Gannett Co Earnings Call Nuggets: Digital Subscriber Experience and Daily Circulation Changes
Digital Subscriber Experience
Doug Arthur – Evercore Partners: Actually, two questions. Gracia, the 46,000 digital-only subs, is there any – can you elaborate on what your experience has been with subscribers kind of who have been traditionally print-only? Do you have some hybrids where they’ve perhaps dropped print Monday through Friday but are getting it on the weekend and then taking the full access as well? I mean, can you sort of embellish on your subscriber experience in Digital? Then secondly, in terms of Q1 guidance on Broadcasting, any comments on kind of core ex-retrans?
Gracia C. Martore – President and CEO: Sure. Let me begin to answer the first one and we’ve got Bob Dickey with us in the room, and I know he’ll want to chime in. Let me just say that with respect to the 46,000 Digital subscribers, as you know, we spent 2012 really focused, almost entirely, on taking the existing subscribers we had and rolling them into our new model. We did not spend any marketing dollars or really any time focusing on then developing new additional digital subscribers. We happen to have 46,000 of them as a result of the word that got out in the market. We have said that we expect in 2013 and we are in 2013 going to be spending not inconsequential marketing dollars and really focusing on ramping up that level of digital only subscriber because those subscribers tend to be younger and therefore more attractive in some ways to advertisers. So our goal in 2013 is to increase that I think 46,000 number to 250,000 to 300,000 subs by the end of the year. But Bob, do you want to add anything more specifically to…
Robert J. Dickey – President, U.S. Community Publishing: Doug, to your question about shift. I am happy to report, to date we’ve not seen any real significant movement from a seven-day to four-day or to Sunday only. Certainly there’s been some of that, consumers now have the choice, but so far as we get moving into the first wave, which will cycle next month, we’ve not seen significant movement, we’re within the projections we expected on the Sunday and daily home deliveries volume side. We are doing slightly better on the single copy side. Certainly something we will want to continue to manage, we watch it closely and we are very, very happy with our e-edition, the replica, the traffic there has been a pleasant surprise. It’s growing stronger than we anticipated and we think there are some things we can market their as well.
Gracia C. Martore – President and CEO: To the second part of your question Doug, with respect to the first quarter, as we said, probably the area that we have the best visibility is on the Broadcast side and we’re looking at good follow through in the first quarter I think, what we’re expecting is on the core ad revenue side something in the 4% to 5% growth for the quarter, so a continuation and that’s not just in auto, although auto continues to be quite strong, but that spread across a number of categories in the first quarter. On the print side, it’s really early, January is our smallest month and the smallest quarter of the year, so we don’t gain a lot of good visibility. As Bob said, we are tracking very well on the circulation side of that and circulation now is a good third of our revenues on our local domestic publishing site, so that’s a nice boost and that I think will continue to be a good factor for us. Advertising – I think the year started with that weak change, it started a little bit of uncertainty around fiscal cliff, again, in all those kinds of interesting things. I think we’ll know better as progress through the quarter, but we haven’t seen anything thus far that makes us believe that we’re not going to be to achieve some of the goals that we’ve set out for ourselves for the first quarter. I think on the USA Today front, we’re actually seeing some pretty good traction on the print side of advertising on USA Today, so feel a little bit better, and it’s only been a few months since we relaunched USA Today. So, it’s going to take a little time for the traction, especially on the new digital platforms to take hold, but we’re already seeing good progress on video views and a number of other metrics on the digital side to give us good confidence that, as the year progresses, we’re going to see good follow-through on those numbers. Newsquest is starting out as we would always expect Newsquest to do. They’ll do what they need to do. They’ve done some work on the circulation side as well and they’re – based on their early results from that, they’re going to be accelerating the rollout of that program. So we feel good about what Newsquest is going to accomplish. Now Victoria did mention some kind of one-off items, obviously, different challenges that we have in the first quarter compared to the first quarter of last year. So we obviously have those to deal with. We’re pleased, on the one hand, that we’re not doing furloughs, but that’s obviously an impact of $8 million year-over-year and all the other little pieces that Victoria mentioned.
