Mike Lavey - Vice President and Controller Katy Murray - Chief Financial Officer Jim Moroney - Chief Executive Officer Dan Blizzard - Senior Vice President Grant Moise - Senior Vice President, Business Development and Niche Products.

Richard Diamond - Strait Lane Capital Barry Lucas - Gabelli & Company David Cohen - Minerva Advisors Bradley Tesoriero - CRT Capital Chris Mooney - Esposito.

Ladies and gentlemen, thank you for standing by. And welcome to the First Quarter 2015 Financial Results Conference. At this time, all participants are in a listen-only mode. And then later we will have a question-and-answer session. Instructions will be given at that time. [Operator Instructions] And as a reminder, the conference is being recorded.

I’d now like to turn the conference over to our host, Vice President and Controller, Mike Lavey. Please go ahead..

Thank you, Laurie. Good afternoon, everyone. Welcome to A.H. Belo Corporation’s first quarter 2015 conference call. I’d like to welcome Katy Murray, who joined A. H. Belo as our Chief Financial Officer on April 1st to the call. Katy and Jim Moroney, our Chief Executive Officer will lead today’s call.

Dan Blizzard, Senior Vice President; and Grant Moise, Senior Vice President, Business Development and Niche Products are also -- will also be available for Q&A. I will now turn it over to Katy..

Thanks, Mike. My comments will concise and leave plenty of time for Q&A. Yesterday evening we issued a press release announcing first quarter results. We have posted this release on our website under the Investor Relations section.

Unless otherwise specified, comparisons used on today’s call measure first quarter 2015 performance from continuing operations, against first quarter 2014 performance from continuing operations. Our discussion today will include forward-looking statements.

Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. Additional information about these factors is detailed in the company's press releases and publicly available filings with the SEC.

Finally, today’s discussion will include non-GAAP financial measures. We believe that non-GAAP financial measures provide useful, supplemental information to assist investors in determining performance comparisons to our peers.

Reconciliations to the most directly comparable financial measures presented in accordance with GAAP are provided in our press release and on our website under the Investor Relations section. A. H. Belo Corporation announced first quarter net income of $0.02 per share, an improvement of $0.24 per share compared to the first quarter of 2014.

First quarter 2015 net earnings included an income tax benefit of $5.7 million, primarily due to a reduction in the valuation allowance for the offset of deferred tax assets by $4 million of DMV acquisition date tax liabilities.

Adjusted EBITDA or earnings before interest, taxes, depreciation and amortization from continuing operations with acquisition costs and net investment related gains and losses added back was a loss of $1.4 million in the first quarter, down from $400,000 in the prior year.

Total revenue in the first quarter of 2015 increased 1.6% over the prior year, driven by Marketing Services and Commercial Printing and Distribution. The company’s previously announced acquisition in January of three marketing services companies referred to as DMV added $1.9 million of incremental Marketing Services revenue.

In addition, commercial printing and distribution grew $1.4 million due to contract settlement in March of 2014. Advertising and Marketing Services revenue including print and digital revenues decreased 2.4%.

Marketing Services revenue more than doubled from the prior year quarter as a result of the acquisition of DMV and as a result of the growth of Speakeasy revenue of approximately 43%. Circulation revenue remained flat as compared to the prior year as increase rates offset lower volume for home delivery and single copy sales.

Printing, distribution and other revenue increased 33.8% in the first quarter, due primarily to the growth of commercial earning services, which commenced in March of 2014 for various regional and community papers. This category also includes expanded event marketing revenues related to event sponsored by Crowdsource and Untapped.

Total consolidated operating expense increased 3.7% in the first quarter to $70.5 million due to higher materials, production and distribution expenses related to additional commercial printing and distribution business, as well as to the operating expenses related to the acquired business.

Turning to the balance sheet, as of March 31st we had $81.4 million of cash and cash equivalent and no debt. I will now turn the call over to Jim Moroney..

Thank you, Katy, and good afternoon, everyone. Katy mentioned our strong cash position at the end of the first quarter with $81.4 million of cash. This balance remained after we provided a significant cash return to shareholders in the first quarter and made a substantial investment in diversifying our revenue base.

Our Marketing Services business which primarily consisted of Speakeasy and 508 Digital in 2014 more than doubled from the prior year first quarter with the January acquisition of three marketing services businesses Distribion, Vertical Nerve and Marketing FX or DMV.

