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GANNETT CO., INC. THIRD QUARTER 2005

CONFERENCE CALL AND WEB CAST

OCTOBER 11, 2005

PRESENTATION

Operator

Operator: Good day, everyone, and welcome to Gannett's third quarter 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, President and Chief Executive Officer, and Gracia Martore, Senior Vice President and Chief Financial Officer. At this time I'd like to turn the call over to Ms. Gracia Martore. Please go ahead, ma'am.

Gracia Martore - Gannett - CFO

Thanks very much and good morning. Welcome to our call and our Webcast to review our third quarter results. We hope you have a chance to review our press releases from this morning which also can be found at www.gannett.com.

With me today are Doug McCorkindale, Chairman, Craig Dubow, President and CEO, and Jeff Heinz, Director of Investor Relations.

As we noted in our press releases, two separate transactions in the quarter had a very significant impact on the reporting of our results. The first was our asset exchange with Knight Ridder, in which Gannett received the Tallahassee (NYSE:FL) Democrat and cash consideration in exchange for newspapers in Olympia and Bellingham, Washington, and Boise, Idaho.

The transaction was accounted for as a sale of discontinued operations and a purchase of the Tallahassee newspaper. The contributions from the former

Gannett properties have been reclassified as discontinued operations in our financial statement.

The asset exchange resulted in an after-tax gain which is also included in discontinued operations for the third quarter. And we have also gone back and reclassified last year's quarter to reflect the discontinued operations.

As you saw this morning Gannett earned $1.14 per diluted share from operations this quarter including $0.01 per share, or approximately $3.6 million of after- tax income from those discontinued operations. Basically, the income from Bellingham, Boise and Olympia for the two months that we owned them in the quarter. The gain associated with the sale of these three properties for accounting purposes was $18.8 million after-tax, or $0.08 per diluted share. That gain is also included in discontinued operations.

And during the quarter we also reorganized the Detroit Newspaper Agency. As part of that transaction Knight Ridder sold its newspaper interest in Detroit to Gannett and MediaNews Group. Together we formed the Detroit Newspaper Partnership. We acquired the Detroit Free Press and MediaNews Group acquired the Detroit News from us.

The Detroit transaction significantly impacts the results in our newspaper segment.

As you saw from the release this morning, on a reported basis, newspaper publishing revenues rose 7.1% while newspaper expenses increased 9%. However, the reported numbers are not on a comparable basis year-over-year.

Beginning August 1st, 100% of Detroit's results have been fully consolidated in each line of the financial statements of Gannett along with a minority interest charge for MediaNews Group's interest. Prior to that date the NIBT from our 50% interest in Detroit had been reported as one line item in other operating revenues.

So the reported results for the third quarter of 2005 include two months of 100% consolidation and one month of a one line 50% NIBT item in other operating revenue, while at the same time 2004's third quarter's reported results included three months of a one line 50% NIBT item in other operating revenue.

To put this on a more comparable basis, pro forma - that is assuming we owned 100% of Detroit and some other small acquisitions that we completed, had been included for all of the third quarter 2005, and all of the third quarter of 2004 - then newspaper operating revenues would have increased 1.3% and newspaper expenses would have increased 1.7%.

Hopefully you're still all with me on this. To put our expenses for the quarter into further perspective, we reported that newsprint expense was up 7.7%, which consisted of a 6.4% increase year-over-year in price and a little over 1% increase in usage.

But again, Detroit impacted those numbers. So on a pro forma basis newsprint expense actually was up about 1.5%, with an almost 6% increase in price, and about a 4% decline in usage.

Finally, looking at pro forma cash costs excluding newsprint, they were up about 1.5% for the quarter in the newspaper segment. That increase includes a couple of million dollars related to higher fuel costs and some hurricane-related expenses.

As we indicated when we completed the transactions, the full consolidation of Detroit's results would have a negative impact on our margins in the near-term. However, we see opportunity to expand them over the intermediate to long- term. Greater control of the partnership, the conversion of the Detroit News to a morning publication, which will maintain two editorial voices in Detroit while providing a stronger ad platform, and the benefit of the new press facility all are opportunities for higher levels of profitability.

