gannett 1Q2007transcript

GANNETT CO., INC. FIRST QUARTER
CONFERENCE CALL AND WEBCAST
April 19, 2007

PRESENTATION
________________________________________________________________________

Operator

Good day, everyone, and welcome to Gannett's first-quarter 2007 earnings
conference call. This 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 Chief
Executive Officer, and Gracia Martore, Executive Vice President and Chief
Financial Officer. At this time I would like to turn the call over to Gracia Martore.
Please go ahead.

Gracia Martore - Gannett Co., Inc. - EVP, CFO

Thanks, Sheila, and good afternoon. Welcome again to our conference call and
Web cast to review Gannett's first-quarter 2007 results. Hopefully you have had
an opportunity to review the press releases from this morning, which 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. Since many of you heard our presentation at the
MEANY luncheon a few weeks ago and quite a few other media companies
reported this morning, we will keep our comments brief. Craig will begin this
afternoon with an update on our strategic initiatives and provide an overview of
our results for the quarter. I will then follow up with some more specific details.
Craig?

Craig Dubow - Gannett Co., Inc. - Chairman, President, CEO

Thanks, Gracia. Good afternoon to everyone. As Gracia mentioned, we gave you
a comprehensive update on the progress of our strategic initiatives at the
MEANY presentation in mid-March. Briefly, we are moving ahead on a number

of our strategic efforts. The rollout of the information center is proceeding as
planned and will be completed at our domestic publishing operations in the next
few weeks. Around the rest of the company, similar efforts are underway.

Our properties that have implemented the information center are developing
new ideas to attract audiences. We continue to experience strong forward
momentum on our Moms sites. For instance, as you may recall, our Moms sites
are devoted to all things for working and stay-at-home mothers. Our first sight
was indymoms.com in Indianapolis. We will be rolling out additional Moms
sites in two waves and should have 30 sites up and running by June 1.

We are extremely encouraged by the results. A large majority of the Moms’
traffic is going to the discussion forums and we're seeing steady and increased
growth on the sites. Plus, in Indy for example, over 30 new advertisers are on
board with Web and print ads. The lesson here is that successfully engaging a
desired demographic is leading to more advertisers on line and in print.

We are applying that to other areas as well. Databases continue to be an effective
way to bring traffic to our sites. In Brevard, the site they call Watchdog, includes
searchable databases and has proven to be very popular. More visitors are
staying on the site for a longer period of time and we are working to connect
advertisers to that wider audience.

Most importantly, the sites that have been through the information center
transformation are seeing steady and increased growth in traffic, which
translates to a wider audience. This, in combination with our audience based
selling efforts, is working well to attract new advertisers. We are becoming
smarter about our niche sites and connecting them with the right demographic
and geographic audience.

Additionally some of the ideas supported by our center for innovation are
moving to the next stage of development. As we have suggested at the MEANY
luncheon, we are expanding local search and local ad capabilities and building
mobile capacity at Gannett Digital.

Let me comment briefly on our progress with the ad network. We continue to
talk with multiple parties about the ad network and how it should be
constituted, focusing on issues of governance, content and exclusivity. These are
issues that we believe have not been satisfactorily resolved in the agreements
currently under discussion.

We are open to talking with anyone, but are interested in crafting the right
solution, not necessarily the quickest solution. We are committed to the concept

of an industry-wide ad network, one that does not compromise the value of our
content, that is fair and open to all, has reasonable governance structure and
allows all parties to make deals with other providers as they see fit.

On March 3, we re-launched the USATODAY.com site. We saw a substantial
increase in traffic and registered users. The site saw a 380% increase in
registrations. Readers also are spending more time per visit on the site. Unique
visitors on the sites were up 21% for February. Clearly our readers are
connecting more with USATODAY.com.

One component of our strategic plan is to enhance the core - our traditional
media segments - while optimizing our footprint of our properties. Last week we
announced the sale of four of our newspapers in Utica, New York; Norwich,
Connecticut; Huntington, West Virginia; Rockford, Illinois, for $410 million. We
want to thank all of our employees of these newspapers for their hard work and
dedication over the years.

