GANNETT CO., INC.

FIRST QUARTER 2005 CONFERENCE CALL AND WEB CAST

APRIL 14, 2005

PRESENTATION

Operator Good day, everyone and welcome to Gannett's first quarter earnings conference call. This call is being recorded. Our speakers today will be Mr. Douglas McCorkindale, Chairman and Chief Executive Officer; and Gracia Martore, Senior Vice President and Chief Financial Officer. At this time I would like to turn the call over to Ms. Gracia Martore. Please go ahead.

Gracia Martore - Gannett - CFO Thanks very much, Shannon and good morning. Welcome to our conference call and Webcast to review Gannett's first quarter 2005 results. We hope you've had a chance to review our press releases this morning, which also can be found at www.gannett.com. With me today are Doug McCorkindale, chairman, president and CEO; and Jeff Heinz, director of Investor Relations. Very briefly, we earned $1.05 per diluted share this quarter, a 5% increase over the first quarter of 2004's comparable number of $1.00. This was within the range of estimates provided by us in mid-March. I'd like to briefly detail a few other areas before I turn the call over to Doug. On the newsprint front, producers seeking to raise prices continued to be faced with the realities of declining consumption and higher inventories. Consumption levels in the U.S. have declined about 5% year-to-date and inventory levels remain quite high. These factors moved several paper companies to postpone a planned March 1st price hike. Gannett has not been impacted by an increase in the first four months of this year. Looking ahead, most folks don't expect any measurable change in the current dynamics. Against this backdrop of reduced demand, producers remained pretty focused on managing supply. However, similar to last year, the struggle to raise prices in 2005 will be no less difficult. Attempts to push prices higher in this weak environment of consumption will most likely result in substantial

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implementation delays and reduced values. As we've told you before, we've fixed prices with a majority of our suppliers through June of this year. For the quarter on the newsprint expense side, it was an up a little over 4%, which consisted of a 8% increase in price mitigated by a 3% decline in usage. Adjusting for the affects of acquisitions and currency on a pro forma constant currency basis, newsprint expense was up a little over 3% with usage down about 3 and prices up a little less than 7%. In the other expense areas, we continue to focus on prudent cost control. During the quarter, our reported expenses from the newspaper segment increased slightly less than 4%. Acquisition, currency and newsprint obviously have a significant impact on that number. Adjusting for currency and acquisitions and then also excluding the newsprint component, newspaper segment expenses rose a little more than 2.5%. This also includes certain higher benefit costs and also costs related to the continued expansion of our very strategic and important non-daily effort. The broadcasting segments reported expenses increased slightly over 6.5%. The increase reflects our continued investment in Captivate. If you excluded Captivate from the numbers, expenses increased slightly over 1% for our television stations. Turning to the balance sheet for a moment, total debt at quarter-end stood at $4.7 billion and cash and marketable securities were $142 million. At this point, our all in cost of debt is 3.5%. With respect to shares outstanding, basic shares at the end of the quarter were 249.2 million and averaged 252.1 million for the quarter. We were very active on the share repurchase front and bought back approximately 5.3 million shares for approximately $420 million. In total, between 2004 and year-to-date, we have repurchased 25.2 million shares for approximately $2.1 billion. We think Gannett is a great investment. Capital expenditures for the quarter totaled approximately $53 million. At this point we're still on track to spend roughly $280 million for the year. One additional note regarding our non-operating expense area: As we mentioned to all of you in mid-March, we recognized a non-cash gain for the newspaper exchange with Morris Multimedia in the first quarter of 2004. The other non-operating line did not have that benefit this quarter. As well, CareerBuilder accelerated some of their promotional spending for their very successful Super Bowl chimp commercials which impacted their first quarter numbers.

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Finally, before I turn the call over to Doug, it would not be an earnings call if I didn't tell you that the call and the 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. This presentation also includes certain non-GAAP financial measures and we've provided a reconciliation of those measures to the most directly comparable GAAP measures both in the press release and as well on the investor relations portion on our website. Now I'll turn it over to Doug.

Douglas McCorkindale - Gannett - Chairman, President and CEO Good morning all. As most of you will remember at the mini-meeting in mid-March, we told you that we were comfortable with the then-consensus estimates in the range of $1.04 to $1.06 per diluted share which, as Gracia said, we achieved. We also noted at that time that roughly 45% of the first quarter comes in the month of March. At that point, which was just a couple of weeks ago, our numbers for the print side in the U.S. were coming in as expected while broadcast was soft and the U.K. was a little softer than we had expected. In contrast to the end of the first quarter of 2004 the last two weeks of March in 2005, at least for our community newspapers in the U.S., did not live up to expectations. March was our toughest comparison month but when we combined it with the early Easter, we have seen some changes that we did not anticipate. We saw a mixed bag of results. For example, Palm Springs had the best month ever in its history as a Gannett newspaper, while Detroit, as most of you know, continued to suffer. We think we're going to have to look at the numbers for the two months of March and April together to really understand the underlying trend and see if there have been any changes. As you know, we started off the year reasonably well for January and February, but these last two weeks of March clearly reflected a negative result. As you saw from the press release, our operating revenues increased 3.6% and operating cash flow grew 2.6% for the quarter. Looking at our newspaper segment, and assuming we owned the same newspapers both this year and last as we owned in the first quarter, the total advertising revenues were up almost 5% for the quarter. And this increase is despite the slowdown in March that I just mentioned. On a constant currency basis, advertising revenues increased over 4%. Local advertising was particularly strong in our newspapers increasing over 6% for the quarter. In the U.S., across all products, the department store category, grocery, health and telecommunications category were particularly strong while furniture, entertainment, financial and restaurant lagged last year's results. Classified

