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GANNETT CO., INC. FOURTH QUARTER AND FULL YEAR 2005

CONFERENCE CALL AND WEB CAST JANUARY 27, 2006

PRESENTATION

Operator Good day, everyone, and welcome to Gannett's fourth-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 would like to turn the call over to Gracia Martore. Please go ahead.

Gracia Martore - Gannett - CFO Thanks very much and good morning. Welcome to our conference call and Webcast today to review our fourth-quarter and full-year 2005 results. Hopefully you have had 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. Not a lot has changed since our presentations at the year-end conferences, and since many of you heard those, we will keep our comments relatively brief to allow time for your questions. As you saw from our press release, for the fourth quarter we earned $1.44 per diluted share from continuing operations, which is at the high end of the range we provided you in early December. In 2004, we earned $1.44, on a comparable basis, for the quarter. Looking at the full year, we

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earned $4.92 per diluted share, again from continuing operations, versus $4.84 last year. A number of factors had an impact on our results for the quarter, which we shared with you in early December. However, a strong finish in December by USA TODAY contributed positively to the quarter. Our broadcasting segment also had a better December than anticipated. But the challenge of recouping politically related advertising demand, that totaled over $48 million in last year's fourth quarter, was too big a mountain to climb over for the full quarter. Our domestic community newspapers experienced double-digit revenue gains in classified, employment and real estate, but again, auto remained very soft. Our results at Newsquest continued to be impacted by the slowdown in the UK economy. Craig will discuss our operations in more detail in a few moments. Also impacting the quarter was our reorganization of the Detroit Newspapers Partnership which we completed in August. The full consolidation of 100% of Detroit's results had an impact on both revenues and expenses for the full quarter and our margin for the newspaper segment. When we completed the Detroit transaction, we shared with you that it would have a negative impact on our margin in the near term. But we see opportunity to expand them over the intermediate to long term. Just a note on one change you heard about in the fourth quarter. On December 25th, the last day of our fiscal year, we completed the expansion and reorganization of the Texas-New Mexico newspapers partnership with MediaNews Group. We contributed one newspaper, for which we recognized a minor non-monetary, non-operating gain in the quarter, and MediaNews contributed three Pennsylvania newspapers. As a result, our interest in the partnership is now approximately 41%, and MediaNews Group has become the managing partner. This change does not impact operating results for the quarter, but will result in a change in our accounting presentation. Going forward, our percentage of the net results of the partnership will be included in other operating revenues, similar to the California Newspapers Partnership. Turning back to our results for the quarter, our reported expenses for the newspaper segment increased 12%. However, Detroit and some other smaller acquisitions completed this year had a big impact on that number. On a pro forma basis, assuming we owned 100% of Detroit and the same complement of properties in the fourth quarter of '05 and '04, newspaper expenses would have been up less than 0.5%. Reported newsprint expense increased 14.9% in the quarter, comprised of a less than 10% increase in prices and 4% greater usage. Again, Detroit and those other acquisitions had an impact on those numbers, as

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well. On a pro forma basis, newsprint expense was up 4.7% with usage down almost 4.5% and prices up 9.5%. Finally, pro forma cash comp, excluding newsprint, were down about 1% for the quarter. Focusing on newsprint specifically, throughout 2005, Gannett benefited from fixed-price newsprint agreements covering a substantial amount of our requirements. As I mentioned, pro forma consumption in 2005 trailed the prior year. Conservation measures will continue throughout 2006, including additional Web-width reduction and expanded trials of lightweight newsprint. For the first half of 2006, we have again secured stable price arrangements covering a vast majority of our paper usage. Moving to the balance sheet, total debt at year end stood at $5.4 billion, and cash and marketables were about $167 million. Our all in cost of debt currently is 4.7% with commercial paper at about 4.4%. Interest expense in the quarter, as you saw, was $62 million, compared with 41 million in the same quarter last year. The increase was attributable to both higher short-term interest rates and debt outstanding related to share repurchase activities and acquisitions. With respect to shares outstanding, basic shares at the end of the quarter were 237.8 million and averaged 238.5 million in the quarter and 245 million for the full year. We repurchased approximately 3.2 million shares during the quarter and approximately 17.5 million shares for the full year. Capital expenditures in the fourth quarter were a little over $101 million, and for the full year they totaled about 263 million. I also want to note some other items that will have an impact on our results in 2006 and should be considered as you think about quarterly results. The first is the exchange rate. During the fourth quarter, the exchange rate averaged 1.75 versus 1.84 in the previous year, creating a headwind for us in the quarter. We expect that trend to continue in 2006, with the first quarter representing our toughest comparison, as the pound averaged 1.89 in 2005's first quarter. The second factor is the expensing of options. As we noted at the year-end conferences, we will begin expensing options this year, and expect the impact will be approximately $45 million of pretax expense in the year, spread evenly over the quarters. One comment on a transaction that took place after the close of the quarter -- on January 17th, we announced a minority investment in 4INFO, as well as a marketing and distribution agreement. By investing in 4INFO, Gannett readers and viewers benefit by gaining access to free, accurate and thorough information on a number of relevant topics that will add depth and timeliness to USA TODAY and other media that Gannett owns.