Let me make one further comment on newsprint. As we previously told you, we have secured fixed price terms for newsprint through the end of this year for a substantial amount of our newsprint requirements.

We know these are challenging times for paper makers and publishers and we genuinely understand the economic pressures facing suppliers. However, publishers also face similar challenges. Yet we remain hopeful that both sides will continue efforts to minimize market volatility.

The ability to have set pricing over a six-month period is a good start. We are confident that consistent pricing initiatives over longer periods will ultimately support the health and stability of both of our industries.

Now let me finish up with some balance sheet items.

Total debt at quarter end stood at $5.4 billion and cash marketable securities were $54 million. At this point, our all-in cost of debt is about 4.3%.

Capital expenditures for the quarter totaled $54 million roughly. We are on track to spend around $275 million on capital expenditures for the year including the ramp up of Captivate.

With respect to shares outstanding, basic shares at the end of the quarter were 240.9 million and averaged 242.9 million for the quarter. We repurchased 3.6 million shares during the quarter and year-to-date we have repurchased approximately 14.3 million shares for almost $1.1 billion.

At these price levels we continue to think of Gannett as a very good investment of our free cash flow.

Finally, before I turn the call over to Craig, 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 great detail 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 Web site.

And now I'll turn it over to Craig.

Craig Dubow - Gannett – President and CEO

Thank you, Gracia, and good morning to everyone.

Before I jump into the details regarding our quarterly results, I'd like to take a moment to commend our employees in the Gulf Coast region, as well as the Gannett employees that volunteered their help and efforts in the aftermath of Hurricane Katrina and Rita.

As you saw from our press release this morning and as Gracia mentioned, earnings per share for the third quarter excluding the gain from discontinued operations totaled $1.14.

Operating revenues for continuing operations increased 4.1% to $1.9 billion for the quarter. Operating cash flow from continuing operations was $541 million, and income from continuing operations was approximately $275 million.

On a pro forma basis our operating revenues declined slightly less than 1% for the quarter. Last year we had over $50 million of Olympic and political revenues from our television stations, and USA TODAY also received about $4 million of Olympics-related spending.

This was just too steep a mountain to climb in this challenging advertising environment and with the U.K. economy slowing as it has.

Let's turn first to our newspaper business.

Pro forma local advertising in our newspapers rose just over 1% in the quarter. In the U.S. across all products, the health, financial and telecommunications categories were positive for the quarter, although the furniture, restaurant and home improvement categories lagged last year's third quarter results.

In September of 2004, our pro forma local ad revenues were up over 10% - our toughest monthly local ad comparison for the year.

Similarly, we faced a very tough quarterly comparison as third quarter of 2004 local revenues were up 7.5%. Pro forma local classified revenues in our U.S. and U.K. community newspapers were up 1.4% in the quarter.

Help wanted revenues increased 2%. Real estate was up 3%, but auto was down over 9%. These results reflect positive growth trends domestically offset partially by the weakness in the U.K.

The strength in our domestic community newspapers this quarter, much like the second quarter, came primarily from employment and real estate.

Our employment numbers in the U.S. continued to be a bright spot for us. For both September and the third quarter the pro forma growth rate of employment classified was approximately 14%.

The double-digit growth in employment continues to be driven primarily by the West. Cities like Phoenix, Palm Springs and Fort Collins and in the South in places like Broward and Fort Myers although they also had very good growth in the Midwest as well.

Pro forma classified real estate at our community newspapers was fairly solid as well with growth rates approaching 7% in both September and the quarter. Classified auto, as we have noted, continues to be very soft.

We continue to invest in our strategy to develop non-dailies and niche publications which are affiliated with our local daily newspapers and are profitably expanding the unduplicated reach we have in our markets. In the quarter our non-dailies, which do not include publications such as Clipper, Nursing Spectrum or Army Times, once again had mid-teens revenue growth.

