas we are not afforded that ability.

So we are just being very cognizant of what our advertisers are looking for and being focused on what we need to do to drive revenues to the Company.

Thank you.

Karl Choi with Merrill Lynch.

Hi, good morning. I just wondered if you can talk a little bit about what you are seeing so far in the new year. Has decline been similar to what you were seeing in December?

Sure. I would say this, that very much what we were seeing in December, particularly when we met at the conference, continued; and then it further pushed itself downward with all the turmoil.

What we are seeing right now as we go through the first quarter is quite similar to that as we go forward. We're hopeful that we are going to be seeing some pickup in the political on the television side as we move through Super Tuesday and into the overall election period toward November. And the same as we move toward the Olympics.

But overall right now we're seeing pretty much a continuation from what we saw in December.

Just one last question, actually. Gracia, can you tell us what the non newsprint cash expense is? How much were they down in the quarter?

Yes, I think, we went through that. But let me if I can grab those numbers out again. On a pro forma constant currency, excluding the impairment charge, the Newspaper segment was down 13.3%.

Is that excluding newsprint or including newsprint?

That includes newsprint. If you exclude newsprint, it was about a little over 11% on that same basis.

Should we expect that to be sustainable into the new year?

We just have to recall that the first quarter of the year and particularly January is our smallest revenue month; and the quarter is our smallest revenue quarter. So our fixed costs would play a bigger role in the quarter.

But clearly we are very focused on continuing to align our expenses with whatever the revenue opportunity is out there, while balancing it with making important strategic investments in product and in other areas to have the right mix when we emerge from this cyclical downturn.

Can you tell us what headcount was down to at the end of the year?

On a pro forma basis, fourth quarter over fourth quarter, headcount was down in the mid to high single digits.

Great, thank you.

Just to jump back, with one exception in what we are seeing at USA TODAY, we are seeing a little bit of pickup for January. That is a more positive trend than what we were seeing certainly through December as well.

Alexia Quadrani with Bear Stearns.

Hi, thank you. With regards to your comments, Craig, just about January seeing maybe a little bit of a pickup from December. Is that also true for the UK? Are the trends similar there as they are in the US?

Well, first, let me -- the pickup is just with USA TODAY. I would say we are seeing, for the most part, pretty much in our other publishing areas as well as broadcast, pretty much the same. We saw as you know in the UK a softening as we went through the end of the year, particularly the last few weeks; and that has not picked up for us at this point.

Then with the pickup in the USA TODAY, does that suggest you might see positive growth there? Or is it still way too early to sort of go that far?

I think it is way too early at this point. We are just going to have to see. This is a very interesting market, to say the least.

I apologize if I missed it, but was the profits also down at Newsquest in the fourth quarter?

Yes, they were down slightly in the UK and the fourth quarter.

But less than the decline in revenues; is that fair?

I'm quickly flipping to that page, I don't think that that is the case, but let me just grab those numbers out in front of me. I think that the profit decline was a little bit higher than the revenue decline.

Then back to the US on the political, can you give us your expectations of what I think you're looking for in the first quarter for election dollars?

I will tell you, it has been kind of a mixed bag in the way that it has come together, particularly with the change of the caucuses, timing of the caucuses, as well as for the primaries.

You, know, we are I think at this point a little behind where we thought we would be. But overall in general, what we are expecting is the year builds. We're not changing on our thoughts on where we were. It should be a very robust political season.

Okay. Just lastly, Gracia, was there any reason I guess behind the reclassification of the equity interest that you mentioned?

Well, as is the annual practice of the SEC, they provided a comment letter on our 2006 10-K. They asked a few questions about it. As we looked at it carefully here, given that our equity investments in various Internet businesses are continuing to increase, we felt that this was the appropriate time to combine those partnerships together with those investments and put it in one line, which is the more typical treatment on the P&L.

Okay, thank you very much.

Peter Appert with Goldman Sachs.

Thanks. Gracia, you guys really have done yeoman-like work in managing the cost side of the equation. I'm just wondering, sort of following on what Karl was asking earlier, the sustainability of margins in the context of the newsprint price increases and what I would have to think at this point would be limited opportunity for further headcount reductions.

Do you think you can sustain the current Newspaper segment margins in '08, given what you are seeing from a revenue standpoint?

You know, obviously it will be a little bit tougher, as their newsprint prices turn from being a positive impact to a neutral to a bit of a headwind for us. But we are continuing to look at further consolidations and centralizations of operations and properties. We will continue to take advantage of technology improvements.