Integration of DMV products into The Dallas Morning News sales portfolio is well underway. We are very pleased with the reception that our expanded product portfolio has received from our customer base and The Morning News sales staff is excited to have additional tools to help their advertisers reach target markets.

As we mentioned in the year end call, we are making strategic investments to increase the staff of DMV to target the growth opportunities available in the Dallas market. Grant Moise and Tim Storer who is the CEO of DMV are doing great work scaling the business to accommodate the opportunities generated through The Dallas Morning News sales staff.

The financial performance of DMV is very much in line with our expectations and we are very excited about its potential. Our Event business is growing significantly as well. In the first quarter we promoted the Savor Food Festival for the first time, more than doubling the number of attendees from the 2014 event.

Our Untapped Craft Beer Series opened its first new city in April attracting attendance of over 6,500 people and essentially selling out the Austin, Texas venue.

Another new market San Antonio is set to open in November and the three established markets Fort Worth, Houston, Dallas, will hold Untapped events in May, September and November, respectively. We continue to explore additional investment and acquisition opportunities in more channels of marketing in order to further diversify our sources of revenue.

Our primary focus is directed at advertising and marketing services companies that have established financial performance and strong management teams, and which display sophisticated uses of data to reach targeted audiences.

These types of companies will best leverage our core competencies, our existing customer relationships and our brand equity in order to diversify and grow revenue.

In addition, we have several new organic growth initiatives already underway this year that will expand and complement to advertising and marketing channels that we already own and operate.

We believe it will take both strategic acquisitions of more channels of marketing, as well as organically grown new products to stay ahead of the decline in print advertising. Laurie we are now ready for questions..

[Operator Instructions] I will go to Richard Diamond with Strait Lane Capital. We have your line open..

Yes. Good afternoon, everyone. Jim, your team have a lot of balls in the air transforming Belo into an omni-channel marketing company. I would like to talk about the balls size.

On the traditional newspaper side, can you talk about new FSI clients and the effectiveness of FSI? And the new initiative, can you talk about programmatic trading -- programmatic advertising and how you’re assessing their clients? Thank you very much..

Okay. Thank you, Richard. And you are right, we have a lot of balls in the air because this transformation is difficult and complex, but I think we’re doing a good job of it as our year-over-year total revenue indicates.

On the FSI side, we did see in the first quarter more weakness than we saw during 2014 on a year-over-year basis in the total amount of FSI dollars that we recognized.

Risk has come primarily from current customers, who have been taking their profile say down from what we refer to as total market coverage, TMC coverage to more targeted zipcode covered. So it's not necessarily less numbers of clients, but less distribution by certain clients.

Now offsetting that for the balance of this year is I think some of you are aware the Nebraska Furniture Mart is opening, has soft launched already a store here in the Greater Dallas area and it’s due to actually open up fairly soon. They have been keeping the actual start date quite under wraps.

But in visits to them in Nebraska, I have made in others their main backbone of their whole marketing is freestanding inserts. They believe that they have played a particularly important role in the success of the stores that they have already opened and they're going to continue to make investments in FSIs with the Dallas Morning News.

We have a contract already in place. It’s just waiting to be triggered once they have an official announcement date. So I actually think we'll see some improvement in the FSI numbers from what we saw in the first quarter as we get into the second half of the year.

I’ll ask Grant to talk for a minute more about programmatic, but let me say this we have been investing in programmatic -- creating a programmatic marketplace for the Dallas Morning News. Since we brought Joe Weir on over a year ago who is now our Chief Revenue Officer.

Joe was the head of the Belo Corp digital advertising across all 20 some odd numbers of their television stations and he had built out a very strong programmatic marketplace with the Belo Corp.

television stations and he came over last year in January and began to build out the same thing for us and we’re a very long ways towards having the technology all in place. We've also been adding a personnel in this area and Richard I know what's behind your question.

You can read the data and it will tell you that anywhere from 20% to 40 or 50% of all the display advertising is going to the programmatic marketplace across the country. And if you're not playing there, you're not playing in where the money is moving.

So we're making significant investments both in technology and in people so that we can ramp up our capabilities in play in this space. I don’t know Grant if you want to add something to that..