These papers were stand-alone properties and, in some cases under our
ownership, would have required substantial capital investment for new
equipment. We expect to close on the sale by month’s end.

Now turning to our results for the quarter. As you saw, Gannett earned $0.90 per
diluted share at the high end of the guidance we provided you in mid-March.
Our reported operating revenues for the quarter totaled almost $1.9 billion and
we generated operating cash flow of roughly $472 million. The first quarter
presented a number of challenges for us. Results were impacted by a variety of
factors that led to a challenging advertising environment. A softening real estate
market particularly in the South and West tempered ad demand and severe
winter weather in the Midwest and Northeast held back advertising.

In addition, our domestic community newspapers faced the toughest year-over-
year comparison of the year, particularly for real estate and employment. And
the shift of the final week in December 2006 impacted the first quarter. We also
had to overcome the absence of more than $22 million in Olympic revenue in our
broadcasting segment. Yet with all of those challenges, our total operating
revenues were down only slightly, less than 1%.

On a pro forma basis, our total operating revenues were down slightly over 1%.
On the same basis, newspaper advertising revenues for the quarter were down
almost 2%. Local advertising was up slightly while national and classified were
both down in the low to single mid digits.

In the classified categories at our domestic community newspapers, real estate
and employment were impacted by the softening real estate market and tough
comparisons. Auto continues to be soft. Stabilization continues at Newsquest and
they achieved their first quarter of year-over-year revenue growth in pounds
since the fourth quarter of 2004. Growth in the classified categories, the largest
contributor to revenues, drove the gain.

USA TODAY's advertising revenue was down for the quarter, reflecting softness
in some key categories and the absence of Olympic-based revenue that benefited
the first quarter of 2006. 2007 marks the 25th anniversary of USA TODAY and
they will be including a number of features to showcase that milestone.

As expected, our broadcasting segment faced the absence of significant ad
demand driven by the Olympics. However, with the addition of the two new
stations in Denver and Atlanta and healthy revenue growth from Captivate and
Online, broadcasting posted a slight revenue increase for the quarter.

We are very focused on the digital side of our business and continue to drive
gains across our segments. Company-wide online revenues were up 16%. Our
domestic newspapers were up almost 12%, even with the fall off in print
revenues in our classifieds verticals. Newsquest was up 55% in pounds and
broadcasting had an increase of 36%. In March, our domestic websites had 23.1
million unique users and reached 14.6% of the Internet audience. In the UK,
Newsquest’s online audience totaled 4.8 million unique visitors with over 70
million page impressions.

CareerBuilder network revenue advanced 20% compared to the first quarter of
2006. Traffic for the network averaged 21.7 million unique visitors for the first
quarter.

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


Thanks, Craig. Before we go into detail on our quarterly results, I need to remind
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.

As Craig mentioned, there were a number of factors that had an impact on the
quarter. Beyond the cyclical factors in terms of year-over-year comparisons, we
benefited from the increase in the Sterling/U.S. dollar exchange rate on the
revenue side. However, that created a commensurate headwind on the expense
side. Finally the increase in non-operating expense reflected in part the absence
of the gain of the sale of our piece of the Cincinnati Reds last year.

Let me drill down a little deeper into our results starting with the newspaper
segment. Overall, as you saw, pro forma newspaper segment ad revenues
declined 1.8% for the quarter. In the UK, ad revenues in pounds were up 1.4%
while in the U.S. ad revenues declined 4.8%.

Local advertising revenues were up 0.6% on a pro forma basis. For our U.S.
community newspapers, we achieved gains in the health, restaurant,
telecommunications, and office supply categories. This was offset by declines in
some of our larger categories: department stores, furniture, and consumer
electronics.

The classifieds categories, as Craig mentioned, were soft in the quarter,
particularly for our U.S. community newspapers, which also faced the toughest
year-over-year comparisons in the first quarter. On a pro forma basis, real estate
and employment were about 11% and 8% lower in the quarter at our domestic
community newspapers against gains of 22% and over 7% respectively last year.

