The decline reflects the relative absence of politically related advertising demand that totaled almost $58 million in the last quarter of 2006. If you exclude the political advertising, net time sales were down in the low single digits, 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. The firm fully expects stronger results in broadcasting this year because it is well-positioned in its markets for the much anticipated political spending, as well as Olympics. But the results will not be spread evenly across the quarters.

The two items in the quarter had a significant impact on the expenses.

- The firm completed its 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, or 22 cents of EPS. The write-down is related to the value of certain mastheads from some of the firm’s recent acquisitions in the US and the UK. These non-cash charges have no impact on the firm’s operations or its operating cash flow.
- The firm incurred $38 million in pretax severance and facility consolidation costs related to continued efforts to achieve efficiencies and better align its expenses to its revenue opportunities across all of Gannett.

Including 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, expenses 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 13.3% lower in the quarter.
- In broadcasting segment, expenses declined 11.3%.
- The corporate expenses were down 17.8%.

Throughout 2007, the firm 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.

The digital operation of the firm, across the board, has been positive.

For the year, online revenue totaled over $460 million. That’s 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. Company wide, the growth rate was over 11%, driven by increases of 18% in broadcasting and 31% at Newsquest in pounds. Point roll was up strongly as well, 34%.

Traffic at the 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.

At CareerBuilder, North American network revenue grew for the quarter and traffic averaged 18.6 million unique visitors.

The continued growth of the firm’s digital revenues highlights the promise of the transformation and the focus on the digital front. The overall mission in transforming the company is straightforward. The firm will provide must-have news and information on demand across all media, ever mindful of the journalistic responsibilities. The firm believes that there are tremendous opportunities in the media space as it fulfills that role. Digital clearly is a key to that. The firm’s transformation is firmly underway and its online stalwarts, CareerBuilder, Classified Ventures, and Point Roll, 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 job site dedicated to serving the recruitment and job search needs of employers and workers in Spain. Classified Ventures is investing in its brand. Point Roll revenues and bottom line are up nicely this year.

The company reaches more people in its markets through a variety of publications and platforms than it ever did with a single platform and, judging by nearly $0.5 billion in digital revenues, the firm is moving towards successful monetization of these efforts. Gannett is giving its audiences more options. The firm standardized its web offerings, added social networking through Pluck, improved its video offerings, which have grown dramatically through its affiliation with Maven and the platform, and expanded its mobile and tech solutions.

The firm has announced a joint venture with Tribune Interactive to expand the Metro Mix brand.

The firm has acquired a controlling interest in Schedule Start LLC and highschoolsports.net. The company expects to invest in them it 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.

- The total debt at year-end stood at $4.1 billion and cash was $77 million. At this point, the firm’s 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 the firm finished the year with $171 million of CapEx.
- The shares outstanding at the end of the quarter were $230 million and the basic quarterly average was $231.4 million.
- The firm repurchased 2 million shares in the fourth quarter and 4.8 million shares for the year.

Key questions and answers from the fourth quarter fiscal 2007 earnings call conducted by Gannett Co Inc. on February 1, 2008.

John Janedis (Wachovia): Can you just talk about pricing changes in 2008 for classifieds in the four markets you’ve been talking about now for the last few quarters? Are you pushing through increases in the low singles or dropping rates in an effort to drive volumes?

Gracia C. Martore: It varies from market to market and newspaper to newspaper. We are very mindful of each market’s individual characteristics and in some, we can press pricing and in other areas, we are not afforded that ability. We are 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): What you are seeing so far in the new year? Has the decline been similar to what you were seeing in December?