- The ad serving platform is a crucial component of the infrastructure, along with Point Roll’s ad portal, Planet Discover, and affiliations on the video side as well.
- The firm is finding new ways to achieve efficiency and change the cost structure, in some cases through centralization and outsourcing.

Segment Highlights:

- Publishing revenues totaled $1.5 billion and advertising revenues, were down 10.2% to $1.2 billion.
- In the U.S., total ad revenues were about 11% lower and operations in the U.K. faired better, although they did not escape the softening economy, particularly in real estate.
- Ad revenues at Newsquest in pounds were down about 7%.
- U.S. community publishing properties were more unfavorably impacted relative to the U.K. Categories like furniture and home improvement in the U.S. were impacted by the real estate slowdown, but financial and telecom also were softer.
- Classified advertising continued to soften due to the economic slowdown, particularly for those properties in real estate driven markets.

For U.S. community publishing, real estate advertising was over 30% lower for the quarter, employment was down about 26%, and auto declined over 11%.

- Properties in the four states, Arizona, California, Florida, and Nevada, comprise roughly 25% of advertising revenues for U.S. community publishing, yet they drove about 40% of the ad revenue decline.
- Classified advertising at Newsquest was trending the right way through most of the quarter but it slipped in March and was down about 9%, indicating the U.K. is beginning to experience the same real estate issues as in the U.S.
- Operating expenses declined 6.6% due primarily to a significantly lower newsprint cost and other cost containment efforts.
- Reported newsprint expense was 19.3% lower as usage prices were down almost 6% and volume was over 14% lower.

- Broadcasting revenues totaled $170.2 million, down 7% from the prior year period as operating expenses were also lower, about 5.5% due to strong cost controls and in part to lower stock-based compensation.
- Corporate expense was down 32%, due in part to lower stock-based compensation, continued cost control efforts, and some operating asset sales.

Key questions and answers from the first quarter earnings call conducted by Gannett & Company Inc. (GCI: chart) on April 21, 2008.

Paul Ginocchio (Deutsche Bank): On USA Today, it looks like March was relatively weak. Is that just anything to do with the Easter shift or has it just been weakening since the relatively good result in February and March?

Gracia C. Martore: There is some of the Easter Sunday switch that impacts it but things are very volatile on the national advertising side and ads are being placed very close to publication date. April has started out not dissimilar to March but we will just have to see how the month and quarter progress.

Michael Kupinski (Noble Financial Group): Can you bring us up to date on the large number of alternative papers that you launched over the past five years?

Gracia C. Martore: We have launched a number of titles. Right now we are at around 900 domestically and what we have done over the last couple of years as we had a tremendous amount of launches. Others we have focused on and done some things to improve their performance. However, a number of the titles are in the broader classified arena so they are in fact suffering some of the same pains that we are suffering on the daily newspaper side.

We are looking at continuing to launch a number of new products as we continue to be very locally focused in the communities we served, but there is a constant process of revisiting those titles to make sure that they are doing the job that they were originally intended to do.

Craig A. Dubow: When you take a look at Indianapolis and our Moms project with respect to online, we have also launched a non-daily product along with that, so there are going to be opportunistic times when we look at where we can find real advantage and how we can serve that local community but the key again is how do we better create a broader reach within local.

Michael Kupinski (Noble Financial Group): On pacings in broadcasting, can you break out that between national and local?

Craig A. Dubow: The local is faring a bit better earlier in the quarter. It is still negative. National, due to the fact at this point of the slower political coming in, is a little further down.

Michael Kupinski (Noble Financial Group): Can you talk about headcount, what FTEs were in the quarter and how far they were down?

Gracia C. Martore: Overall, we saw another mid-single-digit decline in FTEs year over year.

Craig Huber (Lehman Brothers): Given what is going on with the credit markets, is it possible you would actually tap into your bank revolver here?

Gracia C. Martore: Given where the credit markets are these days, one should never rule anything out but as we sit here at this moment, we feel very good about how our commercial paper is being received in the marketplace. We have had extensive conversations with our dealers and feel very good that we will be able to place that commercial paper in the commercial paper market.

Barton Crockett (J.P. Morgan): Can you parse out a little bit what the contribution there was from the newspaper partnerships versus Internet?

Gracia C. Martore: With regard to the newspaper portion of it, the California newspaper partnership obviously is suffering the same kinds of difficulties that you have heard from other companies and as well as ourselves that have a concentration of California properties and that’s a very difficult impact.

On the digital side, Metro Mix is new in the first quarter. We are in a ramp-up mode there, so that’s a few million dollars of investment spending there. CareerBuilder as always does a significant amount of promotion spending in the first quarter. As you know, they are doing international expansion as well, so the promotional expenses there would have hit us a little bit more than they did last year.

And then the same with Classified Ventures, where we are doing some additional things where expenses were higher in the first quarter but we would anticipate that those will smooth out over the rest of the year.