gannett dbtranscript08

GANNETT CO., INC.
DEUTSCHE BANK MEDIA & TELECOMMUNICATIONS CONFERENCE
QUESTION AND ANSWER SESSION
June 9, 2008
(Edited for clarity)

Question:

We'll start with one quick question. There are some comments from another TV group
that because of the shortened political cycle, all the number one and two radio and TV
stations will be sold out anyway, so actually there may not be as much political money
for the top-rated stations. Is that something you foresee happening?

Craig Dubow - Gannett - Chairman, President and CEO:

No. Frankly with the station group we have, and the footprint we have from a market
perspective, we are anticipating the 527 PAC money that has not been spent because the
candidates had not been selected now will be released fairly rapidly, I would imagine.
We’re anticipating a very robust season there. Now as far as being sold out on the other,
I can't respond. I mean you know the business conditions out there and, frankly, you
know the category analysis and the revenue and statistical report we provide. It's a real
tough environment, but I think we'll have inventory to work with.

Question:

Just a quick question on your balance sheet. You guys have about $0.5 billion in 08
maturities plus some converts that are out there. Can you talk about whether you
expect the converts to be put to you? Also, whether or not you would use either a $0.5
billion or $1.5 billion - I guess if everything got put to you - revolver to do that, and
otherwise I guess you would just expect to be in the market to refinance all that stuff.

Gracia Martore - Gannett - CFO

We have $500 million dollars of maturities coming due on June 15th or 16th. We have
already prefunded that maturity. As we told everyone when we put the convertible in
place last year, we fully expected it to be put back to us in mid-July. It is at an extremely
attractive rate. And we have a number of — a variety of different financing sources that
we will use to take care of that including accessing the public debt markets. We have a
shelf registration statement in place. We also may diversify some of our financing

sources and we've put together a club bank deal for a portion of it. The commercial
paper markets have been very good for us, so we would anticipate also accessing the
commercial paper markets to take care of those maturities.

Question:

So a quick follow-up on that. Just for modeling purposes: What rate do you expect on
any and all of that on a blended basis going forward? Just given the markets today?

Gracia Martore - Gannett – CFO:

We expect that at the end of the second quarter our all-in debt rate will be around 4%. It
will really depend on how we refinance things and what portion of public debt versus
other methods of financing. The convert that comes off right now is at about 2.3%. The
notes that are maturing are at around 4.25%, so I think it would have some impact on
the all-in cost of debt but not a dramatic impact on it. We'll just have to see what pieces
we put together ultimately.

Question:

On newsprint. Some of the smaller producers have already proposed a $20 price
increase for the fourth quarter, on top of $60 for the third. The price has moved up quite
a bit. Is the industry able to push back harder this time in the third quarter? What's your
view?


Continuing attempts by producers to raise newsprint prices reflect their own situation,
which is their raw material costs, energy costs and other factors, so we are focused on
the challenges they have, as well as currency. But at the same time, we are taking steps
and continue to take steps to mitigate our usage of newsprint through web reductions
in the U.S. community newspapers, and other places, as well as more lightweight
newsprint. We'll just have to balance all those things as the year progresses.

Question:

I think you've got a couple of 43-inch papers?


44-inch. We will be doing a fair number of 44-inch conversions over '08 and '09.

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Question:

What's your average web-width, roughly?


Web width right now is somewhere between 44 and 48; it's probably close to 48ish.

Question:

Do you have a year-end debt target and would you-- since you gave us some other
costs-- would you project the interest expense, the next couple of quarters?


I don't have a year-end debt target yet. It's going to depend on what we do vis-a-vis
investment and additional acquisitions. There are some additional opportunities that all
of us are looking at. It also depends on what we do in share repurchases for the
remainder of the year as well as what we do with our dividend in July. So there are a
number of factors. It's a little early for us to project that out, but we'll keep everyone
posted in our monthly revenue and statistical report. I suspect it will be below budget
but I wouldn't want to put a range yet on that. And certainly below last year.

Question:
Couple of questions. Do you retain enough confidence in your business sector long-
term to look at adding assets? There are some players out there, McClatchy and others,
that probably would like to divest some assets and take whatever they can get. Second
question is, Gracia, I hear that the goodwill write off is about $2.5 billion.


Yes. It's $2.5 billion to $3 billion pretax.

Question:

I would look at a goodwill write off, as a belated admission that the value of your
business is wrong. What areas of write offs were these in? What properties did you
write down in value? If you can be specific?


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Let me just start, John, with the first. From an acquisition standpoint. Yes, we are going
to continue as we always have to look at newspaper properties if they make sense. The
strategy would be quite similar to what we have been talking about the last few years.
Where we can achieve synergies, printing opportunities in regional situations, it would
make sense to us based on our footprint. At this point, if there happens to be a good
opportunity, and it will fit well, of course we will consider that -- just as we will with
our broadcast side and certainly as we're doing on the digital side. We see no
restrictions in pursuing that. But only if it makes good sense as we have been
disciplined in the past.