The South, especially the Sun Coast, and the far West, were particularly soft as
the weakening real estate market sent ripples through those local economies that
negatively impacted both real estate and employment. Auto advertising remains
soft as Craig mentioned, although we are seeing some success with multi
platform advertising solutions aimed at the used car market.

Turning back to real estate for just a moment, a recent article on the housing
slump highlighted the softness we are seeing in our Pacific and Florida
properties. According to that article, Arizona, California, Florida, and Nevada,
the chief beneficiaries of the housing uptick, are expected to be disadvantaged
disproportionately from the housing slump. Since late 2005, existing home sales
fell over 30% in Florida and Nevada and over 20% in Arizona and California, all
places where we have a meaningful presence.

The article went on to say that the slump not only impacts the labor situation in
these markets but also the spending on big-ticket items such as cars and home
furnishings, which were being financed by home equity loans. Specific examples
were that 30% of California new car purchases and 10% of Florida's were

financed with home equity loans in 2006, compared with just 7% nationally.
Clearly this is reflected in our results in those four states.

Real estate and automotive losses in these states were double what we
experienced in all other Gannett properties. And on the employment side, we
saw results in those four states lagging last year by over 20% while the rest of our
community newspapers experienced a lag in the lowest single digits. This
housing cycle -- and it is a cycle -- will also pass, but we cannot predict when.
When it does, we will be well positioned to capitalize on those better revenue
results.

Turning to national advertising, USA TODAY's ad revenues declined almost 8%
for the quarter, due in part to the absence of Olympic-related revenue. Travel
made a solid come back in the quarter, as did the restaurant category. Softness in
the entertainment, auto, and tech categories offset the gains, however.

In the UK, total revenues in pounds were up 1.8% for the quarter as classified
revenues, particularly the critical real estate and employment categories were
both in positive territory in pounds. Newsquest benefited in the first period from
the calendar shift, but we are encouraged by their results. Operating leverage has
taken hold and costs have been well controlled, resulting in NIBT again in
pounds for Newsquest being up almost 14%.

Moving to the broadcasting segment, which includes Captivate, revenues were
up slightly on a reported basis reflecting the addition of the two recently
acquired stations in Denver and Atlanta, revenue increases of almost 17% at
Captivate and a 36% increase in online revenue that offset the absence of
substantial Olympic revenue. Total revenue growth on a pro forma basis in the
segment was down 6.3%.

The latest television pacings for the second quarter of 2007 point to revenues
being down in the very low single digits compared to last year. With respect to
the pacings, please keep in mind that there was approximately $9.5 million in net
political revenue in the second quarter of 2006 - not a number we anticipate
repeating in the second quarter of 2007.

Those are the projections for this week and the numbers can be volatile, as you
know. As always, we will keep you updated through our monthly reports.

Now let's turn to our expenses, a place again where we have kept a close eye on
the costs we can control. Reported expenses for the company were up about 0.6%
for the quarter and would have been essentially flat on a pro forma basis. In the
newspaper segment, reported expenses were also flat for the quarter. Reported

and pro forma newsprint expense were both up slightly as a 7% increase in
newsprint prices offset an almost 7% decline in usage.

Bear in mind, we are on a FIFO accounting basis for inventories while many of
our industry colleagues are on a LIFO basis. And the currency translation that I
mentioned earlier also impacted this area. As well in the UK, newsprint pricing
for the year will be up a little over 5% in pounds as that market has different
pricing characteristics than the U.S. market. Absent the UK in fact, our newsprint
expense would've been down a little over 2.5%.

Taking all of these factors into account, our pro forma, constant currency,
newspaper cash costs excluding newsprint would have been down a little over
2%. One further comment on newsprint: Newsprint prices retreated at the start
of 2007 and that trend continued through the first quarter. The supply and
demand imbalance has been more acute than anticipated. Consequently,
producers adjusted Gannett's longer-term price arrangements to reflect the
competitive realities of the marketplace. We will, however, remain watchful for
solutions that temper pricing volatilities over the long term.