No, the only thing I would probably add Richard is that we are playing on both sides of the programmatic equation. We are not only providing inventory as a seller of digital inventory, but we are also a buyer.

We are representing some of our own advertisers in that marketplace as well to expand their reach into any niche audiences that we may not serve ourselves..

Richard, that get to all of your issues?.

Well, thank you very much..

Okay. Thank you, Richard..

A question from the line of Barry Lucas with Gabelli & Company. Please go ahead..

Great. Thanks. And just a couple of items.

Jim, one usual quarterly question on real estate update would be helpful?.

Yes. So I am going to ask Dan to respond..

Yes. Barry, we still have four properties up in Providence that we are marketing for sale. We expect to have a value range on those properties because I know that’s going to be your next question. And let’s call in a range between $10 million and $12 million right current market value.

And then we got four noncore properties in Downtown Dallas that we are not offering for sale as this market here continues to grow and expand, and we think there is a lot of legs for the market to go even further. We estimate the current market value of hat real estate is between $13 million and $14 million.

So you add those eight properties together $23 million to $26 million in value of our noncore assets, of which the four in Providence are for sale..

Thank you, Dan. I appreciate that. Jim, if we look at results for the quarter and technology and the fact that 1Q is generally a seasonally small one.

How do we look at the metrics or are there anything -- is there anything out that you can provide with regard to profitability either at the Morning News or the new businesses so we could sort of peel back the onion and get a look at what’s going on there?.

Let me do a couple things. I will ask Grant to chime for a minute on DMV. Barry what we see happening is the continued decline in the print, core print advertising categories and that as you know as well as anybody on this call has gone on unabated in the industry for at least eight years.

What we have been trying to do over the last five and six, seven years is how do we making the assumption that that’s just going to continue, don’t want it to continue, but we make the assumption from strategic planning purposes that it will how do we replace that revenue and how do we replace it profitably.

And so as you know, we've been taking up the price of the paper in order to continue to yield the same or greater revenue even on a smaller base of subscribers. We did a lot of organic growth in 2012 with 508 Digital and with Crowdsource and with Speakeasy.

And we have continued to go down the organic path trail but we’ve been working very hard on acquisitions.

And we’re going to continue it because we believe we have to continue to grow in both of these ways, both internally organically, if you will, and in acquisitions, if we’re going to get ahead and stay ahead of the decline in the corporate advertising.

Of course, the only silver lining in that decline, if you will, is that the base then becomes smaller every year. So the same percent decline is actually less impactful and takes less new revenue to offset it. That's hardly a lot of solace in that but it is just the fact.

I think that our first quarter results show that I if we can keep a reasonable pace of acquisition and new product organic growth, we have the opportunity to get ahead of or stay slightly ahead of this decline in print.

I would tell you that the first quarter and you have seen the results from some of the other publicly traded newspaper companies, the print side had a difficult first quarter. And you’ve seen our numbers and they were much like they were last year, maybe a little bit worse in terms of where they were down year-over-year first quarter of last year.

So the challenge then becomes the profitability part because that display advertising has a high margin in it. And when we lose it, it’s difficult to replace it with as higher margin of dollar and I think that's the challenge for us.

And I would say probably the challenge for most newspaper companies, which is how do we not just replace dollar for dollar the revenue that that comes out of the print category but how do we actually replace it with more dollars so that we can maintain an equilibrium of profitability.

We do not expand profitability in this quarter as you know from the results.

I think some of that though is related to some forward investments we're making with things like DMV in terms of adding the staff and so forth, so that we can recognize the opportunities that are there to take advantage of those in the Dallas and Fort Worth marketplace coming up.

I think the rest of the year is going to be challenging on the core print side. And our best opportunity to stay up with that is going to be to continue to leverage the things we have in place, DMV, Crowdsource, Speakeasy, 508, those things that have a better growth profile to them than the legacy parts.

Grant, you want to just talk about -- we talked about DMV last call and gave some ranges and just you want to repeat that and kind of give us an update..

Just to refresh the ranges that we’ve when we acquired for this year, we -- the plan that we have is of between $9 million and $11 million in revenue and between about $800,000 to $1.2 million in EBITDA. And as Jim had stated earlier, the business is very well on track. We’re very pleased with where it is.

