Carolyn Pione Micheli - Vice President of Corporate Communications and Investor Relations Timothy M. Wesolowski - Chief Financial Officer, Senior Vice President and Treasurer Richard A. Boehne - Chairman, Chief Executive Officer, President and Member of Executive Committee Brian G. Lawlor - Senior Vice President of Television Timothy E.

Stautberg - Senior Vice President of Newspapers.

Michael A. Kupinski - Noble Financial Group, Inc., Research Division Craig A. Huber - Huber Research Partners, LLC Barry L. Lucas - G. Research, Inc..

Ladies and gentlemen, thank you for standing by, and welcome to the Scripps Third Quarter Earnings Conference Call. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Carolyn Micheli. Please go ahead..

Thank you, Cynthia. Good morning, everyone, and thank you for joining us for a recap of The E. W. Scripps Company's third quarter results.

We're going to start this morning with Scripps' CFO and Treasurer, Tim Wesolowski, who will recap our third quarter performance; and then CEO, Rich Boehne, will update you on our pending transaction with Journal Communications and what's ahead for 2015; then we'll open up the lines for your questions.

Also in the room are Tim Stautberg, who heads our newspaper division; Brian Lawlor, who runs our TV operations; and Adam Symson, our Chief Digital Officer; as well as Doug Lyons, our Corporate Controller. A reminder that this conference call and webcast includes forward-looking statements and actual results may differ.

Factors that may cause them to differ are outlined in our SEC filings. You can visit scripps.com for more information, such as today's release and financial tables. You also can sign up to receive e-mails anytime we disclose financial information, and you can listen to an audio replay of this call.

The link to that replay will be up there this afternoon and will be available for a week. Now here is Tim Wesolowski..

Good morning, and thanks for joining us. Of course, the big story this week across the country has been the elections. As you know, broadcasters were in a boatload of political advertising, with each leading up to an election. And now that we're past Tuesday night, we know that the 2014 mid-term election generated $58 million for Scripps.

As we often tell you, political spending is about the footprint and the competitiveness of each individual race. In this political season, races in Arizona, Michigan, Florida and Colorado remain competitive for us until the end, while other races that we thought would be competitive never materialized.

The best example of that was a lack of a competitive gubernatorial race in Ohio. We believe the significant early lead established by the incumbent cost our stations in Cleveland and Cincinnati more than $10 million. With the mid-term election behind us, we are already thinking about the 2016 political opportunity.

We'll have 14 Senate races in our markets in 2016, and we expect as many as half to be competitive. As we saw in 2012, we expect the swing states of Florida, Ohio, Colorado and Michigan to play a significant role in determining our next President. On top of that, Journal gets us into Wisconsin and Nevada as well as some Iowa counties in the Omaha DMA.

We look forward to beginning to see early spending on our stations in 2015. We like our footprint in any political year, and we love it during presidential elections. In the third quarter, political spending was $17.4 million. In addition, we saw nearly 50% increase in our retransmission revenue.

Those 2 factors were the big contributors to the 22% increase in our television revenue for the quarter. The 2 stations we acquired in June from Granite also contributed. On a same-station basis, TV revenue increased 16%. I'll get back to the television results in a moment, and Brian will be available to answer questions following our prepared remarks.

But first, let's review the third quarter consolidated results. Total revenues increased 9.5% to $208 million. Our cost and expenses for segments, shared services and corporate were up 3.5% to $188 million, primarily due to expenses from the 2 Granite stations and a couple of million dollars of incremental expenses to grow our digital operations.

We recorded pretax income of $400,000 in the quarter. That compares to a loss of nearly $12 million in the 2013 quarter. The third quarter 2014 pretax income includes $5 million of acquisition and related integration charges and a $3 million gain from selling real estate in the newspaper division.

Our net loss was $1.3 million or $0.02 per share compared to a net loss of nearly $9 million or $0.16 per share last year. The acquisition and integration costs and the gain on sale of land combined to reduce earnings per share by approximately $0.02 in the current period.

Our tax rate for the quarter is a bit odd, tax expense of $1.8 million on $400,000 of pretax income. That's due to several things, mostly the small amount of pretax income relative to normal book tax differences. And now turning to the broadcast division. Total revenues increased 22% to $121 million.