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revenues in our newspaper segment were up over 4% for the quarter. Help wanted increased almost 9% while auto was down almost 4% and real estate was up over 1%. Automobile advertising, as I mentioned a few weeks ago, globally – both here and in the U.K.– and across all of our platforms is soft. Our employment numbers for the U.S. community newspapers increased almost 20% in the first quarter of this year. In March, about 40% of the papers, the larger ones like Wilmington and Phoenix and Honolulu and Fort Meyers had double-digit employment gains. National advertising was up approximately 4% for the quarter. The bright spot was USA TODAY. USA TODAY's ad revenues were up almost 5% and March was particularly strong with ad revenue growth of almost 7%. As some of you may recall in March of last year, USA TODAY's ads revenues were up almost 25%. So that 7% is a very good number going against very, very strong comps. USA TODAY benefited from positive growth in travel, entertainment, technology, financial, packaged goods and pharmaceutical categories, while again automobile was down as well as telecommunications. They both lagged last year's results. Our strategy to diversify both our base of clients and our product lines continues to succeed. For our domestic papers, the non-daily revenue, which doesn't include things like Army Times and Nursing Spectrum and Clipper, were 21% higher for the quarter on a year-over-year basis as we continue to launch and expand new publications. A number of you have asked about the impact of the Sears/K-Mart and the Federated May mergers, and as we noted earlier, there is no question that most newspapers will sustain a revenue hit from one or both of these deals. What we really can't speculate or quantify about this until we see more of the details from the consolidations on a market by market basis. Overall, the department store segment is becoming less and less critical to our success with each passing year. For example, back in 2001, department stores generated about 22% of the retail ad revenues. The current run rate for our U.S. community newspapers across all products is about 19%. On the internet side of the business, total company revenues in the quarter increased over 47% versus last year's first quarter. In the U.S. community newspaper group alone it was up over 63%. We continue to be very pleased with the growth in our local Web sites both in newspapers and in broadcasting. March traffic numbers are not yet available for CareerBuilder, but, its traffic increased 43% in February and had a record of 21 million unique users both in January and February of 2005. We believe March is expected to show similar growth. The

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traffic growth and the Super Bowl ad recognition that Gracia mentioned also translated into strong revenues in the first quarter. CareerBuilder Networks revenue was up 88% over the first quarter of 2004 and in March alone it was up 92%. Turning to the U.K. for a moment, as I mentioned Newsquest results for the first quarter were softer than we anticipated. Local and national advertising showed solid growth in March. However, for the quarter, the gains in local and national were offset by softness in the classified category, again partly due to the early Easter. Pro forma revenues for Newsquest for the quarter, in pounds, were down 1%. Looking at Broadcasting for the first quarter: Broadcasting revenues, including Captivate, declined 2.9%. If you take out Captivate our television revenues fell approximately 5%. Local and national revenues declined 2% and 12% respectively. Their numbers reflect in part, obviously, the absence of advertising related to politics and the Super Bowl, which was on six of our CBS affiliates and helped a good deal in the first quarter of 2004. They also, though, reflect softer than expected core business. Again, auto was down and down in the mid-single digit range for the quarter for Broadcasting. Similar to our Broadcasting results for the first quarter, our pacings so far for the second quarter are down in the mid- to high-single digits. Again, this reflects a significant lack of political advertising which we had last year and some one-time events from last year such as the “Friends” finale on NBC. At this point, the pacings show May to be stronger than April and local is stronger than national. However, the pacings continue to be very volatile and are subject to weekly change. That's where we stand at this moment. We'll keep you up to date in the monthly reports as the quarter progresses. Turning quickly to acquisitions: In March, we acquired a 25% equity interest in Topix.net, a content aggregation service that continuously monitors breaking news from over 10,000 online sources and categorizes daily news content on a number of topics. That's another venture with our friends at Tribune and at Knight Ridder. Subsequent to the end of the quarter, we announced that we closed our acquisition of the assets of Hometown Communications. That's a community publishing company with various properties including a daily newspaper, 62 weeklies and twice weeklies, telephone directories and a lot of other niche publications in the states of Michigan, Ohio and Kentucky. Looking ahead, as I noted, I believe we have to compare March and April together to get a better insight into the ad environment for the community newspapers. We'll just have to wait for those numbers to come in and see what

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we're experiencing. As you've heard from our remarks today USA TODAY has clearly been the bright spot in 2005. And we hope that trend will continue as they continue to demonstrate the appeal of their brand and the national platform. As you have come to expect, Newsquest is working to control its expenses in response to the softer advertising environment and finally our television folks are clearly facing tough challenges as the year progresses. I think this quarter has presented some challenges for us but we've posted what we think are solid results. We continue to expect that we will generate top line growth that is more than competitive in the industry and maintain our financial discipline. We'll just have to wait and see how the advertising environment unfolds over the next few months. Let me stop now and Gracia and I will take your questions.