On the broadcasting side, reported expenses were up about 7% reflecting
primarily the additional expenses associated with the TV stations we acquired in
the third quarter. On a pro forma basis, broadcast segment expenses were up less
than 1%.

Stock-based compensation awards accounted for all of the increase in reported
corporate expense. We did not make stock awards to about 25 senior executives
in 2006. Awards were given in the first quarter of 2007 and we will look at future
grants for those executives in the first quarter of subsequent years. For the full
year of 2007, we expect stock-based compensation to be flat to down compared to
2006.

Touching briefly on some of our balance sheet items, total debt at quarter end
stood at $5.5 billion. Cash and marketable securities were $644 million. On April
2, the first day of the second quarter, we had $700 million of long-term debt
maturing. We pre-funded a substantial portion of that payment by borrowing in
the commercial paper markets in the last two weeks of March and invested those
borrowings at a positive spread, which resulted in $525 million of marketable
securities on the balance sheet at quarter end.

On April 2, we liquidated the marketable securities, paid the $700 million
maturity, and total debt was reduced from $5.5 billion to $5 billion where it
stands today. At this point, our all-in cost of debt is 5.42% with commercial paper
at 5.39%.

Turning to capital expenditures, they totaled approximately $29 million and we
believe we are on track to be within the budget of $200 million for the year.

With respect to shares outstanding, finally, our basic shares at the end of the
quarter were 234.5 million and the quarterly average was 234.6 million. We
repurchased a little less than 200,000 shares late in the quarter as several
potential investment opportunities resolved themselves.

Now we will stop and Craig and I will be happy to take your questions. Craig?

QUESTION AND ANSWER

Lisa Monaco – Morgan Stanley – Analyst

Could you comment on the cost performance going forward for the newspaper
division? Costs were much better than we expected and I just wanted to see how
sustainable that is going forward.


First, looking at our friends at Newsquest, as you know over the last two years,
they have been challenged by a difficult revenue environment. The management
team there led by Paul Davidson did a terrific job restructuring and
consolidating and really rationalizing the expense structure there. They have
continued to be very careful on the expense side into this year, so we would
anticipate we will continue to see them appropriately size the expense side to the
revenue opportunity.

Turning to the U.S. newspapers, we anticipate we will see some additional help
in future quarters from the newsprint side. We are, as I mentioned, on a FIFO
basis, so given inventory levels, the real impact of that will not be felt until the
second, third, and fourth quarters. We would also anticipate that our U.S.
domestic newspapers will continue to focus on the expense side and size it
appropriately to whatever the revenue opportunity is out there.


Okay. Then, on the proceeds that you will receive from the announced
newspaper sales, what are your expectations for the use of proceeds?


Well, clearly in a short term we will simply take the proceeds in and repay debt
with them. But there are a number of investment opportunities we continue to
look at. You saw that we dipped our toe back into the share repurchase market
towards the end of March and you may see us doing further share repurchases in
the second quarter. So, very short-term debt repayment, but intermediate to
long-term, redeployment into other investment opportunities.


Can you give us a sense of how you're looking at the share repurchase
opportunity versus acquisitions in terms of other means of investment?


Well, as we have historically said whenever we are looking at an acquisition or
an investment opportunity, we run our models against what that would mean in
terms of a share repurchase opportunity. We take into account what we think
that we can do with that acquisition or investment opportunity both from
growth on the revenue line as well as potential expense savings. Then we decide
which would make the most sense for us to do -- to increase shareholder value.
We will continue to reflect that kind of decision making going forward.


Lastly, on the dividend, I assume by the lack of mention of a potential dividend
increase that that is currently not on the table.


Well, the only reason why I did not mention it is because normally that is taken
up in our July Board meeting and I never like to preempt the Board. However, as
we have been saying for the last several months, we are open to all uses for our
free cash flow. We have not ruled anything out. We just have to weigh the
investment opportunities against share repurchase opportunities against the
dividend.