But as Jim was saying to your question, Barry, on the profit, we are reinvesting very aggressively into this business this year and are very hopeful that that EBITDA improves in out years as a result of that short-term investments which some time you have to make ahead of the revenue. But again that business is right what we expected at this point..

Right. Thanks.

Last question for me, Jim is, as you look at what you have and what you don't have within the portfolio in terms of investments, where do you think you have to go for and what do you need? Is it people? Is it technology? Is it businesses within specific verticals, maybe you could just flush [Technical Difficulty]?.

Barry, what we’re trying to do is to continue to add to the portfolio of marketing services that we can offer to our customers that we presently have and by having other channels bring in some new customers that we don't do business with.

Again we found that our best opportunity is to take our existing customer base, that's already doing business with us in one or multiple channels and introduce to them either channels that they are already using with a different supplier.

But we can become for them more of a one-stop shopping opportunity or they can -- we can bring to them a business that their channel marketing are not presently using and show them how that would even bring more return on their marketing investment.

So that current base of customers, is if you will a little bit of the low-hanging fruit when we bring these new companies in. Of course, what we want to do also is expand the number of customers that we have. And if we bring in new channels of marketing that we don't already own, we have an opportunity to do that.

We also think that by having the Dallas Morning News standing behind these channels of marketing particular with our customers with whom we've already done business, we also provide them sort of more assurance that they're going to get the quality of service and the value from the marketing investment that they make.

And we've seen that prove out particularly as I said in the past around Speakeasy where more than half of their customers are former -- current customers of Dallas Morning News and we introduced them to Speakeasy. The areas that we continue to look at, more things around digital marketing services is high on our list.

We’ve been looking at -- we talked about in the past at direct marketing, direct mail marketing but only those that employee digital variable printing, which marries up digital printing technology with databases so that you can customize each piece of mail to the home.

We think that that's a strong complement to Distribion, whose basic business is that it can take 70 million customer records, cut them by 350 different kinds of demographic and psychographic attributes and send them e-mail marketing.

So if you take that e-mail marketing channel and you marry it up with a piece that complements it and reinforces it through direct mail again on a personalized basis, we think that would be a very powerful add-on to our Distribion acquisition. So I’d say those are the kinds of things that were looking at.

We still look at little bit at the Hispanic market. It’s harder, the TV stations, the networks of Telemundo and Univision are so strong, it’s just hard to get a foothold there. But it’s still some we are looking at because it’s as an important part of the growth of the Dallas and Dallas-Fort Worth market.

So, I’d say those are probably the primary targets right now and we are finding some opportunities. We just don't have anything yet that we could announce..

Great. Thanks so much, Jim..

You bet..

We have a question from the line of David Cohen with Minerva Advisors. Please go ahead..

Good afternoon, guys. Jim, I’m just sort of in the camp of -- this is a brave new world that you're entering in terms of the marketing services business and we are still little concerned about how easier your business that’s going to be to generate a lot of profit.

And so all I have really to look at is right now, particular with regards to the acquisition is the performance of the acquired company in these first, almost three months since you’ve closed the acquisition. And I mean you were given a $9 million to $11 million revenue range.

We essentially owned it for the whole quarter and generated, it sounds like $1.9 million, which only annualizes to about $7.6 million. And originally you guys have said, 0.8 to 1.3 of EBITDA, I think Grant Moise said 0.8 to 1.2. You didn't give us a contribution number, so I can't really judge that.

But it just feels to me like this is going to be slow in developing, something which you somewhat acknowledged.

But given that, I just feel a little concerned about your stated goal of going out and making more acquisitions before this strategy has really been proven? And I'd love it if you could take a minute to try and set our minds at ease as to why without any real proof-of-concept in terms of profitability you feel comfortable with spending more of this hard-earned cash that’s sitting on the balance sheet?.

So, David, I appreciate the question. Couple of things. The organic growth process of developing new products to me has much more volatility and uncertainty than acquiring a business that has already demonstrated track record of operating and operating success.

So we have been, I think successful so far with Speakeasy particularly, CrowdSource following right up behind it. We've had more struggles with 508. But in some way in the not to overdo this analogy but that’s a little bit of VC work.

I mean, nobody had ever created a content marketing agency to the best of my knowledge in United States when we started that business up and yet today it's profitable and it's got -- I don’t know what the current number is, 75 customers and it’s a growing business. Crowdsource, again we did not have an event marketing company.