Q U E S T I O N A N D A N S W E R

Michael Kupinski - A.G. Edwards - Analyst Thank you. I was just wondering if you can talk a little bit about your circulation? Obviously, the trends are down there and at what point do you start getting a little pushback on ad rates? And if you can just talk about your marketing plans on that front and if there's any increase in promotional spending in that area? And then secondly, I was just wondering, if you can talk about auto advertising? You mentioned it was soft and it continues to be soft. But, are you seeing any improving trends there? We're starting to hear on the local level that local dealerships are starting to pick up a little bit and I was just wondering if you were starting to see that?

Douglas McCorkindale - Gannett - Chairman, President and CEO Mike, let me turn to the automobile picture and Gracia can comment on circulation. I hope you're right. We are not hearing any pick-up, or any significant pick-up, from our newspapers regarding local dealers. The dealers are telling our newspapers that they have too much inventory of products that they can't sell and not enough inventory of products that they would like to sell. Therefore, they're waiting for some help from the manufacturers. So, we're not hearing any positive news. Keep in mind, and you've followed us long enough to remember this, a couple of years ago we said we didn't understand what the momentum was that would keep the advertising strong in the automobile category. I think we said that probably at the end of 2002 and yet it continued on and on and on. I think this softness is going to last a little while. I hope I'm wrong

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because it's a very significant piece of the broadcasting side, as you know, and obviously important to us in the newspapers. But, as I mentioned earlier, it's also happening in the U.K. for slightly different reasons. The general answer is there seems to be a little bit of a saturation of automobiles – and trucks, for that matter – and not enough buyers to justify the inventory. Gracia, did you want to comment on the circulation?

Gracia Martore - Gannett - CFO Sure. On the circulation side, let me start with probably a real bright spot for us which continues to be USA TODAY. As you know, they had a price increase back in September. We anticipated that there would be some fall-off in single copy sales but they would try to do a good job of replacing that circulation. They have done a good job and we would hope they'll be reporting for the March ABC books yet another uptick in quality circulation and in total circulation at USA TODAY. With regard to our community newspapers, as Gary Watson has indicated previously, we're in a transition period coming out of the Do Not Call list. We, as Gary will say, got lazy in terms of relying more and more on telemarketing. We're now more focused on other means of selling newspapers whether it is crewing or kiosks or online or a variety of other things. We also focused on retention. With the telemarketing orders, we weren't seeing the level of retention that we had all had hoped for, frankly. Now we are seeing better numbers on the retention front and that -- that's an important consideration. So, I think that we are clearly spending more money per order in -- in bringing circulation. Obviously, we'll cycle that at a point. We're more focused on our retention efforts. We're more focused on creative ways of bringing customers in and retaining those customers. We've also focused on increasing the level of credit cards that are used and that number's in the 17% to 20% range of our orders. So we feel a little bit better that we're doing more on that front. We're spending a few more dollars and hopefully we'll see the returns from that over the next year or so.

Douglas McCorkindale - Gannett - Chairman, President and CEO But Mike, we still have work to do. The whole industry has work to do. We got a little too comfortable, especially at the larger newspapers where the Do Not Call list required efforts that they haven't put in the past. Our smaller newspapers reacted better and we've just got to do better work in the larger papers.

Jim Goss - Barrington Research - Analyst

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Thank you. Couple of things. One on the broadcast side, you talked about the weakness in the core product. To some extent, broadcasters will talk about a crowding out that takes place when the political advertising is there that you sometimes get back the next year. Obviously, you're not seeing any of that. I wonder if you can comment on that? And the publishing side, you noted entertainment was weak at the local papers but it was a bright spot for USA TODAY. And it seems in general, that national is weak at the local papers but strong at USA TODAY. Is there something going on where certain categories are tending to shift to national products rather than local newspapers? And finally, the thing that Mike just brought up regarding circulation, are you using credit card charges at all to reduce circulation churn or it's sort of an automatic debit periodically?

Douglas McCorkindale - Gannett - Chairman, President and CEO Jim, Let me go first on the broadcasting. Your observation is correct and we do not have an answer for it. Traditionally, after the political advertising crowded out advertisers – say the automobile dealers – the automobile dealers came back. Last year in November and December, they didn't come back nearly as strong as they traditionally have and they've continued in that weak posture through the first part of 2005. So, all of the core categories that traditionally come back when they're crowded out are simply not coming back as strong as they have in past years. But the most obvious one is automobile. That's 30 plus percent of the revenue picture and it is not there. Gracia, do you want to comment?

Gracia Martore - Gannett - CFO Yes. On the circulation side, Jim, the use of credit cards – or EZ-pay solutions is what we call them – we're in about the high teens 17% to 20% usage of credit cards. That number has doubled over the last couple of years. We have some markets where that's over 50%. But that's clearly a focus that we have – a very specific focus we have. We're looking to ramp that number up more considerably because we think that will help with the retention efforts. And then you mentioned entertainment advertising. I think the difference between USA TODAY and the local newspapers is that entertainment advertising at USA TODAY is probably a little bit different than what we see at the local newspaper side. So I'm not sure there's really a specific apples to apples comparison there.

Douglas McCorkindale - Gannett - Chairman, President and CEO Yes, those aren't the same thing, Jim. What's happening is one really isn't reflected in the other. Traditionally, USA. TODAY's ad picture is closer to Broadcasting than it is to Community Newspapers. This year, USA TODAY is doing very well while we have the softness in Broadcasting that I mentioned earlier.