As we said earlier, much of that growth was driven by political and increases in retransmission fees. Retransmission revenue rose almost 50% to more than $15 million. Our fourth quarter retrans should look a lot like the third, bringing us to about $55 million for the year. Then we see 2015 going gang busters, as several key contracts renew.

We expect our retransmission revenue to be about $100 million in 2015. That's not including the contribution from Journal Communications or the impact of about $2 million of our cable subscribers going to market rates with Charter some time after the Comcast, Time Warner deal closes next year.

Local advertising was up nearly 2%, and national advertising was down 2.8%. In the second quarter, you remember, we saw a 12.5% decline in National. On that call, we said we expected improvement in the third quarter but that we did not expect National to get back to flat versus the prior year.

The network and national cable marketplace remains soft, limiting the opportunity for scatter to push to our heavy top 25 footprint. But the third quarter did improve, as expected, down 2.8% overall and 9% on a same-station basis.

On the digital revenue front, our dedicated digital sales force once again drove the increase in digital revenue in the TV division, which was about 8.5% to $4.6 million. Segment expenses were up 14% from the prior year quarter or less than 7% on a same-station basis.

The increase was driven by salary increases, severance costs related to the consolidation of our master control operations and increases in digital costs. Network fees tied to the increase in retransmission revenue accounted for $2.3 million of the increase and a decline in syndicated programming fees helped to offset this increase.

TV segment profit was about $30 million in the quarter compared with $19 million in the third quarter last year. Turning now to the newspaper division. Total revenue was $84 million, down 4.4%. The 7% decline in advertising and marketing services revenue was partially offset by an increase in subscription revenue.

The 7% decline was larger than what we had seen in Q1 and Q2, and we expect Q4 to improve a bit. Subscription revenue rose 2% to $29 million. This is the fifth consecutive quarter of growth for that line, but the rate of growth has moderated as we hit the second year of our subscription bundle.

We completed the launch of the bundle in the third quarter last year, and therefore, have seen the growth in subscription revenue level off. Single copy price increases also contributed to that growth. Advertising and marketing services revenue was $51 million. Classifieds were down 6.8%.

Local advertising was down 5.6%, and preprint and related products were down 7%. Digital was down nearly 4% to $6.1 million. The decline in digital continues to be tied to the loss of impressions due to the metered access to our content. These comparisons are leveling off, and this strategy continues to pay off in the subscription revenue line.

Expenses for the newspaper group were $84 million, down nearly 2% from the same quarter last year. Employment costs decreased nearly 4%, and newsprint costs decreased nearly 5%. We had about 6% fewer newspaper employees in 2014 compared to last year. Segment profit for the third quarter was $800,000 compared to $3 million last year.

Despite the well-known challenges in demand for print advertising, our newspaper division leaders have managed to hold year-to-date segment profit about flat with last year due to good expense discipline. I'd like to look now at our cash position and share repurchase program, and then I'll update you on our fourth quarter guidance.

As of September 30, our cash balance was $124 million, and we had $199 million of debt. That leaves us with net debt of only $75 million. Since political advertising is paid in advance, nearly all of the $33 million we recorded in October and November had added to our cash balance since the quarter end.

We have repurchased more than 6 million shares for about $95 million in 2013 and 2014. About $105 million remains under our stock repurchase authorizations. However, under our deal with Journal, we can't repurchase any shares until the transaction closes. Now I want to take a minute to update you on our fourth quarter guidance.

For the fourth quarter 2014, we expect TV revenues to increase on a percentage basis in the upper 20s. That includes $33 million in political ad revenue and $15 million of retransmission revenue.

We expect TV expenses to increase low teens because of hiring for The Now and The List and increase in network fees tied to higher retransmission revenue, and continuing expenses for Granite. We expect newspaper revenues to be down mid-single digits and expenses to be down low single digits.

We expect fourth quarter shared services and corporate expenses to be less than $15 million. Now I'll hand it over to Rich..

Thanks, Tim. Thanks, everybody else, for joining us. Let me give you a couple other quick updates then we'll take your questions. The political years may be winding down, but the pace of activity at Scripps is picking up.