It's growing well and profitably and I see nothing but more upside coming from that.

508, as I said is still contributing a lot of revenue, not nearly as much profitability as we would like but it's profitable when we consider all the companies that’s brought to our company to do business with both, using the 508 services and other services of The Dallas Morning News and our different marketing channels.

And I look at those and say, gee, that’s pretty tough work to start things up and to make them work. I don't think that it is as difficult but I'm not saying, I'm not minimizing the challenge that when we stick to our criteria. Number one, the business has to have an established track record of several years.

It has to already be profitable and the owner of that business has to be willing to continue to run that business for at least three years and to keep skin in the game from at least 20% to 30% and we accomplished all those things with DMV.

And so in essence, it's not just us running this business, it’s the person who founded in this case and has been running it, who is continuing to operate it. So, I don't feel like there is a great amount of downside in this because he was already showing year-over-year growth in revenue and profitability when we bought it.

The question is can we add our resources to it and leverage, or if you will, improve the trajectory of those sales and EBITDA? And I will grant you that that's the challenge for us to demonstrate to you, our investors and to our Board of Directors. And we think that this is still a winning strategy and we are going to continue to pursue it.

I would ask that you give us like anything a few quarters to demonstrate that we can do what we have told you that we're set out to do and that is not just to acquire the company and have it run at the rate it was running before but through our resources and support actually improve the trajectory of its revenue growth and expansion in EBITDA profitability.

So, I don't think, David, you are going to see us go on any sort of mad streak of announcing every six weeks a new acquisition. And you're not going to see us make a real big bet in terms of size of acquisition.

We are going to try to sequence this so that we can bring one in, learn what we can learn from integrating it and aligning our resources to it and apply that to the next one and hopefully the one after that.

So, Grant, do you want to add?.

Yeah. David, it is Grant and I will add is because your point based on what can you do to help set my mind at ease. It’s really a similar question that our Board asks us. And what I focused on in this primary or preliminary or kind of first phase of these acquisitions is to make sure that these are things where we -- there is a lot of things.

These things -- our sales force has already sold these types of services. We just may have been brokering them out to outside companies, historically. And so what we're doing in a lot of cases is we are not teaching our sales force how to sell new things.

We are actually upgrading what they're selling, but they are actually selling into our own companies now where we are building our own equity rather than building equity for other companies on the backs of our sales force.

So, we are staying focused on things that our sales force has shown us over the past year, two or three years that they've been able to sell them and that gives us a greater sense of confidence as well..

Okay. Well, fair enough. I won’t belabor the point except to say that we hope that the patience, which we've always exhibited as long as we’ve owned stock in the company, we hope you exhibit an equal amount of patience in terms of spending hard-earned and hard maintained cash as we go forward. So let me just ask one or two other questions.

First of all, I'm assuming that the growth in full-time employment from 1,100 at year end to 1,200 at the end of the first quarter obviously, it relates to the acquisition. But it also relates to some incremental strategic hires that you’ve made.

Is there anyway that you can sort of quantify the amount of incremental investment that went through the P&L on the first quarter?.

I think at this point, I can give you a rough headcount number. When you look at the DMV acquisition, we’re talking about sub-100 total employees even with their new investments. But we’re not at a point right now where we can breakout the incremental expenses associated with that.

There were some, as Grant mentioned their investments around headcount, to continue to drive topline revenue growth..

And, David, I just will also add. We like -- I’m sure a lot of newspaper companies, we are holding a lot of positions open as we went through what was a challenging September and even parts of the fourth quarter more than we have anticipated. And so the year end number sometimes is a bit artificially low. It's not that we hired new people.

It’s that we began during the quarter to fill positions that came open during the year that we left open as long as we possibly could in order to recognize some savings and yet evaluated then that this number -- some of these jobs that we held open are critical enough that we needed to go back and fill them.

So it's both a combination of employees from DMV that are indeed new. Some new employees with Crowdsource and Speakeasy that are growing and then it was some open headcount positions that got filled..

Okay. Thank you. And then the last question relates to the purchase price accounting for the acquisition, which seems to also relate to your rather favorable tax rate in the first quarter. This $4 million deferred tax asset reversal or realizations with regard to the DMV acquisition.