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Jim Goss - Barrington Research - Analyst Are there any other categories that are causing national to be a strong category for USA TODAY but a weak category for the local papers?

Douglas McCorkindale - Gannett - Chairman, President and CEO No, I think some of the weakness you see in the local category relates to USA WEEKEND which is the primary national category in our local and it's really apples and oranges. USA TODAY is simply getting very good results on the national level and it's not that significant on the local level. But, it's apples and oranges. There's nothing out there that's giving us any signals one way or another. Edward Atorino - Fulcrum Global Partners I’ve got two questions. Would you hazard a guess on newsprint costs for the second quarter, given the great job you did in the first quarter? And looking at the TV cost trend, would you give us a look over the next couple of quarters what the TV cost trend looks like? Was there any front loading in the first quarter?

Douglas McCorkindale - Gannett - Chairman, President and CEO Ed, I'll go on broadcasting and -- and Gracia buys more newsprint than anybody else in the world. Edward Atorino - Fulcrum Global Partners Yes she does.

Douglas McCorkindale - Gannett - Chairman, President and CEO So she's the expert on that. But no, there's nothing, no front loading. TV costs were up 1% Edward Atorino - Fulcrum Global Partners Right.

Douglas McCorkindale - Gannett - Chairman, President and CEO If you take out Captivate.

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Edward Atorino - Fulcrum Global Partners Okay.

Douglas McCorkindale - Gannett - Chairman, President and CEO That as good as they're going to get. I mean, you get an occasional event, a shooting, or something like that, drives the news cost. But they're totally on top of that. There's nothing happening on the side that’s out of the ordinary. Edward Atorino - Fulcrum Global Partners Got you.

Douglas McCorkindale - Gannett - Chairman, President and CEO Do you want to comment on the newsprint?

Gracia Martore - Gannett - CFO Yes, on the newsprint side, Ed, we're just going to have to see where this price increase goes. But, we would expect that the comparison year-over-year will get a little bit tougher in the second quarter so you could see, with regard to purchase price, the number going up a little bit year-over-year. But on the usage side, I think you'll still see the pull-back in consumption that you've seen in the first quarter, or similar to it, given the conservation measures that Gary Watson alluded to in March. Edward Atorino - Fulcrum Global Partners Where were you on lightweight newsprint -- lighter weight newsprint.

Gracia Martore - Gannett - CFO We have been testing it in a number of our markets. Some of them have had very good results. Some have not had as good results. It really depends on the mill. It depends on a variety of other issues. We'll be continuing to look at that and take the appropriate action there.

Douglas Arthur - Morgan Stanley - Analyst

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Yes, two questions. Sort of the perennial question on the FCC, Doug. Do you have any updated thoughts given the appointment of Kevin Martin? What does that do for the delayed deregulation rules? And then secondly, you mentioned that help wanted was up 20% in the U.S. community papers. What does that imply or what was the numbers at Newsquest? Thanks.

Douglas McCorkindale - Gannett - Chairman, President and CEO Let me go with the FCC first. We think that Chairman Martin is an excellent choice and we were pleased with that decision by the President. His policies, to the extent that he has revealed them, have been consistently positive in terms of deregulation and allowing us to participate in the marketplace on an aggressive basis and face the reality of what happens in today's media world, which is obviously dramatically different than when, say, cross ownership was passed 20-plus years ago. On the timetable though, I don't know of anything that's going to accelerate the present morass that we're in. We're waiting to hear from the Supreme Court. Depending on whom you believe, most folks think it's 50/50, maybe a little bit more positive than that, that they'll take the case. If they don't, it goes back for action by the FCC. I think Chairman Martin has already expressed positive thoughts on moving it along and -- and possibly taking some actions that would take some of these restrictions at least off the back of newspaper companies. But it's going to take some time. And to go to your employment number, Newsquest was not positive, U.S. was positive. But as I mentioned earlier, the classified categories in the U.K. were soft while the local and the national categories were positive and employment was one of the categories that was soft in the U.K. Interestingly, it's different results and different parts of the U.K. which, in our experience over there in the last five or six years is, a first time. Traditionally, the regions have differed maybe sometimes from the national categories and in the bigger cities like London. But, what we're seeing now is, softness in the south of England, which is the fastest growing area, and positive results in the north of England, which is not normally considered to be the most positive area. We did very well in Scotland on the employment category. It's becoming a community-by-community result over there at least for the first few months here of 2005.

Gracia Martore - Gannett - CFO The only other piece I would add on that is: Doug's absolutely right in terms of them being negative in first quarter. We did have a couple of things – with Easter which we had here, but also that first week of January was a negative week across the board. So we had a few things that probably impacted it a little bit more than we would otherwise normally have but Doug's right, it was a negative number.

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Douglas McCorkindale - Gannett - Chairman, President and CEO In the U.K., their definition of holiday is -- is wonderful. They tend to have more of them than are permitted at the Gannett company.

Paul Ginocchio - Deutsche Bank - Analyst First, based on all the comments on the U.K.. do you think it's accelerating now or is it still decelerating? And the cost growth number in Q1 looked pretty good with [inaudible] newspapers, is that sustainable? Then finally, how do we think about the other non-operating income expense going forward? Thanks.