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And then finally, before I turn the call over to Craig, our conference call and Web cast 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 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 website. Sorry I couldn't come up with a better introduction for Craig, but here's Craig Dubow.

Craig A. Dubow - Gannett – President and CEO Thanks, Gracia, and good morning to everyone. In December, we told you that 2005 looked like it would be a record year, in terms of revenues. Our release this morning confirmed those results, and I am pleased to say total operating revenues reached $7.6 billion for the year. It's particularly pleasing, because we achieved these record results in an advertising environment that has both been challenging and choppy. Our 2005 results reflect solid ad demand in classified, employment and real estate in our domestic community newspapers on top of a tough 2004 comparison. Growth in local advertising was boosted by revenue growth from our non-dailies and niche publications. Our newspaper segment results were tempered by the UK economy's impact on Newsquest. And auto advertising was soft throughout the year in both the UK and US. Our broadcasting segment saw soft auto advertising and faced comparisons to a record level of political and Olympic ad revenues that contributed to results in 2004. But the year ended strongly for broadcasting and for USA TODAY, with both posting good results in December. As you saw from our press release, operating revenues from continuing operations advanced over 6% to approximately $2.1 billion in the quarter and increased over 4% for the year. Let me give you some additional details on our results, starting with our newspaper segment. Newspaper operating revenues advanced almost 9% for the quarter and over 6% for the year. This includes the results for the full consolidation in the third quarter of Detroit, after the JOA was reorganized, and for Tallahassee, which we acquired in an asset swap with Knight Ridder. Assuming that we owned the same newspapers in both years, total advertising revenues in the newspaper segment declined 1% for the quarter and rose 1.6% for the year. Overall, our results in the US were better than those in the UK, with

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US ad revenues for the quarter increasing over 1%. Pro forma local advertising in the newspaper segment declined slightly over 1% in the quarter. In the US, local advertising was down slightly. Across all products, health, financial and home improvement categories gained, and helped offset the lagging results from department stores, furniture, grocery, restaurants and telecommunications. Trends that we have seen all year in classified advertising continued in the fourth quarter. Employment advertising for the Company as a whole increased slightly for the quarter, on top of an increase of more than 18% in 2004. Domestic classified employment results were significantly better than our results in the UK. In the US, community newspaper classified employment increased almost 14% for the quarter. The strength came primarily from our Pacific and South groups, both generating double-digit gains in employment. For the entire Company, real estate was fairly strong throughout the quarter. For the US community newspapers, real estate increased almost 14% for the quarter. Again, US results in real estate were stronger than in the UK, although the UK's results were positive. Automotive, as we have been saying for quite some time, remained soft in both our domestic community and UK newspapers in the quarter, decreasing over 16%. In our US community newspapers in the quarter, the automotive category was down more than 15%, reflecting declines in all regions, but most heavily in the Atlantic Coast and interstate groups National advertising revenue was down slightly for the quarter, as decreases from the community newspapers were offset in part by growth at USA TODAY, where ad revenues were up over 2% for the quarter. During the quarter, the technology, auto and advocacy categories at USA TODAY were very strong, while travel, retail and pharmaceutical lagged last year's results. As we noted, USA TODAY had a robust finish to the year, with ad revenues up 13% for December. Before I turn to our online revenues, let me talk for a minute about the extent of our reach when you combine our print products with online in any one community. Together, our daily newspapers, our non-daily and niche publications and our online products achieved a high level of audience aggregation and reach, in many cases in excess of 75%. The success of our focus on this aggregation strategy is reflected in the revenue growth from our non-daily products and online. Revenues for our local non-daily products, which do not include the Army Times, Nursing Spectrum or Clipper Magazine, increased over 10% in the fourth quarter and almost 13% for the year.