As you saw from our report this morning, national advertising was flat for the quarter. USA TODAY's ad revenues were down almost 3% once again reflecting the tough comparisons primarily from the demand related to the Summer Olympics in 2004's third quarter and the choppy national ad environment.

USA TODAY's ad revenues were down 1.2% in July, down 17% in August and up over 8% in September. For the third quarter the entertainment and telecom categories in addition to automotive were strong, while travel, package goods and advocacy categories trailed results in the third quarter of 2004.

As I touched on briefly, our U.K. results continue to be negatively impacted by the weak U.K. economy. Pro forma revenues for Newsquest for the quarter in pounds were down 5%.

Newsquest management has done an excellent job controlling costs. Expenses for the quarter, even including a 7% price increase on newsprint, declined over 2% year-over-year. Newsquest's operating profit, again in pounds, declined 10%.

Classified revenues at Newsquest, which were almost 70% of ad revenues in the quarter, continued to be soft with the auto or motors and the lucrative employment categories the most hard hit.

Turning to online revenues for the entire Company, increased approximately 29% for quarter led by a 46% increase at our domestic community newspapers. At this pace we are on track to have about $275 million to $300 million of revenue from our Internet activities this year.

We are pleased with our Internet initiatives to date and we are particularly enthused about the potential of PointRoll from both the business and the rich media perspective.

We are very pleased as well with the progress CareerBuilder continues to make.

Revenue for the CareerBuilder network for the third quarter of 2005 was up 72% year-over-year. CareerBuilder network traffic for September of 2005 was up 31% to approximately 20 million unique users compared to last year.

Moving now to Broadcast.

As we noted in our earnings release, revenues for the quarter were down over 19%. Excluding Captivate, television revenues were down over 20%.

Ad revenues declined with a lack of over $20 million in political-driven ad spending and almost $30 million in ad demand related to the Summer Olympic games. Excluding political, the auto, retail, restaurants and telecommunications categories were negative year-over-year, while the package goods, services and medical and dental categories surpassed last year's results.

Local was down 11% for the quarter while national declined 33%.

Our latest pacings for the fourth quarter are down in the low to mid-teens, reflecting roughly 48 million in ad revenues related to political ad spending that benefited the fourth quarter of '04. November and December are stronger than October which includes the lion’s share of political spending in 2004.

Local is stronger than national at this point.

Pacings continue to be highly volatile and subject to weekly change but this is where we stand at this moment. We'll keep you updated in our monthly reports as the quarter progresses.

Now looking forward into the fourth quarter. We face tough comparisons, again, in the fourth quarter particularly in the broadcasting segment, which, as I just noted, faces almost $50 million of politically-driven ad demand associated with last year's fall election.

Our U.K. properties have responded to the economic downturn in the challenging ad environment but unfortunately the economic outlook at the moment continues to be difficult. Domestically, our community newspapers are very well-positioned in the markets they serve to maximize the coverage with advertisers and consumers.

Similarly, USA TODAY will continue to successfully leverage its brands and as always we will continue to maintain our financial discipline and focus.

At this point we'll stop and be happy to take any of your questions. Thank you.

QUESTIONS AND ANSWERS

Peter Appert - Goldman Sachs - Analyst

Hi, thanks. Craig or Gracia, these cost controls are quite impressive in the quarter. Any thoughts in terms of the level at which you can hold cost growth going forward excluding newsprint?

Gracia Martore - Gannett - CFO

Peter, we'll continue to be very focused on the cost side of the equation with ad demand particularly in the U.K. and in the TV side under some stress. Our folks in the U.K., as I said, and Craig has pointed out, have done a wonderful job of having lower year-over-year costs.

We've put in conservation measures on the newsprint side. We've taken a look at each and every expenditure in making sure that it is warranted on a product or return on investment equation. So we'll continue to do the best we can.

We'll have newsprint going against us again in the fourth quarter. But we will continue to stay very focused.