So we will continue to do a strong job on the expense side. Whether we can maintain margins or not, we will just have to see how each quarter unfolds and where the economy goes each quarter.

Then, just continuing in the tradition of ignoring your request for one question, the FX impact, please, for the quarter on earnings. And can you tell us what the CareerBuilder revenues were for the quarter?

The impact of foreign exchange was around $0.01 for the quarter. On CareerBuilder revenues, I don't believe they have released those numbers yet.

Okay, thank you.

Craig Huber with Lehman Brothers.

Yes, good morning. Thanks. Just for clarity, this down 11% non-newsprint number you gave, Gracia, of cash costs there, that includes the extra week a year ago, correct?

Yes, yes, it does.

Do you have it without the extra week a year ago? So apples and apples?

It would be a percent or two lower than that.

Okay. This headcount, you said down roughly 6% to 8% year-over-year pro forma. Do you think you have enough slack in the system where you can take that out again, a similar number, in this new year?

I don't think anyone here at Gannett believes we have slack in the system. However, we continue to look at opportunities as I said to further consolidate things and centralize things as technology allows and as we continue to look at opportunities both internally and externally.

So we will, I think, continue to do the job you have come to expect of us to do on the expense side.

Okay, then lastly, has your thoughts changed at all on potentially selling or spinning off your TV station group, as you think out over the next year or so, Craig?

No, we have -- we always look at all elements of it. But I have to tell you, with what we are facing certainly this year, some really great opportunities, we are moving forward. We are really excited about what the group has already produced, and we're looking forward.

I'm sorry, but what about once we get through the political Olympic this year, as we go into 2009, so that is behind you?

You know, Craig, we will always continue to assess everything as we have in the past. But at this time, from what we can see right now, we see good upside and opportunity with the group as we go forward.

Then just lastly for clarity, your January comments, you are saying they are very similar to December with the exception that USA TODAY looks better. Is that correct?

That is correct, yes.

Great. Thanks, guys.

Fred Searby with JPMorgan.

Thanks. Just a question on the UK. There has been a fair amount of concern about the housing market and potentially a real meltdown in the UK housing market. I know that is more sort of focused on London, the City. But can you talk about just helping us, what you think is happening? Is that what started to really fall off for Newsquest in December?

I think you basically said that things started to decline a little bit. Is that real estate related? I know you are more south in England (technical difficulty) unusual situation, but what your outlook is and whether you're starting to see that.

Fred, I think really, clearly real estate was impacted a bit. But I think really in a more general way it frankly reflected, I think, the uncertainty that many advertisers were seeing in the marketplace in mid-December, both with the equity markets and with some of the meltdown on the subprime situation. So, I think that uncertainty caused advertisers to be a little bit more cautious in their spending.

January does not necessarily make the trend for the year. We will just have to see how that plays out and what they do in the UK vis-a-vis their own economy and what they do ultimately on interest rate cuts and the like. But obviously, it has gotten off to a slower start than any of us had hoped for.

But our team there in the UK, led by Paul Davidson, they're pros and they have managed through these kinds of cycles in the past and they will continue to do the job on the expense side, as they have traditionally done, whichever way the revenue opportunities go.

Thanks, guys.

Jim Goss with Barrington Research.

Thank you. One broader question first. How do you see the endgame for classifieds? There seems to be an increasing concern that maybe it is not just some of the help wanted that has -- and automotive that has siphoned off to online; but that the mix will continue to shift for all of the categories, despite some pretty good efforts on your part.

How do you see it ultimately leveling off? I know you're on both sides, but it has hurt to this point.

You know, I think with regard to the endgame for classifieds, it is probably a little bit early to predict where it will be. That is why I think it behooves us to continue to position ourselves across the spectrum and on whatever platform those classifieds end up being on.

We have a very strong presence in all of our markets on the print side, both through our daily newspaper as well as various nondaily publications and niche publications. Then on the online side we have robust websites in those local communities, together with great national solutions through CareerBuilder, cars.com.

On the real estate side we have very good solutions across all the platforms. You know, you may see us do more in that arena as well. But I think that what we need to do is make sure that we are positioned wherever those classifieds go.

But the mix shift in favor of greater share online is not something that is nearing completion by any stretch. It is probably still going to be an issue for quite sometime.

I would suspect that we will continue to see some migration. It will, perhaps, be at a faster rate in some larger markets than it is in some of the small to medium-sized markets. But I think we will continue to see migration.