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Turning to the Internet side of the business, our online revenues for the total company, including PointRoll, were more than $300 million for the year. That's an increase of 49% for the year and 59% for the quarter. Growth in online revenues was driven by our domestic community newspapers, which had growth rates of 47% for the quarter and more than 50% for the year. Our latest monthly numbers, which are for December, show our domestic websites at about 21 million unique users and reached 13.5% of the Internet audience. In the UK, Newsquest's online audience totaled 2.7 million unique visitors, with 31.1 million page impressions. CareerBuilder also continues to perform well for us. Overall in 2005 compared with 2004, CareerBuilder experienced a 20% increase in unique visitors. For the fourth quarter, revenues grew 67% compared to the same quarter last year. Focusing on the UK briefly, Newsquest, as we have been noting, has felt the impact of the changes in the UK economy, particularly in automobile and employment. Revenues for Newsquest in pounds were down almost 6% in the quarter and about 4% for the year. Newsquest operating profit, again in pounds, was 16% lower for the quarter and over 8% for the year. In response, expenses were tightly controlled and were lower year over year. These down cycles typically last 18 to 24 months, so we believe that we are about halfway through this. We expect to see modest ad revenue growth in the latter half of this year. Moving to broadcast, total revenues for the broadcast division including Captivate declined 11% for the quarter. At our TV stations, total revenues were approximately 12% lower compared to last year. Local ad revenues increased 1% while national decreased 28%. This decrease reflects the lack of more than $48 million in advertising demand related to the elections in the fourth quarter of 2004. However, several advertising categories firmed up in December, led by auto, retail, banking and finance. This resulted in revenue growth of over 5% for the month. Looking ahead, our latest pacings for first quarter overall are up in the high single digits compared to last year's first quarter. January is down in the very low single digits. February is up over 30%. Local is stronger than national at this point. These pacings reflect the ad demand associated with the Winter Olympic Games in Turin that will be broadcast on our NBC station in February. Again, I want to caution you the pacings are very volatile and reflect where we are right at this moment, we will keep you updated on our monthly reports as the quarter progresses. Before we go to questions, let me provide a few words about 2006. We are enthusiastic about the possibilities and opportunities we see in our markets, as more consumers access our content in even more ways. Our investment in

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4INFO is just one small but interesting example of our effort to deliver content in ways consumers want it. In 2006, our domestic community newspapers will take advantage of the market coverage and an array of products to generate positive revenue growth. USA TODAY will benefit from the value of its brand as we find more ways to deliver its content, and there will be an advertising rate increase. In broadcasting, the Olympic Games and politically-driven ad demand, in addition to new business initiatives, are expected to contribute significantly to revenue growth as we take advantage of our strong local news ratings. For Newsquest, we expect and anticipate some stabilization in revenues in the first half and revenue growth in the second half. Overall, Gannett is committed to our focus on local coverage and local content. Delivering that content wherever and however the customer wants it is our mission, and that will drive our results. Now we will be happy to stop and take your questions.

QUESTIONS AND ANSWERS

Christa Quarles, Thomas Weisel Partners I just had a quick question on the online side. It appears you are outperforming pretty much everybody else in the online space, perhaps other than Google. And I was just wondering if you feel that that is just pent-up demand for your properties, pricing improvements or is that’s something that can be sustainable? Then on CareerBuilder, we are hearing news that they're thinking about moving internationally. I was just wondering if you guys have any comments on that and the resulting profitability there.

Gracia Martore - Gannett - CFO With regard to CareerBuilder and international, we look at a variety of things in the partnership. And if we all believe, together with our good partners at Tribune and Knight Ridder, that an international expansion is appropriate, and we can ultimately make money there, then we would certainly contemplate that. But we are very focused on being successful, as we have been here domestically.

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Douglas H. McCorkindale - Gannett – Chairman With our operation over in the UK, we're doing very, very well in online and our relationship with CareerBuilder is a positive there, because the UK folks and the CareerBuilder folks do exchange information. That should add a little plus on the international big picture.

Craig A. Dubow - Gannett – President and CEO As far as the overall for online, as you know, we have had an extraordinary focus on that for the last several years. And I think we are beginning to see the fruits of our labors there, if you will. It is going to continue to be a major focus in all categories across the company. You probably also saw the emphasis we are putting toward that with the introduction of our new president of Gannett Digital. Jack Williams will take over and will continue every effort to further coordinate this as we go into the future, recognizing the importance of this for the forward view.