Douglas Arthur - Morgan Stanley -;Analyst

Craig, a great job. I'm wondering, can you just delineate a little bit more clearly the U.S. community newspaper ad trends both for September and the quarter, so excluding the U.K. impact and USA TODAY? And then as a follow-up, the strength in USA TODAY in September, do you see that as sustainable into Q4? Thanks.

Gracia Martore - Gannett - CFO

Doug, let me start with just the U.S. side of things.

If I excluded Newsquest on the ad revenue side, for period nine, on the U.S. side, ad revenues would have been up in the 4% range. And for the quarter, again, excluding Newsquest, advertising would have been up in about the 3% range.

USA TODAY did have a good month. They had a little bit easier comparison than they did last year.

But what we've heard thus far from Craig Moon, who runs USA TODAY, is he's feeling a little bit better about the fourth quarter and is seeing some opportunities for the fourth quarter. We'll just have to see how that plays out.

The numbers are not going to be straight-lined and there'll be some choppiness to them, but I'd say overall on the USA TODAY side, we're feeling cautiously optimistic.

Doug McCorkindale - Gannett – Chairman

The big picture is the U. S. domestic newspapers are doing okay. I think a little bit better than maybe some of the others in the industry are seeing. We're getting hurt by the U.K. economy and Broadcasting is disappointing.

But if the U.K. and Broadcasting were just flat, we'd be having some big time numbers here. So the U.S. side is doing very nicely.

Craig Dubow - Gannett – President and CEO

The only other comment relative to USA TODAY, they have been doing extraordinarily well with auto. And that is contrary to what we have seen in Broadcast and certainly on the newspaper side and our hope is, is that we can see that continue. But that's a big difference in where we are right now.

Craig Huber – Lehman Brothers - Analyst

Good morning. Thank you. Gracia, last quarter on your conference call you mentioned about a curtailment of retiree medical and life insurance coverage, which I think when the Q came out it helped by $0.05 to $0.06 in the quarter. I was wondering this time around is there anything of a one-time nature other than what you talked about for the swap in Detroit that either helped or hurt your numbers one-time in nature that we should know about?

And then separate from that, I was just curious if you guys are seeing any light at the end of the tunnel at all here on the auto side for TV or for the newspapers? Thank you.

Gracia Martore - Gannett - CFO

Craig, on the one-time items, yes, we did, as we mentioned on the call last quarter, have a one time benefit on the retiree health side but that quarter was also offset by some one-time items related to Detroit on depreciation of some of our old presses there.

In this quarter we did have the remaining tail on the retiree health which was several million dollars. But at the same time we also had some other pieces going the opposite way that would have been one-time items. So net/net a very small contribution from one-time items.

Craig Dubow - Gannett – President and CEO

With respect to your question on auto, at this time we are not seeing any positive movement in television regarding auto or with the domestic newspapers as well.

Doug McCorkindale - Gannett – Chairman

And then Craig, you know, autos, well, motors, as it's called, is also very soft in the U.K. so the only positive number we're seeing is, as Craig Dubow mentioned earlier, is at USA TODAY.

Steven Barlow – Prudential Equity - Analyst

Thanks. On the U.K., can you tell us your best guess at this point when margins are going to stabilize there? Are they doing quite a bit of headcount reduction as well? Thanks.

Gracia Martore - Gannett - CFO

Steve, on the U.K. operation, interestingly they have done such a good job year- over-year on the expense control side that their margins actually have not suffered as you would otherwise have expected. As I mentioned earlier, they have lowered year-over-year expenses by a couple percent.

That's from a combination of factors. Lower newsprint usage but also they have been looking at headcount and, as appropriate, doing things to right-size where we are not seeing revenue opportunities. We'll just have to see how that all turns out.

William Bird –Citigroup Smith Barney - Analyst

I was wondering if you could just discuss your current thoughts on buy backs versus acquisitions? And also just general update on the M&A environment. Thank you.