Should we view that as adjusting down the announced price of the original acquisition by $4 million? Or did the announced price of the original acquisition already reflect $4 million left from this tax benefit?.

This is Mike Lavey. The situation here was that as a result of the acquisition, we acquired $4 million in deferred tax liabilities of the DMV entities.

As a result of them -- of us holding over 80% of their stock, we will now be able to consolidate them into our income tax return and that has therefore recover shall we say, $4 million of deferred tax assets on the A. H. Belo side that had previously existed and allowed us to reduce our valuation allowance by that $4 million..

But to your question, the purchase price of the acquisition reflects the balance sheet at the time, which included the valuation allowance that was in place. Part of what the deferred tax liabilities that were already in place, so the purchase price already included that..

Okay. Great. Thank you..

David, I just want to add one more thing.

Generally, the question that you asked, I genuinely believe that newspaper companies are going to have to develop strategies that are not solely dependent on digital advertising and digital only subscriptions, which have tended to be the two -- go-two ways that newspaper companies are trying to improve their revenue and grow their profitability.

I think both of those are great opportunities that every newspaper company should be getting after all the digital advertising that they can.

And depending on how they feel about the growth of their audiences, deciding to put a paywall or a meter in place and charging some of the people that access their content that’s distributed digitally to asking them to pay for it.

We just don't believe that those two things even taken together and done well with companies like ours who scale is somewhat limited in digital audience by the fact that we are a local news and information provider.

We are not a global or even national company like The New York Times, The Wall Street Journal, even The Washington Post, certainly, not like Box or BuzzFeed. We’re trying to appeal and our only point of differentiation is information and news about the Dallas/Fort Worth, North Texas and to a degree, State of Texas.

And we're just never going to scale our audience, so that the low CPMs from digital advertising can return the kind of revenue that we were traditionally associating with newspaper advertising. So whether or not, I believe we will demonstrate to you and others that this is a strategy that will work for newspaper companies.

I believe that newspaper companies need to come up with something other than what has tended to be the two go to areas, digital advertising and digital-only subscriptions or they’re not going to outrun their print declines and that’s going to cause them to continue to cut into the franchise.

And at some point, as we all know, cutting is not a strategy and it certainly at some point can reach a tipping point. And we're trying our very best not to face either one of those situations..

Got it. Thank you. We certainly appreciate the effort. And we’ll stay tuned..

Thank you..

Thanks..

Our next question from the line of Bradley Tesoriero with CRT Capital. Please go ahead..

Hi, guys. Thanks for taking our question. We had a one big picture question on A. H. Belo going forward on the newspaper side. Specifically, during a time when many competitors are talking about increasing newspaper M&A, you guys kind of went the other way, with the sale of your Rhode Island assets and your California Paper.

As we look towards the future, is the plan pretty much to operate more or less is sort of the single asset entity here in Dallas and grow to the build out of Marketing Services like you elaborated on earlier.

Were you guys also be partaking in select newspaper M&A, perhaps closer to home, where there might be more synergy opportunities?.

Bradley, we're more the former than the latter.

One of the biggest opportunities we might have had to do some kind of newspaper acquisition or something that would improve EBITDA for us would have been to do something with Fort Worth Star-Telegram and when we took on their printing that would have been big part of the value of even acquiring them let’s say.

Because the big value in acquiring newspapers first comes from being able to consolidate your printing operations so you need geographic proximity and unfortunately the State of Texas doesn't provide you much geographic proximity to get a live addition paper off the presses and drive it as far you have to go to find the next big market like Oklahoma City, Little Rock, Waco, Austin, they are just too far away for us to print them and get their papers to them with any kind of deadline information in it and still deliver to people by 6 ‘o clock.

If you are in the Northeast and you have lots of cities with very close proximity to one another then you have a lot more opportunity consolidate not only your printing, but your next big opportunity which is distribution.

So we don’t see that opportunity so much for a city located like Dallas/Fort Worth and looking towards other cities with enough critical mass to make it work, bring in those printing jobs. So instead as you know we print The New York Times here the Wall Street Journal here, USA Today and so forth.

But we don’t see that opportunity for cost takeout by acquiring other geographically at least somewhat proximate newspapers.