Craig Huber – Lehman Brothers - Analyst January -- any thoughts on newspapers? Is it much different than what we've seen in the fourth quarter? And also, this comparable newspaper cost, down 1% in the fourth quarter -- you guys have been very, very tight on costs for many years. And I applaud you for that. But how many more years can you guys -- or how long can you go with non-newsprint costs down 1% or so without actually hurting the franchise?

Gracia Martore - Gannett - CFO Those are cash costs at newsprint. All of our divisions are focused on making sure that our expense picture reflects our revenue picture. And to the extent that we had some difficulties in the fourth quarter and during the year, particularly over in the UK with the economy there and in some softening demand on the auto side, our folks have responded in an appropriate way to those revenue shortfalls. I know they will continue to do that, to the extent that it is necessary. But we are very focused as well on growing that top line and getting those revenues moving. That's very important to us. On the newspaper side, for January, I would say probably nothing different than what we were talking about at the December conferences on the USA TODAY

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side. We continue to see choppiness. A wonderful month in December. We'll see how January plays out. For the full quarter, we're anticipating that we will do a pretty good job; but, again, we're seeing some choppiness on the national side and no trend from month to month. Auto continues to be a real challenge at the community newspaper level, but at the same time, real estate has been a very good ad category and certainly continued to be in December. And we'll see how that goes for the remainder of this quarter.

Brian Shipman –UBS - Analyst I was wondering if you could quantify -- you have done this in the past -- if you could quantify how much Olympics and Super Bowl will affect the numbers in 1Q, and also if you could quantify what you are expecting in political advertising for the full year? Thank you.

Craig A. Dubow - Gannett – President and CEO As far as the Olympics are concerned, it is not domestic. So it's going to probably be slightly less than what we achieved out of Salt Lake. Overall, the sales are okay; they are not absolutely terrific. But in general, we're fine with it. For political, we're anticipating a fairly robust year. I think that the real key here is when everything will begin. There was anticipation that we would see some political beginning in January. To date, that has been very, very slow. So that would be slightly behind what we had anticipated. In general, from all the people that we have spoken with, we're anticipating a very robust year .

Brian Shipman –UBS - Analyst In '04, I think you came in a bit north of $120 million in political?

Gracia Martore - Gannett - CFO No, that included Olympics.

Brian Shipman –UBS - Analyst

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Oh, that did include Olympics?

Gracia Martore - Gannett - CFO Yes. On the political side, we are about $90 million to $95 million. In 2002, that number was in the low eighties.

Brian Shipman –UBS - Analyst So you're thinking in the $90's for '06 or possibly even slightly better?

Gracia Martore - Gannett - CFO I don't think that's exactly what we said. Remember that 2004 was a presidential election year, whereas 2002 was a congressional election year. I think that maybe at this moment, given how early it is in the year, we would think it would be more comparable to a non-presidential year than a presidential year. But we were surprised in '04, positively, so we will just have to see how the year plays out.

John Janedis –Banc of America Securities - Analyst I just wanted to check in on the Denver TV station. I know it wasn't a big deal, but given you plans, assuming that goes independent?

Craig A. Dubow - Gannett – President and CEO I think the key is we certainly have interest in the station, but we need to understand where all of this will shake out with CW and what those ramifications will be. That has yet to fully unfold here for us.

John Janedis –Banc of America Securities - Analyst

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When is that supposed to close?

Douglas H. McCorkindale - Gannett – Chairman A couple of months, subject to FCC approval. But we have to look at what the CW arrangement means, as Craig indicated. So that may slow down the closing.

Dave Clark –Deutsche Bank - Analyst USA TODAY ad yields were very strong in 4Q, particularly December. Could you give us the color on why that was? And also, could you give us an update on Detroit, how the transition is going?

Gracia Martore - Gannett - CFO I'll take the USA TODAY, and I know Craig will jump in on Detroit. They benefited from the price increase we put in at the beginning of the year, which was in the 8% range. They also benefited from the mix of advertising. As you know, a color page carries a nice premium to a black and white page. That impacts the yield they get, as well.