We're looking ahead to a very busy winter as we work to close our merger and spinoff transaction with Journal Communications and then move forward as the nation's fifth largest independent local TV company. The 2 organizations are working side-by-side to close this transaction as quickly as possible.

As you know by now and as you'll -- will be very clear when you see the S-4 filing, this is not your run-of-the-mill media deal. The integration of Journal's broadcast operations transforms Scripps into a larger and very different company. We'll have almost twice as many big 4 affiliated TV stations, and we'll then reach more than 18% of all U.S.

TV households. We'll also add 34 radio stations. And we'll have a bigger footprint for our market-leading digital products and services as well as our original TV programming. In addition, by combining our respective newspaper businesses, we and Journal will create a new publicly traded company headquartered in Milwaukee, the new Journal Media company.

And Tim Stautberg is here, and can answer any questions if you have them. We'll operate in 14 markets and combine one of the strongest newspapers in America, the Milwaukee Journal Sentinel with the strong heritage of the Scripps papers, including the Memphis Commercial Appeal, the Knoxville News Sentinel and our great brands in Florida.

Right now, we're waiting for the FCC's okay, and we don't anticipate any problems. It's a straightforward transaction with few issues, nothing material to the scope of the deal. We expect to file with the Securities and Exchange Commission later this month.

Once we've received clearance from the SEC, we'll take the transaction to the shareholders for their approval and then move to close the deal, we really do believe in the first half of next year, meaning in the first half of 2015.

Just a reminder, all the details on the transaction could be found on our investor presentation posted at scripps.com under Investor Information. One of the themes you'll find in that presentation is our eagerness to extend our original programming and digital strategies to the markets we'll acquire from Journal Communications.

Our 4 original shows, Let's Ask America, The List, RightThisMinute and, most recently, The Now, help expand our margins by reducing our programming costs. Some of these shows already run in a couple of the Journal markets,, and we plan to roll them out in more Journal markets as the time slots become available.

We also plan to introduce Journal markets -- to the Journal markets, our digital consumer products and advertising services. We'll not only capture more digital dollars for our brand, such as Newsy and, more recently, WeatherSphere.

We'll benefit from a larger national footprint and the introduction to great Journal markets like Nashville, Milwaukee, Las Vegas and so on. If you follow the local broadcast TV business, any local TV, you know that weather is a key driver, not just for brand loyalty, but for audience and audience growth.

The acquisition of WeatherSphere is all about Scripps growing that equity in our markets and across the country. WeatherSphere, as you probably saw in the release, is already a national force to be reckoned with in the mobile weather space with more than 3 million downloads paid apps already.

Now we put together a road map to accelerate and involve that business to consumer product strategy and bring some of their top-tier digital technology and navigation to our local weather audiences. It's really terrific, and I hope you'll go and download it.

In terms of Newsy, it's all about courting the growing audience of mobile video and news consumers. In third quarter, we rolled out Newsy video players on all of our TV station, newspaper websites to promote the brand. That also means consumers from coast-to-coast can now go to their local news source to find Newsy's global coverage as well.

As we look ahead to becoming one company, the contribution of these small, but promising digital revenue streams with our original programming, combined with the Journal station's contributions to our political and retransmission revenue, promises to translate into some terrific cash flow.

The bottom line is the new Scripps will be a financially flexible company with a strong balance sheet and attractive geographic footprint for local television and radio and a portfolio of great digital brands and the ability to grow organically as well as through strategic acquisitions. Thank you for listening to our prepared remarks.

And operator, we're now ready to take questions..

[Operator Instructions] And we will go to the line of Michael Kupinski with Noble Financial..

Regarding the current advertising environment, can you give us a little flavor on the fourth quarter about what we're seeing in terms of -- particularly, in National, I suppose? It seems like auto is very weak and is that a function of auto advertisers moving to network scatter? Or do you think that there are other forces at work here?.

Mike, it's Brian. Obviously, much of third quarter in October really was heavily influenced by displacements, $17 million of political in third quarter, now $32 million in the first 5 weeks of fourth quarter. Really, it's kind of thrown many of our core advertisers out-of-whack.

But I got to say I'm really optimistic about what I'm seeing in November, a very strong rebound. I think National, on a percentage basis, will have one of its best months of the year. We're seeing that pacing on the books now and feel good about that. In terms of categories, auto has bounced back. It's positive in November.