Daily Circulation Changes
Craig Huber – Huber Research Partners: I have a few housekeeping questions, please. In the quarter, Gracia, what was the daily and circulation – daily and some of the circulation volume percent change year-over-year for the U.S. Community Publishing? Also, I was wondering, on the pension side, how did that end for the year? Was it under funded status? How much do you anticipate potentially putting to that plan this year? I have a follow-up, too.
Gracia C. Martore – President and CEO: On the circulation side, as Bob mentioned, the numbers are coming on track as to what we expected. Let me just refresh your memories that we had indicated that we expected, on daily home delivery and Sunday home delivery, over and above the existing trend that we had, that we expected that we would probably see about a mid-single-digit, 5%, 6% further decline. On home delivery in the fourth quarter, it was down about a little over 9% and on the Sunday side, again in that 9%-ish range. So right on track on what we were anticipating. On single copy as Bob mentioned in the fourth quarter, we actually saw better numbers than we expected. We had talked about last February that we expected to see declines potentially in the 30% range. Those declines at this point are about half of what we had anticipated. So I think total U.S. community publishing in the fourth quarter, volumes down in that 11% range and on the Sunday side, not a similar range as well, but right on track with where we expected. Anything else?
Craig Huber – Huber Research Partners: Yes, I am sorry, the pension please?
Gracia C. Martore – President and CEO: We actually had a terrific performance on the pension side. We had a return of about 12.6% for the year, but as you can expect with interest rates continuing to fall, our discount rate is down I think about 90 basis points, but net-net, I think our funding is going to be pretty much in the same order. Victoria, we funded about what $90 some odd million last year.
Victoria D. Harker – Chief Financial Officer: About $94 million. Yeah.
Gracia C. Martore – President and CEO: Then we did another contribution.
Victoria D. Harker – Chief Financial Officer: End of year-end, at this point we will evaluate next year, but we are fully funded as we had anticipated by December 31.
Gracia C. Martore – President and CEO: Not fully funded, we are about 95%.
Victoria D. Harker – Chief Financial Officer: 95% right.
Gracia C. Martore – President and CEO: Based on those – on the current rules.
Craig Huber – Huber Research Partners: So, what is the ERISA underfunded status, please? What are you expecting to put into it this year?
Gracia C. Martore – President and CEO: We did that $50 million contribution and that’s all we have to do. In fact it’s more than what we had to do from a mandatory standpoint. At the pension relief regulations that required us to contribute less, we may look at voluntary contributions as the year progresses, but we have completed our funding, our mandatory funding for the year. I think our – we haven’t finalized the numbers yet on the ERISA funding, but my assumption is based on the good performance, the contributions we made offset by the discount rate that the funding level was going to be pretty close to where it was today and we’d probably be in that 95% range again.
Craig Huber – Huber Research Partners: So, what was the auto percent change for TV in the quarter, and how’s that looking so far this quarter? If I also could just squeeze another one in here. For your Digital segment, the extra week, did you not have an extra week in the quarter, just didn’t have an impact at all in the Digital segment?
Gracia C. Martore – President and CEO: In our Digital segment, those are businesses that we acquired and when they came on they were on monthly calendar, so we changed them to a 544 calendar, so that’s why they just have monthly numbers and they don’t have the extra week. On the automotive side I think Dave Lougee is here and he can probably give us all the nits and nats on that.
David T. Lougee – President, Gannett Broadcasting: Your question I think was about fourth quarter and first quarter. Fourth quarter remember was impacted by displacement that was alluded to earlier, so I think the more key number was December when it was a pure quarter without the impact of political and that ended up a plus 15 in that neighborhood. In the first quarter, it’s pacing nicely as well. We’ve got some ups and downs because of the Super Bowl being a January event this year and a February event last year, but again when you look at March it’s I think right around 20% right now. So, it remained strong, but it’s actually nice to see that our strength is a little bit broader than just auto like it was early last year.
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