Craig A. Dubow - Gannett – President and CEO Detroit is moving forward. I think Dave (Hunke) and his group have been working exceptionally hard up there. But what we have to have is some better economics. As everyone is very aware, it has been a very difficult ad environment in that town. And with what has happened in the auto industry, they have really felt some very significant impacts. Overall, we are moving forward, but it is a real, real difficult economy.

Gracia Martore - Gannett - CFO I'd say, to add to what Craig has said. He's covering the revenue side. On the expense side, they are doing a very good job, with a new plant (press facility)

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coming online here in the last quarter; they have really realized the kinds of savings that we were anticipating from that very significant project. And I know they are going to be very focused on the cost side of the equation, as well.

Fred Searby – JP Morgan - Analyst If you strip out the UK and USA TODAY in 2006, what would be a good number for you on the smaller market, in terms of ad revenue growth? What do you think in the more community-oriented newspapers would be a good number?

Gracia Martore - Gannett - CFO The assumptions that we gave out in early December with respect to ad revenue growth numbers continue to be where we think things are shaping up, at least at this moment. They are in low, potentially, to mid-single digits. Again, auto being a continuing drag on those numbers. But the assumptions we gave out in December continue to be appropriate, at least this early in the year.

Douglas Arthur – Morgan Stanley - Analyst On USA TODAY, you threw out some caveats in terms of choppy start to 2006. But are you starting to feel more confident vis-a-vis some of the major categories that USA TODAY has turned the corner? And Gracia, you had mentioned back in December pretty strong demand at USA TODAY, surrounding the Winter Olympics. Is that still the case?

Gracia Martore - Gannett - CFO Craig Moon mentioned he would see some good advertising pickup surrounding the Olympics, and our sense is he is seeing that. Clearly, it's not anything like what we have seen on the broadcast side; it's measured in single millions of dollars rather than the double-digit millions that we've seen on the broadcast side.

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Yes, I think we're feeling good about the job that USA TODAY is doing. They had a very strong finish to December in a lot of categories, particularly auto, technology, telecommunications. They are feeling a little bit better about business conditions than they did at the beginning of December. But again, it's been choppy, so we don't want to get ahead of ourselves as we look at the remainder of 2006.

Alexia Quadrani – Bear Stearns - Analyst Just some further color on the UK? We obviously saw some deterioration in the fourth quarter versus the full year. I just wanted to get a sense: Are you seeing further deterioration in the UK early in the first quarter? Also I think at one point you were concerned that the real estate advertising in that market was beginning to look a little bit worrisome. It looks like it did okay in Q4. Do you think that's likely to be stable going forward, or is there still some risk on the real estate side?

Craig A. Dubow - Gannett – President and CEO Overall, what Paul Davidson had called back in December is holding very true. We had mentioned how difficult their auto -- they call it motors -- is in that market. Certainly, their employment side was also very specific as a concern. Following up on your real estate question, we’re doing moderately well. It is in the low singles, but it is positive at this point, despite some of the issues they have been having. Depending on which part of the country you are talking about, we see either some more positive or some more negative. The comment that it is very choppy over there is consistent. Again, being about midway into the economic cycle, we are still anticipating this first half to have some difficulties.

Peter Appert – Goldman Sachs - Analyst Back to the UPN/WB combination, can you give us your perspective on what you think that new competitor might mean to you in your markets from a ratings perspective? Whether you think there is perhaps some incremental pressure on programming costs for syndicated product, in terms of a new independent competitor in the market? Then finally, any perspective you can give us on trends in network compensation for your station group?

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Craig A. Dubow - Gannett – President and CEO Overall, I think CW will add some interesting opportunities. You are very clear on the struggles that were taking place with WB and UPN before. The combination this will add – if I'm correct, I believe it's 30 hours of prime programming that will be added into this – I think that will have an impact. Ultimately, it's going to have impacts on overall availability of inventory, so I think that is going to be tighter. What we understand at this point and what they are trying to do -- it should produce some interesting changes for what they were trying to accomplish on UPN and where they were going. Competitively, at this point, it is very early to try and call anything as far as longer-range impacts for us. With the primary networks that our portfolio is made up of, we feel very comfortable. But I think in general, it does change some of the market dynamics as you begin to look forward.

Peter Appert – Goldman Sachs - Analyst And how about programming costs, specifically?

Craig A. Dubow - Gannett – President and CEO As far as programming costs, again, that's something we are going to have to look at further. Clearly, there would be some differences, depending on where and what direction we head. There will be a broader need for syndicated product, so we will have to look very closely. It's very early to try and get to read as to how those markets will react, and certainly the kind of product we put on our local station.