As you know, we have increased our dividend every year since we were a public
company. Last year, we increased it 7% and that is a topic for ourselves and the
Board in the coming months.

Craig Huber – Lehman Brothers – Analyst

Concerning your TV station division, I was just wondering if you have any plans
of potentially selling that or maybe spinning it off?


You know, Craig, as we look at it right now, we are in a tremendous sweet spot
with political as we go into '08, and with a number of other opportunities we are
seeing at this point. In general, we see that will create - and continue to create -
good value for the company. We're very pleased with the direction we're
heading with our duopolies and would look for that as we go further into the
future as well.


A separate question please. How much consideration have you done about doing
a potential large sized Internet acquisition over the next 12 to 18 months?


Well, as you know, we will look at anything that is out there. There is no
question about that. The real particular piece is, do the economics make real
sense for the company? But there is nothing that is a hurdle in front of us right
now that would preclude us other than we need to find what the appropriate
opportunity might be.


If you have something in mind for us, Craig, that you know reaches our hurdles,
please give us a call.


I am not a banker. A last minor question: Can you comment on the multiple you
received for the sale of your four small papers?


What we have indicated on that, Craig, is that revenues out of those properties
were in the $115 million to $120 million range and they had cash flow margins in
the very, very low 30s -- 30% range.

Fred Searby – JPMorgan – Analyst

I wondered if you could talk specifically about how Newsquest's online
operations are doing in the UK vis-à-vis Monster, just generally, and
CareerBuilder's efforts internationally. Secondly, whether you have rethought
the historic -- [Doug McCorkindale’s position of] only looking at English-
speaking markets -- whether you have rethought that about that international
expansion notwithstanding the obvious media restrictions in some of those
markets?


First off, with respect to the online operations, we are seeing some very good
traction in the UK. This past period, we have been up in the plus 50% range with
them. With respect to Fish4, which would be the CareerBuilder equivalent in the
UK, we also have seen some tremendous growth from that perspective as well.
We would anticipate that will go further as we go along in the year.

With respect to the past discussion on English-speaking markets, there have been
a number of opportunities over the years and we have made a few
determinations. We will look at anything. But, again, we want to be able to
evaluate the products on as fair a basis as we can. What we have found is that for
those that are English-speaking, it is a far easier comparison. That’s probably a
direction that will continue as we go into the future.


Just to add one thing, Fred, with regard to Fish4. Fish4 is a clear number one in
the employment category sites in the UK, far surpassing Monster and any other
career sites there. As to CareerBuilder's international expansion, it is in its
nascent stages. However, they have done a couple of recent small acquisitions in
Sweden and in the Netherlands to expand on their international efforts. You'll
see that will continue to be a thrust for them as well as to be the clear number
one here in the U.S. in every metric.

Steven Barlow – Prudential Equity – Analyst

Gracia, what is the run rate of annual revenue of the two Connecticut
newspapers you're buying and the run revenue rate of the two TV stations you
bought in the third quarter last year?


With regard to the SCNI papers, it's probably a little premature for us to discuss
that, given the most recent issues there with the labor unions. As we get closer to
resolution there, we will be happy to share those numbers.

With regard to the two television stations, Jeff will call you back later, but they
were small stations from a revenue perspective.

Paul Ginocchio – Deutsche Bank – Analyst

Craig, maybe you can just give us some more color on the -- you made some
comments about some of the issues maybe with joining the current newspaper
consortium. I think you mentioned governance and some other issues. If you can
just maybe for those of us who are a little slower, spell out a little bit more what
some of the issues are.


Number one, we are not suggesting we have made any hard decisions in any
direction. We are most committed, as I said earlier, really to the concept of an
industry-wide ad network. We think that is of tremendous value. But what we
don't want to do is put ourselves in any kind of position that could potentially
compromise the value of our content. Additionally, we just want to make
absolutely certain that it is fair and open to all. I also want to be able to see how
this works with other networks as well.