Services, positive in November; food services. So those are 3 of our top 5 categories, and all are pacing positive to prior year with money already booked and probably more to come. So I think as the -- we shake off the hangover from the political, we feel pretty good that November is emerging and bouncing right back..

And Brian, some -- can you just talk maybe a little bit about some of the weaker categories? Are you seeing that type of bounce back as well? Like I think if you look in the last quarter, many reported the financial services were a little light, maybe telco as well.

Are you seeing there improving trends outside of the political, as you head into November and especially December?.

Yes, most of our categories kind of frankly are up. Like you mentioned, telco. It's -- we're up double digits for November in telco. I think the one that's still slow to kick it back in is retail, and that could be a factor of what you described a little bit of a soft national marketplace.

So they're still able to be doing more retail deals and it hasn't yet pushed to our top 25 footprint. But beyond that, really, most of the other categories have pushed back -- have bounced back pretty good..

Good.

In terms of -- can you give us any updates on the negotiations with your ABC network reverse comp? Are you negotiating on a percentage basis or on a per subscriber fee basis? Any updates that you can provide for us there?.

Look, we're right in the middle of it. It's real-time, as you and I are talking here. And so I really am not in a position to disclose much of the specifics. Conversations are going well. And we continue to work toward getting a long-term deal with ABC. So once we get that deal done, we'll have more to talk about..

[Operator Instructions] And we'll go to the line of Craig Huber with Huber Research Partners..

Brian, if you could just follow on a little bit more commentary about auto for TV.

I mean I know it's tough to say with the political you had in this last quarter, but how did auto do on a percentage basis year-over-year or even versus 2 years ago? And again, can you just quantify how the TV paces are looking here for auto for post-election? Are they up 5%, 10%? What's the sort of range they're up, please? And I'll follow on..

Yes, no problem, Craig. Yes, we're pacing. I'll tell you for November, it's better than 5%. So it's pretty healthy growth off of -- if you remember last fourth quarter, we're plus 8 to plus 10, so building off of a pretty good base. So we feel good about that. Third quarter was not a great automotive. And I think a lot of it was displacement.

I think some of it was a little bit of the open national marketplace. We did have some cancellation of auto money that we saw moved to the network. But it wasn't everywhere. We had a couple of markets, about a third of our markets were up year-to-year in automotive in third quarter. We just also had a couple of markets that were down.

And 1 or 2 of our bigger markets took a little bit of a beating in automotive. But as I said, it's bouncing back pretty good for November, and there's still a lot of business to write for December. But we hope November's strength provides optimism for December as well..

Brian, can you just give me some commentary about any potential movement you're seeing from TV ad budgets to digital and mobile? are you seeing any accelerated pace there at all?.

I wouldn't see any accelerated pace. I mean, we have those conversations on a regular basis with our advertisers. Look, when we sit down with our advertisers, we're encouraging and working with them to move some of their money to digital and mobile. It's a space that we're competitive in.

We're spending a lot of money as a company to be able to build those platforms. And so I think that political -- I'll give you an example in political. I mean, a little bit of money went to digital, not a meaningful change. I mean, when you consider the $52 million we wrote, it was a couple of hundred thousand dollars I think on the Digital side.

So I think, we're all trying to find that proper media mix for our clients. But in talking with the networks and what they saw in their up-fronts, it sounds like nominal low single to almost flat percent growth that they felt money moved away to go to digital.

And look, it really varies on an advertiser-by-advertiser basis, but we're not seeing any significant shifts of any key category, Craig..

Can you just talk a little bit further -- Brian, I'm sorry, keep going back to this. But in the quarter, the outlook was 5 weeks into the quarter for advertising for TV.

And then what actually transpired? I mean, what actually changed with remaining weeks of the quarter, we think back 3 months ago, please?.

Yes, look, I think the political displacement was significant. I also saw -- in some of our key states in Michigan and in Florida and Arizona, we saw, as we tightened with the political, that a couple of advertisers that we thought were going to be there decided to sit on the sidelines.