John, with regard to the impairment charges, the lion’s share is related to our U.K.
operations, but there is also, to a much lesser degree, the newspaper partnerships,
particularly out West, and then some other smaller domestic pieces. I'd say, John, we
don't think it really reflects the fact that the Newsquest acquisitions were bad
acquisitions. I think it reflects where we are today, where the economy is today, where
the market perceives traditional print businesses to be. The Newsquest acquisitions
have been wonderful acquisitions for us since we bought Newsquest originally in '99
and added onto the pieces. The story is yet to be told on how all that works out.

Question:

Could you comment on your hyper local activities in Cincinnati? Whether you find any
conflict between the regional paper and hyper local efforts and whether you are
satisfied with that? And whether you'll use that in other markets?

Craig Dubow - Gannett - Chairman, President and CEO

Yes, we're very excited about the hyper local activity, particularly in that market. We
have 226 microsites we are serving and -- in conjunction with the other verticals we are
producing, such as Moms, which has also been extremely successful in that market --
we like what we see. As I mentioned earlier, with the 60 Moms sites across the country,
that will be scaled on a national basis here very quickly. Yes, is the answer.

It's working very well for us. And again, what we're really pressing is how we can
create the greatest local impact to serve absolute need of the consumer. That's what it's
all driven by. When you look at the social aspects, particularly of the Moms sites, what
you'll find is they drive that content, and then we serve that by being good listeners. It

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has really created an environment for us, a very targeted environment for us, very
advertiser friendly. We're very very pleased with it.

Question:

When I accessed those sites some months ago, I was enormously impressed with the
amount of editorial content you had, but I didn't see a lot of advertising. Has that
changed?


It's been ramping up as we go along. As each of the markets has opened, you have to
build it up first. We have been doing that. We are seeing the ad dollars begin to come in
in a very nice way and again once this scales, it's going to be a very interesting national
opportunity. With some of the technology that Chris Saridakis is working on for us, it
will allow us to have the specifics about use. It doesn't matter if you're in Orlando or if
you're in New York City for the (social networking) conversations to occur. Mothers
with children are going to want those conversations – on health issues for instance. But
it will be driven as well by local content. We're really going to have a double bite at the
apple, if you will. Purely local and then on a national scale basis as well. We're very
excited where these projects are taking us. They are going to scale nicely.

Question:

Recently some companies -- newspapers in the HotJobs consortium -- said that pricing
power is getting more difficult. And we know that Monster is discounting. Are you
finding at Career Builders, pricing pressure in the market?


In any market, at this point, that is a given. However, with the added strength and
certainly the added opportunity we've had with Career Builder, we're very pleased
with the growth we've had. We continue to have the number one platform out there,
and this is now almost two years running come July. We are quite confident where
that's going, and are pleased.

Question:

Looking at your margins, historically, they have been higher. There has been a
tremendous reset in the last five years. Your operating margins are 100% higher than a

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lot of your key peers. Why should you be higher? Give us the rationale for being higher
than your peers?


Just take what we have done over the course of time. We think we are quite efficient
operators. We are able to maximize the local opportunities that exist. We've done that
in some very significant ways in the community publishing side. From the broadcast
side, the high margins really are directly related to the ratings of those stations. We
have had a goal in every market to be number one or number two for years. That allows
us to continue to get a higher percentage of political as the one or two station. We will
be seeing a higher volume now that the primaries are done. That will continue for us,
and we are working diligently to maintain that. There is significant pressure on us right
now, category and sector pressure, from some of the key areas. However, with those
goals in mind, we are going to continue to have very, very solid margins.


Our small- to mid-size market orientation has worked well for us on the newspaper
side. At the same time, our larger-market focus on the broadcast side also has worked
well for us.

Question:

Couple of questions. First, concerning pricing at your newspapers: Have you had to
lower prices in the advertising category so far this year?


Bob Dickey is here, if he would like to chime in. It really is a market-by-market,
category-by-category issue. I'd say there are some categories and markets where we are
raising prices more than what we had indicated; some where we are being more careful
given the economic environment of those markets. But Bob, did you want to add
anything?

Bob Dickey – President, U.S. Community Publishing

Gracia, I think you pointed out we're working individually with each of the clients,
segment by segment. There are different impacts market-by-market. What's going on in
Phoenix would be different than what we might experience in Sioux Falls, South
Dakota. Overall, I think we've been able to hold our prices steady on the print side and

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we've seen some nice growth in the newspaper division’s digital, particular on the retail
online side.