Gracia Martore - Gannett - CFO

I will start with the buy backs versus acquisitions and then turn it over to Doug and Craig on the acquisition environment.

I think our current position remains similar to what it has always been, which is that we will look at acquisitions and we will look at buy back at the same time and do whatever makes the most economic sense for the Gannett company and its shareholders. We have done a fair amount of share repurchases because, frankly, on the acquisition side we haven't seen very many economically attractive opportunities, and our stock represented the best investment for us. That continues to be the case at the moment, but Craig and Doug, if you want to…

Doug McCorkindale - Gannett – Chairman

Bill, I think Gracia's put it in focus there. There are some things for sale but at prices that we don't find attractive. As you know, we've been doing this a long time and when the numbers get out of focus as they did in the late ‘80s we stepped out of the marketplace.

Right now we're involved in looking at a number of transactions - there are a number of broadcasting stations for sale. There are some print properties for sale. There are a number of technology plays that are on the marketplace. So we're in all of them.

But we are not going to chase some of these properties to get to a purchase price that we don't think can make money for Gannett shareholders. Others may see a more optimistic view, but 16 times cash flow for a well-run television station simply doesn't make economic sense to us. It's better for to us buy back Gannett stock.

So the marketplace is not overly active, but it's busy and there are a lot of things to look at and we're looking at all of them.

Debra Schwartz – Credit Suisse First Boston – Analyst

Hi. Thanks. It's Debra Schwartz on for Bill. Not to harp on the U.K., but I was wondering if you could just quantify for us how much auto and help wanted were down in the quarter in the U.K.? And also if you could just talk about comps in those two categories for the rest of the year and when they might start to ease?

Gracia Martore - Gannett - CFO

Let me give you some numbers on a constant currency basis for Newsquest. On the automotive side for the quarter, automotive was down in the low teens and employment classified was down in the high teens.

Vis-a-vis the fourth quarter, I think they started to see a little bit of softness there towards the tail end of the fourth quarter last year, so we have a little bit easier comp towards the end of the quarter. But a lot will depend on the health of the U.K. economy which at the moment we don't see really picking up to any degree for the remainder of the year.

Doug McCorkindale - Gannett – Chairman

Especially in the South of England which is, as you know, their most positive growth area, the numbers are most negative there. In the North of England and in Scotland our numbers are actually a little bit better but the South is such a big piece of the pie that unless that picks up you're not going to see positive results overall.

Craig Dubow - Gannett – President and CEO

And the follow to that would be with respect to the real estate sector itself which at this time last year was in considerably different position. For 3Q it has turned just slightly negative.

Doug McCorkindale - Gannett – Chairman

It's beginning to soften, the real estate picture in the U.K. As we said earlier, we haven't seen that yet in the States but maybe things are slowing down a little bit especially in the high-end properties.

Matthew Gourmand – UBS Warburg – Analyst

Good morning, it's Matthew Gourmand here for Brian. You talked about the U.K. the auto and the employment sectors. Outside of those are there any particular pockets of strength that you're seeing? Any positives at all?

And as well, you mentioned you saw hurricane-related expenses in the quarter.

Can you quantify these at all and can you give us a sense of the impact going forward, any color at all? Thanks a lot.

Gracia Martore - Gannett - CFO

On the hurricane side, as I said, we saw some additional expenses. We had a fair amount of impact, the

hurricanes did, on our folks in Hattiesburg, Mississippi, and to a lesser extent, in Jackson, Mississippi.

As is typical of Gannett we moved in a lot of supplies, a lot of loaners, a lot of people to keep the Hattiesburg folks up and running and able to put out their newspaper. So clearly there are extra expenses associated with that.

Some of that we'll pick up from insurance. So it didn't have a major or significant impact but on the margin it had an impact. I'm sorry, your question on the U.K. again? Was there something positive that we can report on?

Craig Dubow - Gannett – President and CEO

Other than auto and employment.