Douglas McCorkindale - Gannett - Chairman, President and CEO Let me comment a little bit on the U.K.. I don't know, I think it's going to get a little bit better. It started off slow, as Gracia mentioned, the first couple of weeks in January, the folks were simply still on holiday. It's been getting a little better each month, but it's clearly still a mixed message over there. It's interesting to see the local and national categories doing as well as they're doing and have classified – which is really just a variable on the same basic advertising trend – be as weak as it is. The automobile picture over there is clearly as negative as it is over here. So, I wouldn't say it's getting any worse. Our people over there know how to react and how to manage and they will get the best results that we can. Gracia, do you want to comment on the others?

Gracia Martore - Gannett - CFO Well, on the non-operating line, we won't have a gain as we did in the first quarter of '04 in the second quarter of '04. We will still have our investments in CareerBuilder, but again the promotional spending that was accelerated will not be accelerated into the second quarter. There’s a variety of other impacts in that line including currency and minority interests and a few other things. So, it probably will not be at the negative level it is this quarter but it will be in negative territory in all likelihood. Although we'll keep you updated as various pieces move around.

Paul Ginocchio - Deutsche Bank - Analyst And, finally, the cost growth, is that current levels particularly the newspaper group sustainable going forward?

Gracia Martore - Gannett - CFO

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We would certainly expect so.

Douglas McCorkindale - Gannett - Chairman, President and CEO Yes. You know how we manage.

Steven Barlow - Prudential - Analyst Thank you. I've got two questions. What was the price increase in the U.K. for newsprint for 2005? You said you set the price at the beginning of the year. Just what rate of increase is there? And then USA TODAY seems to be the topic of conversation. Can you just talk about travel and entertainment and maybe financial in terms of the run rate of revenue now versus the peak? Where are you, above or below the peak in 2000, is a way to put a metric on what the potential is there to get back the previous levels if that's indeed where we are? Thanks.

Gracia Martore - Gannett - CFO I'll first give you the newsprint in the U.K. We indicated that we had a 6% to 7% increase in newsprint pricing there and that will be for the full year.

Steven Barlow - Prudential - Analyst And would consumption be down in the U.K. as well as the U.S.?

Gracia Martore - Gannett - CFO Depending on a variety of factors including their advertising results and circulation and the rest. We'll have to see how newsprint consumption goes.

Douglas McCorkindale - Gannett - Chairman, President and CEO Yes, Steve, I don't remember the numbers for 2000. I can tell you that travel is up in the first quarter by about 15%. What was financial? Is that the other one you were asking? That's 10%.

Steven Barlow - Prudential - Analyst Entertainment, pharmaceuticals..

Douglas McCorkindale - Gannett - Chairman, President and CEO

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Entertainment is up about 9%. Travel was actually stronger in March than that 15%. Entertainment was a little less strong, financial was softer in March. But I don't remember the 2000 numbers. I can give you a general feeling that travel was, probably coming back. Because 2000's obviously four or five years ago and we've had some 8% rate increases in advertising. So in dollars, even though it is not up to the volume level that it might have been, the dollars might be up there. We can find that out and Jeff can give you a call.

Gracia Martore - Gannett - CFO Getting back to Newsquest, Steve, specifically for the first quarter: Yes, usage was down there. But again, we'll have to see. If their ad results pick up, we won't see that. We have done some Web-width reduction there which will have had an impact on usage. We'll have to see how the ad side of it goes.

Brian Shipman - UBS - Analyst Thanks, good morning. I noticed real estate was down 1.1% in March. How much of that was due to the timing of Easter and what are your expectations for real estate looking ahead to April in the second quarter? And while you're thinking about April, if it's possible, could you please discuss what publishing is looking like in April so far and really I guess for the quarter if you have any expectations on the top line? Thanks.

Douglas McCorkindale - Gannett - Chairman, President and CEO Brian. Real estate. I think the major reason for the negative number were the new homes being built in some of the larger markets like Phoenix and whatever. We're seeing a slow down in the developers that have been going great guns. The resale of existing homes has been pretty strong. But a couple of these very, very large developer categories is the reason we saw that slowdown in March. I don't know whether that tells us anything other than Easter again and people backing off. It was a little bit softer than I thought. But we're going to have to see what happens in April. Generally real estate's okay. But a couple of these big categories were down.

Brian Shipman - UBS - Analyst Can you add any color on large markets versus small markets for real estate?

Douglas McCorkindale - Gannett - Chairman, President and CEO Well, again, some of the big markets like Phoenix and down south, the new homes were slower. In the larger markets in the north, there’s really not that

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much development going on. It's more resale. There is some. So, it was mostly the Sunbelt new home market that was the soft spot.

Gracia Martore - Gannett - CFO But in, for instance, the Palm Springs, we saw … Douglas McCorkindale - Gannett - Chairman, President and CEO They went nuts.

Gracia Martore - Gannett - CFO The new home side of it actually perked up very, very well in March. So, again, it's kind of a mixed bag and we'll just have to see. Does that mean if Palm Springs has picked up does that leak over to Phoenix? We'll just have to see.

Douglas McCorkindale - Gannett - Chairman, President and CEO Palm Springs is absolutely booming, as I said earlier. It's the best numbers we've ever seen out of Palm Springs and that's been part of the Gannett company for a long time.