Peter Appert – Goldman Sachs - Analyst And any direction in network comp?

Craig A. Dubow - Gannett – President and CEO

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You know, I think you have seen over the course of the last number of years, there has been a reduction in that. We are still participating in it. However, there is a reduction that we talked about…I guess it was a couple years ago, when it was brought up. There are some other combinations of working with the networks that have been publicized with respect to the NCAA and the NFL football. Beyond that, there's really nothing new we have to report to you.

Douglas H. McCorkindale - Gannett – Chairman All of our deals are locked down, so we are not seeing any changes in the upcoming year.

Gracia Martore - Gannett - CFO The other piece is, as we have seen network comp come down, there have been other pieces that have come in to help replace it on the retransmission side and other initiatives that Roger and his team have been effective at. So for us, as we said a long time ago, network comp was never a huge piece of the pie. It’s come down, but again, our TV team has done a good job of replacing some of that with other sources of income.

Steven Barlow – Prudential Equity Group - Analyst Can you talk a little bit, please, Craig, about the NBC effect? Obviously, the ratings are down for primetime. How is that hurting your primetime revenue? And then could you discuss, related to that, your indexing of news? In the past, you have over-indexed, I think, the general NBC stations that are out there. How much has that, maybe, declined or how has that changed year over year?

Craig A. Dubow - Gannett – President and CEO Frankly, the overall NBC programming, no doubt, has had some impact, certainly in our prime numbers. It is a 30% plus part of the overall revenue picture, when you take a look at it. So yes, there are some impacts there.

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But when you translate that to the news, what we have done – and we talked about this a bit last year – where we had increased some of our marketing budgets at the stations to try and offset any possibility of our late news declines. Frankly, after the November sweeps, we are very happy to report the results we had. We are in very, very solid position across the board. From an indexing standpoint, we are again right where we want to be. Does it make it more difficult? Absolutely. There is no doubt from that perspective. On the other hand, when you consider some of the increases we have seen, certainly on the ABC side for the three ABC properties as well as the six CBS stations, there is a degree of offset. The coming back to NBC with the Olympics, it really is balancing up. But it has had some impact. I know the effort at NBC is working to try to create further improvements. As we go into this quarter, we are going to be buoyed to a great extent by the Olympics here in February. Then the added advantage that we are going to have, from a political perspective, again because of the strong demographics Roger and his team have been able to continue on the news side.

Steven Barlow – Prudential Equity Group - Analyst Is there a way to quantify, on an EPS basis, what NBC has hurt you by?

Craig A. Dubow - Gannett – President and CEO No. I don't think there's any way you could piece that together. It would be a very difficult maneuver.

William Bird – William Bird - Analyst I was wondering if you could talk about whether there really are any new strategies you are looking at to reduce expenses more materially? Then, overall, current thoughts on non-newsprint expense rise for '06?

Gracia Martore - Gannett - CFO I'm not sure there are a lot of new things we can do. It's just more of the same blocking and tackling that the company has always done, and just looking in

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every nook and cranny. There are some little things. For instance, we mentioned at the December conferences an ink optimization project that we are doing in the UK and the US that may save in the millions. But it's a lot of just blocking and tackling, and making sure that our expense picture is appropriate in light of the revenue outlook, and that's always what we are focused on.

Craig A. Dubow - Gannett – President and CEO The managers clearly understand the need to continue our tight control, and each of the divisions understands that most directly.

William Bird – William Bird - Analyst On non-newsprint, I was wondering what your outlook is for '06.

Gracia Martore - Gannett - CFO The assumptions that we gave in December with regard to expenses continue to hold. But as always, we will adjust those accordingly, depending on what the revenue outlook is. If it's a more positive outlook, then that may require us to make more investments. If it's a less positive outlook, then we will have to appropriately make sure we continue to fund the right investments, at the same time focusing on those items that we can either defer or put aside for the time being.

Debra Schwartz – Credit Suisse First Boston - Analyst I was wondering if you could tell us where USA TODAY's margins ended in 2005. And Gracia, given what you said earlier about ad trends, where do you expect that to go in 2006?

Gracia Martore - Gannett - CFO With regard to 2006 on ad trends – again, I hate to keep hearkening back to our assumptions we gave out in early December but those continue to be operative.