Doug McCorkindale - Gannett – Chairman

Well, as I said earlier, Scotland is doing okay and the North of England is doing okay. But as a general statement, no, we're seeing softness in employment and motors and the real estate is beginning to get a little less robust.

Gracia Martore - Gannett - CFO

The biggest positive in the U.K. is that we have a terrific management team there that understands how to respond to this kind of economic downturn. And when the economy turns around as it will, they will again post the great numbers that they have for the last five years.

Paul Ginocchio – Deutsche Bank Securities – Analyst

Thank you. I guess this question is for Craig. Your view on dividends, obviously the shares have been under a lot of pressure and the market's got a relatively bearish view on the future newspapers right now. What would it take for you to change your view on being more aggressive on paying out a bigger dividend? Thanks.

Gracia Martore - Gannett - CFO

Craig and I have chatted about this a lot and I think our feeling is that at the moment we're returning value to

our shareholders through a share repurchase program, a very significant share repurchase program both last year and this year. And there really hasn't been a lot of call for us to increase our dividend in a significantly more meaningful way.

Every year we've increased our dividend. In July, we announced a $0.02 increase.

I think we want to continue to maintain the flexibility we have on the share repurchase side as we look at the potential for acquisition opportunities down the road, should the FCC ever get to a point where they change the rules that have been, I think, tempering acquisition opportunities for the last couple of years. So I think we'll stay the course on the share repurchase front unless something were to change dramatically and we would react to that.

Ed Atorino – Benchmark Capital – Analyst

Good morning. Could you remind us what the political contribution and

Olympic contribution might have been in 2002, the last off year?

Gracia Martore - Gannett - CFO

In 2002, Ed, we had about, call it $80 million, a little over $80 million of political and almost $24 million of Olympics. So it was a significant year in '02.

Doug McCorkindale - Gannett – Chairman

But we're looking forward to some pretty good numbers in '06, Ed, looking at that as a frame of reference. It won't be as great as in '04 but it should be pretty good numbers because our ratings on our television stations are still excellent.

Jim Goss – Barrington Research Associates – Analyst

I was thinking along the same lines with the political and Olympic issues. Have you looked at the races in the local markets that you're affected by in terms of broadcasting?

And in terms of Olympics, it seems you've been stepping up your activity with USA TODAY with special sections and getting more like a broadcaster in that way in that vein and the Olympics hit in the first quarter this year, maybe you can comment on that a little bit since it's a near-term event.

Craig Dubow - Gannett – President and CEO

Sure. With respect to the Olympics USA TODAY will continue its participation as it has. It's a big focus for what Craig Moon and his group are doing. And we look forward to certainly all Torino has to bring from that aspect.

Doug McCorkindale - Gannett – Chairman

Every year it gets a little better, Jim, you know, we've, USA TODAY being the nation's newspaper gets a lot of play, we have a very good working relationship with the Olympic folks. You'll see us take advantage of that and being part and parcel of it as much as we can.

And Craig may comment on [any] local races we have. It's not something we spend a lot of time worrying about.

Craig Dubow - Gannett – President and CEO

At this point our groups are going through a budgeting process. We know at this point really very little, but what we do know is that there is some optimism in what we are seeing.

We're just going to have to get through that entire process and probably in the next couple of months we'll have that pretty well ironed out. But Doug commented earlier based on the rating performance of the television stations certainly we would expect some very, very positive results as we move forward.

And the other key is just the strategic location that we have, and if you take a look at a number of the markets where there will be local or state elections we're going to have certainly proper positioning there as well.

Alexia Quadrani –Bear, Stearns & Company – Analyst

Thank you. Craig, I believe you spent the last several weeks visiting many of Gannett's newspaper properties and I was wondering if anything notable or surprising came out of those visits?

And secondly, I know it's a bit early, but any preliminary thoughts on how ad rate hikes may look in '06 versus '05?

Craig Dubow - Gannett – President and CEO

As far as the visits are concerned, we have had, in fact last week, some tremendous opportunities to spend time with the employees and in particular we went down and visited the new acquisition that Gracia had mentioned in Tallahassee and learned a lot. We've got a very, very eager and aggressive group there and so we're looking for some positive opportunities as we go into the future and they blend into the Gannett culture.