Brian Shipman - UBS - Analyst Okay. Any color commentary at all on publishing in April thus far?

Douglas McCorkindale - Gannett - Chairman, President and CEO I don't have any input. You know, it's only a couple of days into it and I don't have anything. I haven't heard anything negative on the other hand, as you saw from the reports we've already issued. Department stores and local advertising were pretty good. I think a lot will depend on what we see on the automobile category. But the rest of the business, except for that blip for Easter, I think was moving along pretty good in the Community Newspapers and, as we've discussed earlier, USA TODAY is off to a good start.

Christa Quarles - Thomas Weisel - Analyst Hi. Couple questions. First, on the investment in Captivate, I was calculating about 5 million additional spending there. Can you just quantify – or indicate – if that's going to be sort of the level of investment as you go forward on Captivate? Then on the Internet side, the 47% increase is obviously fairly attractive. Is a lot of that stemming from price increases? Then related to that, you did another deal with -- your competitors to some come degree – Knight-Ridder and Tribune on Topix. Is that your preferred method of acquisition in the Internet space? Then

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finally on the non-traditional revenues of the paper, we had about a $360 million run rate if my numbers are correct based on your commentary? Thanks.

Douglas McCorkindale - Gannett - Chairman, President and CEO Let me respond to some of the Internet questions and Gracia can fill in some of the other pieces. The growth rate that we're seeing in revenues on the Internet is not directly related to an aggressive price increase. We are simply getting a large number of advertisers. Some of whom are already in the paper, but some of whom are new, coming to our local Web site's. We're trying to be the local source of news and information – and information includes advertising. So we're selling our brands in each of our markets whether that be television or newspapers, although it's more obvious in the newspaper category. The response has been very, very positive. As I mentioned in earlier remarks, I think in the domestic side in the Community Newspapers, we were up something like 60-plus percent so when the 47 number includes television as well as what was going on in the U.K. It's working very, very well at our local newspapers and the U.K. was already off to a strong start. It has more difficult comps to go. But it's not from pricing. I mean there is some pricing but most of it is not from that. And as to our joint ventures we have a wonderful relationship with Tribune and Knight-Ridder. We've all known each other for ever; we've done a number of things together. We have simply found it easier when one of us or the other finds something that is of use to all of us to do it on a tri-party basis because we can spread the risk – one – but we can also spread the benefit of having it cover all of the papers or, in our case and Tribune's case, television stations that we have all across the country. We get great market coverage for all of these new technology ideas. It simply works well. When you have folks that you can work with and you can shake a hand with and not have to worry about dotting I's and crossing T's it -- it makes life pretty simple. So, all of us will do things individually. But we like to do things together when they're industry smart.

Gracia Martore - Gannett - CFO On the Captivate side, Christa, your $5 million number is a pure investment number – is in the ballpark on that on a pure expense line basis. We would expect that we're going to be ramping up the elevator builds this year and hope to end the year at about 8,000 to 9,000 installed. We'll continue to have that kind of a rate of investment this year, than we'll be looking for that investment to turn positive hopefully in short order after that. On the non-daily side, I think you're again in the ballpark in terms of annualized run rate. The $375 million range is where we have been talking about and that's about where we are. Again, that excludes things like Clipper and Army Times and Nurse Week.

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Lauren Fine - Merrill Lynch - Analyst Gracia, I don't know if you have commented and I just missed it, but could you comment on the impact options will have in the second half of the year? Then on the 21% increase in the non-daily revenue, is there a way to brake down how much of that is from the launch of new publications versus the growth rate of existing? Then I'm wondering if you could comment if -- on the community paper circulation revenue, presumably a decline in the quarter, of quantifying that for us? So stripping out USA TODAY and the U.K. operations?

Douglas McCorkindale - Gannett - Chairman, President and CEO Lauren, do you think that the stock option expensing is going to become effective in the second half? We're hearing from a number of sources in Washington, which in and of itself tells you something by saying that, that it may not become effective. Have you heard anything to that account?

Lauren Fine - Merrill Lynch - Analyst I've certainly heard that it -- it feels like it's being postponed.

Gracia Martore - Gannett - CFO Delayed.

Lauren Fine - Merrill Lynch - Analyst Yes.

Douglas McCorkindale - Gannett - Chairman, President and CEO Yes. It may not happen until 2006. We're hearing that rumbling more and more these days but Gracia, do you have any ideas of -- ?

Gracia Martore - Gannett - CFO Yes, right at this point we're -- we're continuing to follow. We're still looking for additional guidance from them which is maybe one of the reasons why they're looking at deferring it to a 2006 event. But right at the moment, what we've said to folks is simply use the run rate that we've been including in our 10-Q's by quarter for the last two quarters. Then as we get closer and as we work through some of the details on it, we'll be able to give you a better sense. Hopefully that

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number will be a smaller number than what we're seeing in the -- in the Qs and the disclosure lines at this point.

Douglas McCorkindale - Gannett - Chairman, President and CEO Yes, of course we've accelerated those options that were under water so that'll save us some money. And I don't know, Gracia, whether you -- I don't think we have a break down, Lauren, of new versus 18 month old versus 12 month old publications. What -- what we're basically doing them is starting them -- most of them don't become profitable on day one but many of them have become profitable sooner than anticipated. If they don't work we -- we terminate them. But, I don't think we have a break down of those pieces.