Just sort of a smaller thing. With the change in accounting you have made to the equity line, could you provide any framework for what you think the size and any seasonal pattern might be as you are looking at it at this point for the year?

You know, that continues to be difficult to say. Obviously as we indicated in the equity investee line, that is a combination of newspaper partnerships; and I would suspect that the trends there will be not just similar to the trends we see in the rest of our newspaper properties.

With regard to the digital investments that are in that line, CareerBuilder, Classified Ventures have done well; but there may be some more investments there. And then we will have the investment to ramp up the Metromix rollout, so we you're going to see investment dollars going there as we indicated.

How those ramp each quarter is tough to foresee right at the moment. It will be somewhat lumpy, but we will keep you posted each quarter.

Thanks.

In addition to that, Jim, you will also see the HighSchoolSports rollout as we go through and forward this year, so there will be other investments that way as well.

All right, last quick thing. The Wall Street Journal and USA TODAY, aside from both being national products, have not traditionally been especially competitive products. But do you think in the hands of News Corp as they try to broaden the appeal, that there might be any greater competitive overlap than there historically has been?

You know, we will continue doing everything from a marketing [end] that we can. We are very proud of the product that Mr. Moon at USA TODAY is putting out, and we will continue to amplify in the areas that will keep us very, very competitive in that arena. But we are very excited about the continued opportunities.

All right, thanks a lot.

Paul Ginocchio with Deutsche Bank.

Good morning. This is Dave Clark for Paul. Gannett and Tribune have worked together on a number of Internet projects over the years, and I am wondering with new ownership and management at Tribune how you see that relationship evolving? Have you met with Mr. Zell? Have you gotten a sense of his attitude and/or his plans for your joint ventures and future Internet collaborations? Thanks.

Dave, thanks for the question. Yes, we have met with Mr. Zell and we are looking forward to the opportunities of continuing our partnerships and moving forward, obviously, with Metromix and other.

We like the opportunities it provides and certainly we are in sync from that end. I know Sam is very interested in the growth opportunities as well from what he sees. So as far as I am concerned, that will continue to be a very collaborative effort as we go forward.

Great, thanks.

[Ken Silver] with Royal Bank of [Scotland].

Hi, good morning. My voice is bad, so I hope you can hear me. I had a couple questions on CareerBuilder. Is CareerBuilder self-funded or are the partners still putting money into it?

It is self-funding.

Has Gannett received or did Gannett receive any dividends from CareerBuilder in 2007?

No, they wouldn't be providing dividends, other than what they provide us in an overall basis as a wonderful add-on to our print product buy.

Okay, and as that business grows and gains a lot of scale, do you think it is going to pay dividends to the equity owners?

You know, I think it is very premature to bet having that discussion. I think we will want them -- if they can continue to invest those dollars that they generate in robust growth, I think we will all be cheering them on to do that.

Okay, great. Then I had a question, you mentioned in your prepared remarks four states that have obviously been hit by the real estate market pretty hard. I guess at some point in 2008, do the year-over-year comps for those markets get a lot easier? Or are they still just significantly underperforming and you don't see any sort of end in sight to having easier comps and maybe outperformance?

You know, obviously, our comps will get a little bit easier, particularly in the third and fourth quarters. However, it is really too early for us to call which way the real estate market is going to go for the rest of the year. So it will be highly dependent on if someone can prognosticate on where the real estate market is going, we can probably help prognosticate where those four markets will go as well.

Well, what percentage of your revenue are those four markets?

I think we talked about the fact that those four states represented about 40% of the revenues in our US community newspapers, which is the lion's share obviously of our Newspaper segment.

Excluding USA TODAY?

Yes, that would exclude USA TODAY and exclude Newsquest.

Great, thank you very much.

You're welcome. I think we have time for one more question.

Edward Atorino with Benchmark Capital.

Hi, good morning. What were the per-share charge amounts from the special charges other than the impairment, the consolidation and severance? And will those go on at all?

Well, as we said, they were about $38 million pretax, so that is about $0.09 or so of EPS.

Should they be considered nonrecurring items?

Well, you know, I think that we're going to have to continue to look at, as we said, where the revenue picture goes and see how we need to size the operations.

Some do in the industry and in other industries classify anytime you have something like that as a non-cash charge as a special item. We just consider that as part of the operations.

Thanks, Ed, and I think that concludes the session.

Thank you. That does conclude today's conference. We thank you for your participation and you may disconnect at this time.