And as well we spent time in Pensacola. And what we found after Ivan hit, created all the issues for that community, is a tremendous response to the community from the people at the newspaper. And our view is that the kind of response they had will really pay dividends as we move into the future and that commitment will pay out in multiple ways.

We've gone around to a number of other properties and various things have come out but we are looking very forward with Sue (Clark-Johnson) in her new role to completing our visits and really working on the planning part. Gracia, you may want to comment briefly on the ad side.

Gracia Martore - Gannett - CFO

I think we'll be looking at similar kinds of increases as we have in the past year, but again, that varies market to market and product by product, and we are just about to launch into our 2006 budgeting. We'll have a much better handle on that when we see what the folks in the field believe that they can do. We're not anticipating anything significantly different than what we have been seeing over the last year or two.

Crista Quarles – Thomas Weisel & Partners – Analyst

You mentioned that you were cautiously optimistic on USA TODAY and I was wondering, obviously they have some pretty easy comps in Q4 so I was wondering if that's what's giving some of the optimism?

You also mentioned auto at USA TODAY is actually an area of strength, if you could highlight some of the other categories?

And then, you mentioned that your non-traditionals are up sort of mid-teens. I was wondering where on a run rate you think that will come out for the year? Thanks.

Gracia Martore - Gannett - CFO

On the USA TODAY side you're quite right. As we said, we have easier comps in the fourth quarter, but I think it's more than that that makes us cautiously optimistic on the USA TODAY side.

Craig has shared with us that a number of advertisers are looking at opportunities to advertise with us, some new advertisers that we haven't seen before, as well as others that perhaps haven't been in the paper for a little bit of time.

And on the auto side, the fourth quarter usually turns into a pretty good quarter for us. So given what they've done thus far this year on top of what they've done in previous years on the auto side that gives us confidence in what they can accomplish there.

Crista Quarles – Thomas Weisel & Partners – Analyst

Is it fair to say the visibility will be increasing then?

Gracia Martore - Gannett - CFO

I'm not sure if it's increasing. If anything it’s about the same, probably on the Broadcast side it's a little bit shorter, but at USA TODAY it's probably about the same. We just are responding to what we're hearing right now in some of the advertisers that are approaching us.

Fred Searby – JP Morgan Chase & Company – Analyst

Comment on the consolidation of department store category and how much of an impact you're seeing? We've kind of been monitoring it and if it really is having a major impact and what your thoughts going forward are there? Thank you.

Craig Dubow - Gannett – President and CEO

I think as we had mentioned before we are impacted in 12 of our Gannett newspaper markets as we go forward. Overall it is a fairly significant number but certainly the group is working very hard to figure out any of the other opportunities we have from an overlap standpoint in how we can move forward.

But Gracia, you may want to fill in a little bit here on some of the other information that we've come in with just recently?

Gracia Martore - Gannett - CFO

Sure. Fred, we have seen a little bit of a pull back on a combined basis from Federated and May as frankly we've been expecting. We have said we fully expect that Macy's is going to reduce their spending over time because of the overlap in those 12 markets.

But at the same time, interestingly enough, we are seeing some increased spending from the Wal-Marts and the Targets and frankly the K-Mart/Sears combination.

So while we've seen some pull back there, we are seeing some positives out of some others. We continue, as you know, to focus on those small to medium-size advertisers and on the non-daily side. Also in response to Crista's question on the non-daily side, we are continuing to see good follow-through as we concentrate on those small to medium-size advertisers and provide them with those additional products that are perhaps at better price points for some of those smaller advertisers. We would anticipate that on the non-daily side we'll continue to see good follow-through for the remainder of the year.

Doug McCorkindale - Gannett – Chairman

Fred, also on the Federated/May pieces where they have overlaps and they have to sell some of the stores, as you know, they're being asked to sell to competing department stores. From what we understand that is going very well and there will be competing brands in those markets which will obviously be more positive to us than otherwise.