Gracia Martore - Gannett - CFO No, we take a look at that at budget time. But we just don't track to that degree of specificity.

Douglas McCorkindale - Gannett - Chairman, President and CEO Yes, it's about 800 of them. I mean --

Gracia Martore - Gannett - CFO Over 800 now.

Douglas McCorkindale - Gannett - Chairman, President and CEO I think, that it's just simply too much number crunching for not a lot of benefit, so we rely on the Newspaper Division executives to make the right decisions. They understand the concept of making money in Gannett and -- and I think they'll do the necessary. What was Lauren's third question?

Lauren Fine - Merrill Lynch - Analyst It was community paper circulation.

Douglas McCorkindale - Gannett - Chairman, President and CEO Oh, yes.

Gracia Martore - Gannett - CFO On the circulation revenue side, Lauren, it was down in the low single digits.

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Lauren Fine - Merrill Lynch - Analyst Okay. And then actually just one last one: I guess, notwithstanding your commentary on the FCC, what's going on with them? Any activity? Are you finding opportunities either in traditional or in some of the new areas that you've been investing in?

Douglas McCorkindale - Gannett - Chairman, President and CEO I think as a general statement, I would say we're finding more opportunity in the new areas, in the technology area where we're seeing a lot of kind of interesting things. Nothing big. But a number of interesting possibilities like the Captivate world and the Topix world and things like that. Not big dollars. In the traditional businesses, those that I have been talking about forever, they are still – if they're small and if they're advised by conservative lawyers and other advisors –in a wait and see. One: They'd like to see what happens at the Supreme Court and if that doesn't happen, they're going to have to see what happens at the FCC. But I think it could be 18 months to two years before we get some resolution of this. I hope I'm wrong. I've been doing this too long. But I was much more optimistic of logic prevailing a few years ago and clearly that has not happened. So the smaller operations are just sitting back. Or – I know in the case of a few of them – they're looking to just maybe sell their properties separately and sell television separate from newspapers if they happen to own both. We'll talk to all of them. Some of them have a Footnote 25 exception so that we could buy them and -- and sit on it. That would have been the case for us, for example, if we had been successful in Pulitzer. But it's clearly had a dampening effect on traditional discussions where there are overlaps. Peter Appert, Goldman Sachs Hi, two questions please. First the pace of stock buyback activity has been pretty robust, including this quarter, so should we just assume that the roughly 5 million a quarter is the run rate for the balance of the year? Secondly, in the context of the general malaise we're seeing in the ad market, the softness in the second half of March? I'm wondering, Doug, if you're rethinking your expectations for mid-single digit ad revenue growth for the year? This is on the newspaper side, obviously.

Douglas McCorkindale - Gannett - Chairman, President and CEO Peter, good try on the soft buy-back. We'll see. You know we did $1 billion in buy-back a number of years ago and then did $4 billion of acquisition. If what I

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just said to Lauren changes and the marketplace changes, we'll go left instead of right. But, buying back in that stock at these prices makes a lot of economic sense. It was obvious in the first quarter. And we'll be chatting with our board about what we intend to do there. There's no special run rate that we build in. We just do what's logical. And Gracia, do you want to comment on the overall picture? I mean, basically we're not prepared to back off from the projections we made. It started off pretty good in community newspapers. Very good in USA TODAY. On the other hand, we've had the softness on the automobile classified side and the unexpected softness in core business on television. Actually our latest book on television is the best result we've seen ever for the Gannett television stations, so the ratings are there. It's the market place that's been a little soft. I think when you put it all together, and especially if April smoothes out this Easter result, we're okay with what we said. Peter Appert, Goldman Sachs Okay. One follow up. Gracia, can you remind us what the composition of the debt is currently so we can get a better idea of the interest rate sensitivity?

Gracia Martore - Gannett - CFO Right. We had a $1.8 billion in fixed rate debt. But as of April 1st, $600 million of that at a 4.95% rate, matured. We've replaced that with commercial paper, so right now we have about $1.2 billion in fixed rate and the rest in commercial paper. We are, as you can expect, looking at that constantly and we may do something as we've seen interest rates back up here a bit. We may do something there to even that off a little bit more. But, we're looking at that on a daily basis. And as Doug said, we've got a board meeting coming up and we'll be chatting with them about that. Peter Appert, Goldman Sachs Okay. And this is the last thing. Can you give us an early read on what the March ABC data might look like for the company overall excluding USA TODAY?

Douglas McCorkindale - Gannett - Chairman, President and CEO No, we don't have that. Peter. We don't get that in ahead of time. We know USA TODAY is going to be positive because, to be blunt, I specifically asked Craig Moon that question, or maybe he volunteered before I even asked it. But we

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don't get it for all the newspapers. I think as a general statement, we're probably going to do better than many. At least from what we hear. There are some numbers out there that are not as -- as strong as we might like. We'll probably be down a little overall but I think we're going to be down less than many of our friends in the industry.

Frederick Searby – J.P. Morgan - Analyst Thanks, Doug and Gracia. Quick question. Are you considering format change at all? There's been a fair amount of discussion about tabloid, modified tabloid and some of the other format changes you're trying kind of to combat the weakness on the circ front and attract the younger demos. I wondered what you're looking at and what you're thoughts are at this point? Thank you.