We want to be very clear. There are opportunities to work in a multitude of
networks. We think this is a good opportunity. For those reasons, we are very
interested in learning more as we go along, but from a content and exclusivity
standpoint, we want to be very, very protective of what we have.

We will continue to work with Tribune on our network. I would just say this: At
this point, with more than some 37 million unique visitors to our Websites, we
are well set at this point. But we certainly would look to continue to expand that.


I guess it sounds like it's sort of exclusivity deal and not wanting to have the --
that sounds like maybe an issue for you. Is that fair to say?


As Craig was saying, the exclusivity part of it. Also as Craig mentioned, the
governance aspect. We continue to do our homework as to what exactly the

governance is of various groups and how that would play out. That is not, as
Craig mentioned earlier in his remarks, specifically clear to us in any of these ad
networks thus far.


Great and maybe just because of your ownership of Discovery Planet, does that
preclude you from doing anything?


Oh, for Planet Discover? No, no, it does not in any way. That has been fully
rolled out across Gannett at this point. But no, there is no hurdle there
whatsoever.

Alexia Quadrani – Bear Stearns – Analyst

Could you give us any sense on how USA TODAY is trending in the second
quarter? Then on the community papers, are you expecting any negative impact
in the month of April from the earlier Easter holiday this year?


With regard to USA TODAY, they have seen some pickup in advertising. It’s is a
little bit similar to what we saw last year. 2006 started out on a slow note and
each quarter got successively better. Then full year was a nice up year for them.
So the first quarter started off a little slow. They've seen some campaigns they
were anticipating might break in the first quarter actually breaking in the second
quarter. They are a little more optimistic as we enter the second quarter that we
will see some pickup there.

As to the community newspapers, given that the last Sunday before Easter was
in the first quarter, whereas it was in the second quarter last year, we may see
some of the preprint revenue could have been realized in the first quarter versus
the second quarter. We'll just have to see how April plays out and add the two
together as we always suggest you do to neutralize the impact.

Alexia Quadrani – Bear Stearns – Analyst

And just a last question on the Newsquest properties: Has the rebound been
across all properties or is it isolated to certain areas?


What we are seeing is the greatest headwind is still in the London area and in
Scotland. Across the other properties, however, the small pickup we're seeing
that's really translating, but those are the two key areas of concern at this point.

Karl Choi – Merrill Lynch – Analyst

A question on divestitures: Knowing that you always look to optimize your
portfolio, and looking at recent decisions to divest four papers, I just wondered if
we should expect some more this year as you look at your geographic location of
your properties?


We have nothing on the drawing boards at this moment. With regard to those
four properties, we received attractive offers. It led us to decide that - given they
were stand-alones and have some capital expenditure needs at least - we would
have to take a hard look at that and it made sense to divest. Nothing right at the
moment on the drawing boards.

Karl Choi – Merrill Lynch – Analyst

Following up on Alexia's question on the UK: Without the calendar shift in the
second quarter that you enjoyed in the first quarter, can you actually maintain
the positive momentum in terms of gains in advertising revenues in the second
quarter at this point?


We'll just have to see how the second quarter plays out. We have continued to
make progress each quarter and there will be some categories, as Craig said, in
Scotland and in London that will be a bit softer. Then there are others that will be
partially offsetting of that. We'll just have to see as the quarter progresses where
that takes us.

Peter Appert – Goldman Sachs – Analyst

Gracia, the cash cost down 2% is very impressive. Do you think you can hold it at
something close to that level through the balance of 07?


We will take it one quarter at a time, Peter. It will be dependent on where we see
the revenue picture going. If the revenue picture perks up in the second half of
the year, then we would expect that expenses would be commensurate with that
kind of a revenue pickup. But we will have the benefit on the newsprint side that
should ramp up during the course of the year. Through the second quarter, we
would anticipate strong cost controls in place across the company. Then we'll just
have to see how the revenue picture unfolds.