The other thing you can do, of course, is you can try to consolidate a lot of your backend into a single office like [indiscernible] does here in fact in the Louisville area and that's something that while we gave that up not having the two coastal properties, we’ve at -- we are not -- that's not enough of cost savings to Warren trying to go out and acquire a bunch of more newspapers particularly when so far none of us, I guess, have said, declared we have found the model -- the business model or business models that we have demonstrated will make these franchises sustainably profitable for the long-term.

And so I don't think that unless we have that formula that doesn't seem very small on our part to go out and buy more newspapers when we are still making great progress, I would like to say, but I would not sit here and tell you that we aren’t declaring victory with one quarter of total revenue growth.

So we’ve instead decided to focus on exactly what you said, we are going to focus on this great market called Dallas/Fort Worth one of the very best markets economically in the entire United States.

And we think there's a lot of opportunities to grow marketing services businesses built around our core franchise The Dallas Morning News and that's our best opportunity to deploy capital in order to a return to our shareholders..

Thanks very much..

Welcome..

And our next question is from the line of Chris Mooney with Esposito. Please go ahead..

Good afternoon, gentlemen and ladies..

One lady, I guess..

Yeah. Welcome onboard by the way..

Thank you very much..

Chris Mooney:.

.:.

You too..

Kind of qualified this sort of follow-up questions to Barry’s really, but there is March 8th article in the Boston Herald interviewing a providence, I guess, base developer, he said he had to deal to buy your buildings is -- are you still negotiating with him or is that transactional….

We are still negotiation with perspective buyers..

Yeah. We’ll get out and hear himself..

Okay. Apparently since he said it was head till the end of March to be closed.

On the print advertising, can you just give us a little more color, is it national advertising, local, what, because it clearly is slipping off that at pretty good clip and...?.

Yes. The general advertising or national advertising is still the category that continues to be under the most pressure. I think it’s the first category that was hit the hardest when the rotation out of print newspaper advertising began to happen towards digital display advertising.

And I think that it’s the first category of business that's going heavily to the programmatic side where we are seeing much more of that from national advertising than we do with local and regional. And I think that’s adding to the problems.

We still have the retail category is also again continued to be under pressure from a decline in the investments they are making in print advertising. We talked about the FSIs. So Chris I wish I could tell you it's all just one area, but I think unfortunately this just continues a rate of decline that we’ve seen for several years now.

And I wish we had the ability to turn it around singularly in the Dallas/Fort Worth market. But particularly on the national side or in our retail category which some of the -- that money is big box national retailers, we just separated out of the general category.

Those decisions are being made at a corporate level in terms of how they're going to invest their marketing dollars and there just isn't much opportunity to change that here in the local marketplace.

Again, I wish it were different, but -- and we are by the way working hard in every way we can to see if we can find more ways to bring dollars from those national retailers or national advertisers, but we spend more of our time focused on the local and regional companies, whose decision makers are here in Dallas and focused on the Dallas/Fort Worth market because that's where they do their primary business..

Okay.

From your early comments, it sounded like just Speakeasy had a very successful quarter, can you give us some color on that?.

Yes. We did have a -- we had our best quarter by far. We had -- I don’t know if we have the percent revenue growth Grant...

43%..

43%..

So 43% and really what we did Chris is we really focused on our advertise -- our customer base and we are a very much of a service hourly based kind of company in terms of how the companies run everything’s built by the hour and we wanted -- we went and looked at some customers that frankly were consuming more resources than they were returning to us.

And we called out some of those which I think is a natural enough start-up kind of business, you take on a lot of things that just to help start building a base in getting experience. And then you get down the road and say this just isn’t really very profitable business. So while we grew the revenues, we even did a better job in expanding our margin.

And I think that also has to do with the fact that our lead people in the business now are more seasoned than they were when we opened the doors in September of 2012. So I think we are just learning how to run and all hopes that that will continue to be the case throughout 2015..

And so that would fit into sort of my next question, which is your expectations that you would have a not material, is that correct?.

Yes. We have a few new products. I’ll let Grant talk about them that we've already launched in Q1 or maybe right up on the launchpad you want to just go over couple of those, Grant..

Sure. Yes. The organic growth strategy just to list a few of what we are continuing to build here is, for example we launched Chris what we’re calling a premium magazine strategy.