Douglas McCorkindale - Gannett - Chairman, President and CEO We mentioned in New York that we're going to try the Berliner format in LaFayette which is a college town and has some other interesting characteristics that we can experiment. So yes, we are trying that. We obviously have a ton of tabloids in the U.K. and we can compare notes on formatting, printing and all of that. We'll see. We are experimenting slowly but carefully and, at the same time, maybe more aggressively than we would have done 10 years ago. You've got to keep in mind that folks think of their local newspaper as their paper. It may be owned by the Gannett company, but they don't like you to change their newspaper. So, you'll have to do it carefully and after some significant research to make sure you're not alienating the older readers while at the same time you're trying to attract the new, younger readers. And it's a balancing act, but -- but we will be doing some of that.

Gracia Martore - Gannett - CFO And Fred, on our 11 or so, youth oriented publications? Those are in a tabloid format and that seems to have great appeal to them. We've done very well with those publications. But, as Doug says, you've got to be careful. That's a market by market decision and within the market, different products for different folks.

Frederick Searby – J.P. Morgan - Analyst Can you also help us understand the question of pricing leverage on the help wanted in classified side? Historically, the thought has been that there's some pricing leverage when things heat up and the market improves. You're seeing that clearly in your Community Newspapers. Has the Internet sort of permanently and structurally attenuated that ability or lessened your ability to

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raise prices? Or are you in fact seeing some nice gains there as the market improves?

Douglas McCorkindale - Gannett - Chairman, President and CEO No, the Internet has probably been a positive rather than a holding back factor because almost all of our employment advertising, if they want to go on the Internet, is a joint sale with the print side. It's not forced in the Gannett company, you can make your choice of going print and/or Internet. Most of the employment advertisers except on the national scale with CareerBuilder, do not choose the internet alone, they go with both. So, they do pay the increase that we have traditionally employed every year on the print employment side and actually we've been increasing the price on the internet employment side at the same time. As long as they get results and that's the whole part of the ball game here, they are satisfied with it. One has not been a negative to the other. We actually asked that question and look at it in the U.K. too. And Gracia, if my memory's right, they've actually increased the Internet side a little bit, which is part of the upsell from the print side. They've increased the Internet side more aggressively and it's working fine. So, so far, everything is on track.

John Janedis – Banc of American Securities Hi, good morning. Doug. I know you touched on this briefly on the auto category, but what do you think you need to see for the category to turn in TV and print from the manufacturer side? And then quickly, Gracia, on the non-dailies. How many do you think are going to launch this year? Let's just say, maybe, the ones you've launched since the first half of '04, are the majority of those profitable?

Douglas McCorkindale - Gannett - Chairman, President and CEO On the automobile side, I don't really have an answer for you. As I mentioned earlier, based upon many, many, many years of doing this – I've been doing it for over 30 years – we expected the softness to come, as we analyzed the marketplace a number of years ago. It continued beyond that with, of course, a lot of discount programs and other incentives. I don't really know what the manufacturers are going to do. Our input from some of the larger U.S. manufacturers is not exactly positive. I mean, you can read in the newspapers the same as we can, what's happening in Detroit. And we're being told they're having trouble in the truck categories also, so I don't know what they have to do to change the format. They are coming out with some new products and new models. And that's good especially for USA TODAY. And hopefully that will fall over a little bit into the

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broadcasting categories. And as I mentioned earlier, it is the new, what I would call exciting products that the dealers want, because the customers want them. It’s the more traditional, straightforward automobiles that are not selling right now and I don't know enough about how to run an automobile company to figure out what they should do. I don't have an answer for you. We're just going to have to wait and see. But I can tell you we're not getting any vibes that there's any quick answer around the corner.

Gracia Martore - Gannett - CFO With regard to the non-daily products, our folks are going to be launching a number of new products. As to the exact number, I don't have it off the top of my head. Frankly, they react to their market places, come up with ideas and we look at them as appropriate. As to whether a majority of them are profitable after a year or so, absolutely. We wouldn't have 20% or so margin on the totality of them if that weren't the case. We have time for just one more question.

William Bird – Smith Barney - Analyst Yes, I was wondering if you could talk about any early read on USA TODAY trends in April and updated thoughts on the tax rate for the year? Thanks.

Douglas McCorkindale - Gannett - Chairman, President and CEO USA TODAY is moving, Bill, along the same positive status that I mentioned for the first quarter. Things are going well there. Their pacings, such as they are in the print side compared to the debt term and how it's used in television, are very good. I mean they're seeing a lot of good reaction to the brand. They're getting good results from the hotels. Positive, positive, positive. So, I hope they continue to do as well as they have and I have no reason to expect they won't.

Gracia Martore - Gannett - CFO On the tax rate side, Bill, all things being equal, we would expect it to stay in that 33.5% range. Obviously, the things that could impact that would be the percentage of our earnings from the U.K. versus the U.S. as well as any deals that could come up that could change the dynamics of that. But the 33.5% looks like a pretty good rate, barring any of these other activities.

Operator

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That concludes the question and answer session today. At this time, Ms. Martore, I'd like to turn the conference back over to you for any additional or closing remarks.

Gracia Martore - Gannett - CFO Thanks very much for joining us this morning. If you have any additional questions, you can give a call to Jeff at (703)854-6917 or me and I -- my extension 6918. Have a great day..

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