Brad Dyland –Deutsche Asset Management – Analyst

Good morning. At what point with your stock at the level it's at, would you look to utilize your balance sheet more to be more aggressive in buy backs? And along those lines, how important you is your single "A" credit rating?

And then my last question is, if it's possible to include more balance sheet and cash flow statement information in the quarterly press releases.

Gracia Martore - Gannett - CFO

Taking that last question first, in very short order, we will be filing our 10-Q and that will have a very complete and thorough reporting on all of our cash flow statistics. We'll have our 10-Q out by the end of the month.

Vis-a-vis using our balance sheet further on share repurchases, as I said earlier, we are constantly balancing leveraging up the balance sheet on share repurchases with the potential for acquisition opportunities. I think as long as we are in that mode in the short-term to intermediate-term we'll continue to balance that equation carefully.

If we were to find down the road that we needed to go in a different direction we certainly would do that.

We have said in the past that we very much like having a solid investment grade credit rating. But at the same time if the right opportunity came along we would stretch our balance sheet for that opportunity, but as we have in the past, then we would quickly look to focus on bringing the balance sheet back so that we have the flexibility and ability to respond to additional opportunities as they come down the pike.

James Peters – S&P Equity Research – Analyst

Yes, good morning. You talked about margins being adversely affected by Detroit in the near-term and seeing opportunities in the medium-term. If you could just remind me what you're defining as the near and medium-term and also in the medium-term if what you're saying is that the margins for the company overall will return to sort of pre-Detroit levels? Thank you.

Gracia Martore - Gannett - CFO

Well, the impact on the margin comes about in part because previously we had been including the net of Detroit's results, 50% of the net of Detroit's results as a one line item in other operating revenue. Which means there was very little expense that offset that line. Now we are fully consolidating Detroit into all of our numbers, and as we have said, the margin in Detroit is not where we want it to be either in the short, intermediate or long-term.

That's the opportunity in Detroit. And so while there may be some margin pressure from Detroit in the very short-term, and by short-term I mean over the next year, we certainly are looking at opportunities to improve Detroit's performance when the new press project comes on board later this fall, when we go to the A.M. conversion we will do in early next year, and then as we continue to look at opportunities to improve operations over the next two to three years in Detroit.

So we understand that Detroit has that impact but our management team there understands the need for us to move in a very positive direction in Detroit very quickly.

Dan Jenkins – State of Wisconsin Investment Board

Good morning. I was wondering if you could give me what your debt to capital is at the end of this quarter versus at the end of the third quarter last year or maybe at the end of the year last year? And then kind of reiterating what the earlier caller said, it would be nice if we could get a balance sheet with the release.

And then how far are you planning to push that for further share repurchases, that leverage? Are you intending to add more leverage from where you're at now or are you just going to use free cash flow for that going forward?

Gracia Martore - Gannett - CFO

As I mentioned previously, you will have a full balance sheet by the end of the month. I did provide some guidance that we had about $5.4 billion of debt at quarter end. I don't have last year’s quarter end but you can go to our Web site, www.gannett.com and our financials are available there.

We'll continue to look at the deployment of free cash flow, whether it be share repurchase or whether it be acquisition and are continuously evaluating that. And we'll do what is right and we'll do what adds the most value to our shareholders on an intermediate to long-term basis.

Operator

It appears there are no further questions at this time. Ms. Martore I'd like to turn the conference back over to you for any additional or closing comments.

Gracia Martore - Gannett - CFO

Thanks very much for joining us this morning. If you have any additional questions please call either Jeff Heinz at 703-854-6917 or me at 703-854-6918. We'll both be here for the rest of the day to answer any other questions you may have. Thanks again for joining us.

Operator

That does conclude today's teleconference. Thank you for your participation and have a great day.

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Source: Gannett Q3 2005 Earnings Conference Call Transcript (GCI)
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