Jim had mentioned, our Crowdsource business which is event marketing, what we've done is a premium magazine that we launched in the first quarter called [Pallet] [ph], which was a magazine that we had both subscription revenue and advertising revenue tied to it, which complemented the saver event, which is the food and wine festival that Crowdsource put on in the first quarter.

We’re going to launch three more of those magazines this year. As you know and probably tracked with us, we have had magazines in the past which have been exclusively advertising base from a revenue strategy. And now we’re adding a subscription based revenue into that. That's something we've been very aggressive with.

We also have relaunched our GuideLive and Arts & Entertainment platform which is actually our first public facing.

You'll probably, if you gone to the GuideLive.com, it's all of the go, see, do and all of those things in Dallas/Forth Worth where as we know that such a large part of our audience wants to help need help planning their weekends, help planning their activities for both family and for young people.

And that is having a very nice traction in the market and also nice revenue traction along with it. So, those are just a couple examples of what we're continuing to innovate and organically build and grow into the future..

And Chris, I would add to that. It came up earlier but a big organic investment that we’re making is this whole programmatic platform. It's not -- it's not something we started in this first quarter but we’re continuing to build it out.

So that it has the same capabilities than any other programmatic platform and marketplace that any advertiser or media buyer is using with any other company across United States. And nice -- we can play in that technology space. It’s not all that -- takes all that much investment.

So that's another thing that we're also doing when we consider a new product growth. And I guess I should mention, I don’t know if we talked about it before but we have the FD luxury magazine brand. We extended that to the FD Love which is the bridal magazine that comes out twice a year..

Yeah..

And then we launched our first home centered edition of FD call, FD House. It launched in March to April and will have three more of those editions this year, all four of those, they are being brand new to this year. And that's again -- sort of organic growth.

Even we can do it whether it is new product or extending the line of our current product or taking the current product and improving it in some way so that it brings in new incremental revenue..

Yes. As I mentioned to you Jim, the palette was, I thought a tremendous publication than it looked….

Thank you..

…through the next editions that are coming in. And I certainly have notice the FD publications as well. All of this lead us kind of to where my final interest is in. It sounds to me like you're going to have a fair amount of spending for organic projects in this years.

And it's beginning to sound like 2015 is more or less a transition year? Are you yet prepared to talk about sort of budgeting it how many dollars you expect to spend on that type of thing over the course of the year?.

8 to 10..

Yeah. I don’t think that’s a great seeker. I think we’re putting up by this year probably about $2.2 million, $2.3 million of investment across a whole range of organic products. Some of which, like palette and frankly, also FD House are typically self liquidating.

Even in their first edition, they drive enough revenue to cover their costs and not provide some margin, whereas the investment in programmatic or the investment in the relaunching of the guidelive.com platform, R&D investments, if you will, through the P&L ahead of the revenue that would cover them.

So that’s kind of the magnitude of what we're doing..

And related to that, I had my notes, number of additional sales people both with the Dallas Morning News and related to DMV that were being hired. Have you been able to -- are you….

Well, on the Dallas Morning News side, we ended the year with quite a few open positions, which wasn't necessarily trying to leave those open from an expense standpoint. It was just the difficulty in trying to bring on salespeople after we had lost salespeople or actually manage somehow during the fourth quarter. It is very difficult to do that.

But we are now backup at full staff for the core Dallas Morning News staff.

And then Grant?.

Yeah. Chris on DMV, as we’ve said, I believe in the first quarter, we started, there were only three salespeople at DMV when we started. We will be at 14 by the end of the year and we currently are at seven. So we’re kind of right on track with what we thought we would be on that having process of sales staff..

Okay. Great. Thank you, gentlemen..

Thanks, Chris..

I’ll turn it back to our presenters for closing remarks..

Well, thank all of you all. We appreciate your time and your interest, great questions and I think anything that we possibly wanted to say to you, you ask us so that we could tell. Productive call for us, so I hope it was for you all, and thank you very much..

Thank you. Ladies and gentlemen, this conference call will be made available for replay that begins today at 3 p.m. Central. Their replay runs through May 5th at midnight central. You can access the AT&T teleconference replay system by dialing 1-800-475-6701, please enter the replay access code 357654.

International participants may dial 320-365-3844 and again the replay access code 357654. Well, that concludes our teleconference for today. Thank you for your participation and for using AT&T’s Executive Teleconference Service. You may now disconnect..