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Specifically, at USA TODAY, they put in a price increase at the beginning of the year in the 6% range, and they anticipate they will get very good follow-through on that price increase, as they have on prior price increases. On the margin side at USA TODAY, I think we continue to look at mid teens kinds of margins there. Obviously, we'd love to see those margins do a little bit better.

Karl Choi – Merrill Lynch - Analyst Gracia, I wonder if you could help us size the net impact of the consolidation of the Texas-New Mexico Newspapers Partnership? And just really quickly, if you can let us know how the option expense should be split between the divisions and corporate?

Gracia Martore - Gannett - CFO With regard to Texas-New Mexico, we will need to get back to you on those specifics. I don't have them right at my fingertips. About stock option expensing, if you look at it on the basis of the split among the divisions on the revenue side, that's a pretty good proxy for the way the option expensing will be split plus a chunk at the corporate level, as well.

John Kornreich – Sandler Capital - Analyst Can you give us some flavor on the ad rate increases for local retail, and also for the classified categories? And related to that, given that you wound up with a 2% decline in daily circulation and more than 3% on Sunday, could there be, should there be some pushback from whatever rate increases you are trying to get?

Gracia Martore - Gannett - CFO Let me start with your last question first, about pushback on rate increases. With regard to preprint advertising, that is a direct correlation between paid circulation and the dollars we achieve from that. There's a very direct correlation there. About our ad pricing otherwise, I think that our advertisers focus on what

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we are delivering in the total spectrum of the community. Whether that is 27,222 paid circulation or 28,143, they are not as focused on that as the kind of market coverage we provide, as well as the audience aggregation and the eyeballs we bring to their advertising. As long as they are comfortable we are being successful in driving traffic into their stores, we are going to be successful in being able to look at the ad pricing side. When you look at specific ad pricing on the local and classified, again, that varies market to market, product to product. In some of our markets where there is a strong ad demand, we will have more flexibility on ad rate increases. In other markets where, for a variety of reasons including dependence on auto-related communities, we're going to have to be careful and cautious in what we do on the ad rate side. It's less of a factor on specific circulation than it is what we are doing with respect to the total market.

John Kornreich – Sandler Capital - Analyst So it would be fair to say, perhaps, you are averaging -- whether that's meaningful or not, but you are averaging somewhere in the 3% to 4% area?

Gracia Martore - Gannett - CFO That's not a bad ballpark.

Dan Jenkins – State of Wisconsin Investment Board - Analyst I was wondering if you could give a little color on real estate and then the UK employment situation? I think you said the US was up about 14% in the quarter, so I was kind of curious how much the UK was down. And at what point will those comps kind of get easier? Because I think it's been declining for a few quarters now. So at some point, I would think you would see less of a decline there. On the real estate, I was wondering what percentage of your classified ads are real estate.

Gracia Martore - Gannett - CFO

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Let me answer your last question first. With regard to real estate as a percentage of our total classified for the total company, it's about 23% or 24%. For Newsquest alone, it's right in that same ballpark, both for our domestic and our US newspapers. On the UK employment side, we will have easier comps beginning in the first quarter, and those comps will get a little bit easier as the year progresses in the UK on the employment side. We have said that in the UK, they have had high teens declines in both employment and auto. We need some help from the economy in the UK, as well as easier comparisons. And we will just have to see how the economy there plays out. Real estate has continued to be a very good category. Domestically and in the UK, while we were anticipating that we might see a bit of a falloff there, in fact that continued to be positive in the first quarter. And I think Paul Davidson and his team are feeling a little bit more comfortable that the real estate picture will not have a hard fall but will stabilize, depending on what happens on the interest rate side.

Douglas H. McCorkindale - Gannett – Chairman One of the aspects of the real estate market is, as houses stay on the market longer, that's a positive to us because people have to continue to advertise for a longer period of time. So the slight slowdown in the market is an advertising plus to the newspaper business.

David Winters – Wintergreen Advisors - Analyst I would like to ask Doug a question. You are one of my heroes. You've done an incredible job over the years. And Gannett is, I think -- it's one of the greatest companies on the planet. You have been brilliant about allocating capital and being thoughtful. I'd just love to hear your sort of longer-term thoughts on the newspaper business, because Wall Street, despite the obsession with the short term, is so gloomy. Yet this is such a great company and you are so long-term thoughtful. So I'd just like to hear your general thoughts about the business, because people are just -- they are so negative, and it's sort of sad in a way.