How about on the newsprint, Gracia? Can you tell us what the actual contract
prices are today versus a year ago - just percentage change - to understand better
what the flow-through benefit might be in the subsequent quarters?


I can't really obviously speak to prices, Peter.


Sure you can.


But then Craig would be very upset with me. What I can tell you, though, is that
newsprint expense will continue to ratchet down. It was about flat this quarter.
We would expect it to be lower each successive quarter than the last quarter.


Have you locked in any price agreements at this point?


As I mentioned in my remarks, we have agreements in place for the first six
months. But the producers, recognizing market realities, have made sure they
have kept our prices competitive.


Okay and it looks like the sale of the four newspapers could be dilutive - if I'm
doing this right - to earnings by maybe $10 million or $20 million. Does that
sound right?


That's probably in a reasonable ballpark - depending on what you assume the
proceeds are used for. If you assume -- in the short-term they are used to pay
down debt, that is probably about right.


Okay and then one last thing, just to be sure I understand: The TV pacings
number you are offering, sort of low single digit decline, that's meant to be pro
forma, right? To incorporate the acquired TV stations in the prior year number?


Yes, that's apples to apples.

Edward Atorino – Benchmark – Analyst

With your debt down to $5 billion and if you pay down some, the run rate for the
year might be in the low 60s or the mid 60s on a quarterly basis?


In terms of interest expense? Yes, assuming that we simply used all of our free
cash flow to pay down debt, that is right. However, that is not necessarily the
right assumption. We do share purchases and we do acquisitions and
investments on an opportunistic basis. So there is no way to really forecast in
when those events are going to happen. But if you simply were to assume --
which obviously is not the case -- that we would use it all to pay down debt, then
your numbers are probably in the ballpark.

Leah Pilla –UBS – Analyst

I was just wondering if the proposed Tribune transaction would trigger any
change of control covenants in the various joint ventures you have?


As it is presently are being reported, it would not trigger any change in control
provisions in those documents.

Harris Hall – Singular Equity Research – Analyst

Just trying to get a sense of what is your online revenue run rate is. I thought I
heard you say earlier it was $400 million in a prior presentation. Is that about
right?


No, what we indicated was that it was a little over $400 million last year and we
shared our online revenue run rate growth this year. You could look at it on an
annualized basis at the moment to kind of come up with a ballpark, but that
changes quarter-to-quarter.


Got you. So for 2006, the last year, it was a little bit over $400 million?


Yes, exactly. And that of course does not include revenues generated at
CareerBuilder or Classified Ventures that remain in those entities which are not
consolidated into our P&L.


So that is just the part that's in broadcasting or does that include the local
newspapers and their websites?


No, that would include Newsquest, our local community newspapers, and
Broadcast.


Okay. Also in your release, you broke out television revenues and as a part of
broadcast revenues. What is the difference there? Is that the Captivate revenues
or --?


It's Captivate.


So the Captivate revenues are about $5.8 million then?


Captivate revenues are about $5.8 million. Let me just quickly take a peak here
and see if I've got that in front of me.


Well I got that because the release said total broadcasting revenues were $183
million and television revenues were $177 million.


Then that would be the difference.


Okay, the difference is Captivate?


Yes.


Okay, great. Then lastly, have you heard anything from your advertisers in terms
of them leaving broadcast TV for cable TV? Obviously that's kind of a bigger
industry trend and I'm interested in what you're hearing from your advertisers.


No, that is not something that we have been hearing. From this past week having
spent time out at NAB, we are feeling very good with respect to broadcasting.
We are anticipating the political that will be coming up for the presidential and
other elections, but I have not heard anything like that.

Operator

At this time I would like to turn the conference back over to the speakers for any
additional or closing remarks.


Thanks very much for joining us today. If you have any additional questions,
please feel free to call Jeff Heinz at 703-854-6917 or me at extension at 6918.
Thanks very much for joining us.

Operator

That concludes today's presentation. Thank you for your participation. You may
now disconnect.

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.

gannett 1Q2007transcript

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