When you look overall at the states most impacted -- California, Nevada, Arizona and
Florida -- for us, those are going to have a little different environment from a regional
perspective. Mostly it's derivative from real estate of course. But then there's also the
sectors -- home improvement, furniture and so on; they're all tied to that. As you move
around the country and look at different areas of the products we have, you're going to
see variances all the way across the board. It's by market, just as Bob was saying.

Question:

If I could just switch over to the U.K. for a second. Last month or two in British pounds,
how has the ad revenue declined there versus in the U.S.? And also can you talk
specifically about the non-category costs in the U.K.?


Sure. Really, it was the second week of March when we saw the biggest impact in the
U.K., and it has been consistently declining since that point. April came through and the
results were tough. What we are expecting we will see, as everything concludes for
May, is going to be similar if not tougher. You've seen the real estate reports just in May
alone. It was reported, on a total market standpoint, a 2.5% decline in real estate values
combined with the previous two months of over 5%. There is a lot of pressure on the
estate agents there. That is the key area. Auto would be a little different than here in the
U.S., where it would be real estate first with the largest decline. Over there it would be
auto, followed by employment and then real estate. That's how it's working now. Here
in the U.S., you would have real estate, employment and then auto, so it's just a slight
variance in what is taking place on a sector basis.

Question:

If you could quantify down 10% British pounds over the U.K. in the last couple of
months, is that reasonable?


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We will be putting out our revenue and statistical report either later this week or early
next week. We'll have those numbers in there. That will give you the up-to-date
numbers.

Question:

Could you update us on the TV trends?


The TV trends from the key categories starting with auto have been challenged all year.
We're continuing to see that. The retail side remains about the same. The restaurant side
has remained challenged as well. We are expecting that it's going to continue to be soft
as we go into the summer. Hopefully, with some acceleration from the political side and
from the Olympic side. Dave Lougee, if you have any added comment you'd like to
make to that, feel free.

Dave Lougee, President, Gannett Broadcasting

Yes, I'll just second what Craig said a little bit to the newspaper answer. It really does
vary quite a bit regionally and by market. On the local TV side, buyers are buying late,
so visibility is tough. But as Craig said, the political demand is going to be there in our
case because of our large NBC footprint. We're well positioned.

Question:

When you talk about, and it's probably a little early to ask about quadrantOne, but can
we talk about some of the…


We're early, yes, but very excited of course. With the consortium joining, and the 70
million uniques, we think we've got a differentiated advantage based on the premium
inventory we'll have. Really critical to all this is the known environment that our
advertisers will access. We think it is a decided advantage to one that is wide open.
Particularly when you get into some of the P&Gs, the multiproduct nationals, the
interest they have in knowing that specific environment is critically important. Jack,
would you like to add anything to the quadrantOne piece?

Jack Williams, President, Gannett Digital Ventures:

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No. You're basically right. The big advantage is that you have guaranteed inventories so
the salesperson walking into the office of the advertiser is going to say here is what
you're going to get, here's the price. That doesn't happen any place else in the Internet
for multimarket multi owner products, and that's a huge advantage. So far, we've sold 6
or 7 advertising campaigns in only a few weeks. Some of those have been tests to find
out whether the technology works, but we have more than half of the newspapers, Web
sites and TV web sites set up to take the ads, and all the tests have worked fine.
Methodology is scaled, so we're pretty happy so far.

Question:

Given the travails at the Tribune, how reliable a partner are they in these ventures?


I can say this: we've had a number of meetings with Sam, and we are working diligently
to move forward on ventures that we have together. We look to them to be very good
partners as we go forward. They obviously have some immediate concerns and we
want to address them the best way. The top line is the most appropriate way possible.
We look forward to continued operations with Tribune.

Question:

I'll throw the last question out there. Dean Singleton just gave a speech at the World
Association of Newspapers, and threw the comment out that probably some metros will
fail. I think Rupert Murdoch, at All Things Digital, said the same thing. Do you think
there are going to be ventures that fail?


As we've seen over the past number of years, things are very challenged. Again, you all
are very familiar with our operations and how we can make things work. We'll
continually look at it. But yes, it's challenging right now, but we still are optimistic.

Host:

Thank you very much.

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Certain statements in this transcript may be forward looking in nature or “forward looking
statements” as defined in the Private Securities Litigation Reform Act of 1995. The forward
looking statements contained in this transcript are subject to a number of risks, trends and
uncertainties that could cause actual performance to differ materially from these forward looking
statements. A number of those risks, trends and uncertainties are discussed in the company’s
SEC reports, including the company’s annual report on Form 10-K and quarterly reports on Form
10-Q. Any forward looking statements in this transcript should be evaluated in light of these
important risk factors. Gannett Co., Inc. is not responsible for updating the information contained
in this transcript beyond the published date, or for changes made to this document by wire
services or Internet service providers.

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