Douglas H. McCorkindale - Gannett – Chairman

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Well, David, you are right on, and yet it's an interesting buying opportunity for us. Keep in mind that the Street was going to put us out of business in 1999, and there were going to put us out of business in the early '90s. I can go all the way back to the early '70s, and when that attitude prevails, there are some interesting opportunities, such as when we acquired Multimedia at a very good price. Now, the acquisition market has not reflected the Wall Street attitude completely, but it has reflected it somewhat. As you know, there are assets for sale in the UK that are quite interesting to us, and things going on the US, and things that are not yet public, maybe some things going to happen in the broadcasting market, for all the reasons that were mentioned earlier on this call. Yes, it's tougher; the revenue is not as easy as it was 15 or 20 years ago. But we are generating a couple of billion dollars of cash. We can put it to very good use, both in traditional businesses and into some of the new businesses that Craig and Gracia have mentioned and have been announced elsewhere. Our Internet world is going very, very well at $300 million plus. Now, compared to $7.6 billion it's not the end of the world, but there's a good upside there. I own a lot of Gannett stock. And you don't see any announcements of me selling it. I think it will come back, and I think the Street will recognize all the positive economics of the business. But is it as easy as it was? No, but it's not going away, either.

David Winters – Wintergreen Advisors - Analyst Thanks, Doug. I wish all of you the best, and thanks for being rational in what has been a very negative Wall Street, emotional environment.

Douglas H. McCorkindale - Gannett – Chairman Well, David, we have been rational for as long as I've been here. And I think the younger management will be just as rational.

David Winters – Wintergreen Advisors - Analyst As long as they follow your example, Doug, Gannett is a long-term winner.

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Douglas H. McCorkindale - Gannett – Chairman Well, I'm right next to them. So they are not going away.

Gracia Martore - Gannett - CFO I think we have time for one more question.

Mike Foss – Alex Brown - Analyst Wow, I don't have anything that could come close to following up on that one. Going back to the completely mundane, I was just wondering if you guys could give us any lead indicators of improvement in the UK, just lead economic indicators that you guys look at, to give us a sense of when that economy might start to be perking up again.

Gracia Martore - Gannett - CFO The best lead indicator we have is probably looking at each one of the regions that we are in, in the UK, and seeing how things are playing out, similar to what we do here domestically. We also look at retail sales and home sales and all the other economic indicators you would imagine we look at.

Douglas H. McCorkindale - Gannett – Chairman We have been over there for five years now, and have hit a home run just about every year until the slowdown took place in January of '05. As Craig mentioned earlier, these cycles in the UK historically last for 18 months to two years. It might be shorter than that this time, but it was market by market for a while, and then the whole country. And we do have some spots over there that are doing a little bit better. The slowdown in motors in the UK is for different reasons than it is in the US. The employment numbers and the softness, especially in the growth areas in the south of England, were a little bit of a surprise. So it's very much of a mixed message. The national scene over there was much softer than the local

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scene, and their retail environment on High Street, as they call it, was pretty negative. Which would give you an indication that the consumer in the UK is holding on to their pounds at this point and waiting to see some developments that would be more positive. Also the housing prices got, in my view, a little silly. Relative to the average income of the buyer of a house over there, that's got to have an effect as people begin to step back and figure out what their cost of living is. Lots of mixed messages, unfortunately, and nothing that's very specific. I just have a gut feeling that it's going to pick up a little bit sooner than the historic trends would suggest.

Mike Foss – Alex Brown - Analyst Thanks a lot, guys. I have to concur with Mr. Winters on our outlook versus the Market's. But good luck and keep up the good work.

Gracia Martore - Gannett - CFO Thanks for joining us, and if you have any further questions, you can reach Jeff or me after the call. Have a great day.

Operator That does conclude today's teleconference. Thank you very much for your participation, and have a wonderful day.

Certain statements in this transcript may be forward looking in nature or “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The forward looking statements contained in this transcript are subject to a number of risks, trends and

uncertainties that could cause actual performance to differ materially from these forward looking statements. A number of those risks, trends and uncertainties are discussed in the company’s

SEC reports, including the company’s annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward looking statements in this transcript should be evaluated in light of these

important risk factors. Gannett Co., Inc. is not responsible for updating the information contained in this transcript beyond the published date, or for changes made to this document by wire

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