gannett 4Q2007transcript

GANNETT CO., INC. FOURTH QUARTER
AND FULL YEAR
CONFERENCE CALL AND WEBCAST
Feb. 1, 2008
(Edited for clarity)

________________________________________________________________________

PRESENTATION

Operator

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 Chief
Executive Officer, and Gracia Martore, Executive Vice President and Chief Financial
Officer. At this time, I would like to turn the conference over to Gracia Martore. Please
go ahead.

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

Thanks, Amy, and good morning. 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?

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

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 environment 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 our 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 were $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

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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, at our community newspapers in the US, the slowing economy,
driven by the meltdown in the housing market in some of our communities, 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%.

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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 clear
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 half-a-billion dollars 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

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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 turbo-charging 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.

Gracia Martore - Gannett - EVP, CFO

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.

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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 time sales were down in the low single digits,

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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 reports, 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%.

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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, industry-wide web width 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 non-operating
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 non-operating 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

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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.

QUESTION AND ANSWER

John Janedis - Wachovia Capital Markets - Analyst

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 rates in an effort to drive volume?


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. 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.

Karl Choi - Merrill Lynch - Analyst

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?

Craig Dubow - Gannett - Chairman, President, CEO

Sure. Very much what we saw in December, particularly when we met at the
conference, has continued. Then it further pushed itself downward with all the turmoil
in the markets. What we are seeing right now as we go through the first quarter is quite
similar to that. 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

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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. Gracia, can you tell us what the non newsprint cash expense is?
How much was it down in the quarter?


On a pro forma constant currency basis, 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 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 January is our smallest revenue month and the first quarter
of the year is our smallest revenue quarter. So our fixed costs would play a bigger role
in the quarter. But we are very focused on continuing to align our expenses with
whatever the revenue opportunity is out there. At the same time, we are balancing it
with 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?


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


Just to jump back. There is 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 - Bear Stearns - Analyst

With regards to your comments, Craig, 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 a softening in the UK as we went through the end of the year,
particularly the last few weeks. That has not picked up for us at this point.


Then with the pickup in 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 were profits also down at Newsquest in the fourth
quarter?


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

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But less than the decline in revenues? Is that fair?


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?


It has been kind of a mixed bag in the way that it has come together, particularly with
the change in the timing of the caucuses, as well as for the primaries. But in general,
what we are expecting is that the year will build. We're not changing our thoughts on
where we expect to be. It should be a very robust political season.


Lastly, Gracia, was there any reason behind the reclassification of the equity interest
that you mentioned?


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.

Peter Appert - Goldman Sachs - Analyst

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?

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It will be a little bit tougher, as 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. 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.

Peter Appert - Goldman Sachs - Analyst

Then, 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.

Craig Huber - Lehman Brothers - Analyst

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, 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.


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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 and centralize as
technology allows. We continue to look at opportunities both internally and externally.
So we will continue to do the job you have come to expect of us to do on the expense
side.


Okay, then lastly, have 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, although we always look at all elements of it. But I have to tell you, with what we
are facing this year, there are some really great opportunities. 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 and 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?


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That is correct, yes.

Fred Searby - JPMorgan - Analyst

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 what you think is
happening? Is that what started to really fall off for Newsquest in December? 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, real estate was impacted a bit. But 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. 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 it has gotten off to a
slower start than any of us had hoped for. 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. They will continue to do the job on the expense side, as they have traditionally
done, whichever way the revenue opportunities go.

Jim Goss - Barrington Research - Analyst

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 -- 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.


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 on. We have a
very strong presence in all of our markets on the print side, both through our daily

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newspapers as well as various non-daily publications and niche publications. 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. What we need to do is make sure 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.


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?


That continues to be difficult to say. 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 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. Then we will have the
investment to ramp up the Metromix rollout, so 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.


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


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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?


We will continue doing everything from a marketing point of view 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.
We are very excited about the continued opportunities.

Dave Clark - Deutsche Bank - Analyst

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.


Yes, we have met with Mr. Zell and we are looking forward to continuing our
partnerships and moving forward with Metromix and the others. 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. As far as I am
concerned, that will continue to be a very collaborative effort as we go forward.

Ken Silver - Royal Bank of Scotland - Analyst

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?

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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?


It is very premature to be having that discussion. If they can continue to invest those
dollars that they generate in robust growth, we will all be cheering them on to do that.


You mentioned in your prepared remarks four states that have 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?


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. 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?


We talked about the fact that those four states represented about 40% of the decline in
revenues in our US community newspapers, which is the lion's share of our newspaper
segment.

18


Excluding USA TODAY?


Yes, that would exclude USA TODAY and exclude Newsquest.

Edward Atorino - Benchmark Company - Analyst

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?


They were about $38 million pretax, so that is about $0.09 or so of EPS.

Edward Atorino - Benchmark Company - Analyst

Should they be considered nonrecurring items?


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.

Operator

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

19

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.

20

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