And then we did -- as I mentioned, we had a fair amount of cancellations with people who couldn't get a full market clearance they were hoping for because of political, decided to move their money into other places. So I do look at third quarter as really having been disrupted mostly by the political and displacement process..

Okay. Tim, I got a question for you, if I could, please. Your shared services in corporate line is tracking towards roughly $54 million this year. If I look at my model, back in 2010, 2011, I believe it was $31 million to $34 million, so up $20 million to $23 million, call it. And then I look at the digital performance.

I know a lot of that spending was on the digital fund. And look what happened to digital here, it was up, a collective base, between your 2 segments up about $100,000, although it was up 8.5% in TV for digital.

I know it's tough on the public call like this with employees listening on it, but it just seems to me just like a [indiscernible] opinion out there, are you guys feel like you're getting proper return on that kind of money $20 million to $23 million? A lot of it was on digital here, yet the performance here was up 1% when we combine the 2 digital pieces here with your company?.

one is local organic brand. So, if you would take a look on our local markets at the digital products that we have compared to our competitors, I think you'll see quite a difference and that's a big and very good investment, and that's driving decent organic revenue growth on the Digital side.

The 2 other buckets are, one is brand new models, and the best example there is if you go to Cincinnati and look at WCPO Insider, which is a subscription service, where the branding and marketing has just started to roll out aggressively, I think you could see pretty quick the business that we're trying to build.

And then also we have a little bit of money into the National brands like, Newsy and WeatherSphere and a few others.

But, I mean, I think, all you have to do is look around you and see where the opportunity is on the Digital audience size and feel like that we're not just smart but prudent to make these investments, and we think it will be a very good return. I wouldn't expect this to pull back..

Our next question will come from the line of Barry Lucas with Gabelli & Company..

I have several. So just staying with Craig's question on digital. Maybe Tim could flesh out the -- a little bit more color on that decline in newspaper, digital and the loss of impressions.

Where are those impressions coming from or where did you lose them from? And how do you reverse that?.

When we put up the meter to accessing our content and limiting it to subscribers for a lot of those stories and articles, we saw about a 25%, 30% decline in traffic and impressions. And so frankly, that was modeled when we went into this.

And we more than made up for that on the subscription side, in terms of our ability to get more value from the consumer-facing side of the business. So it was a trade-off. That's leveling out now, as we're heading into the fourth quarter as we've cycled through that. So a big chunk of the -- and our decline was about 4% overall.

So that was largely the decline in impressions, and I would hope that, that would turn the other way now. When we're out talking to advertisers in local markets, every deal that we're discussing with them includes digital. And so we are a strong partner locally with our offering of products.

But many of those products also include more than just our newspaper dot com platform. It also includes selling into networks and giving our local customers exposure on other platforms but to reach their audiences that live locally. So there's a mix of business there.

We record our revenue from those deals on a net basis, so there's a shift along the way there. There's a lot going on, but I expect that to settle down now that we've anniversary-ed the rollout of the meter..

Tim, as long as I've got you, Scripps, Tribune, Belo, McClatchy all reported deteriorating ad numbers in print in the third quarter.

How much of that was sort of just the weaker -- weakish kind of environment? And -- or how much of it might you attribute to accelerated deterioration in the print product overall?.

Yes, it was tough to pinpoint it, Barry. And in fact, it would be easier if you could say it was this category or that category. For us, as we looked across our footprint, it really was very idiosyncratic in terms of where the weakness was. So that's a bit tough. Although on the other hand, that also can turn pretty quickly.

And the third quarter is also a seasonally low quarter in terms of revenue and activity, the months of July through September.

So while it was disappointing, in my view, we're about to head into months where, in the Florida markets, we see a lot of returning snowbirds and expect that, that activity is going to pick up and will be a meaningful contributor to the overall Scripps newspaper business.

But for the other folks, I think the larger retailers making decisions in New York and Chicago outside of our local market certainly has an influence..

Real quickies, if I can, for Brian.

Judging by the guidance that Tim threw out, if I back out retrans, political and try to strip out Granite, the numbers seem to indicate we're kind of pacing plus 0% to 2% in core TV for 4Q, is that sound about right?.

Yes, that's probably right, Barry..

And then finally, the other aspect of the elections with the Senate going to Republican hands, how do you feel about the way they may or may not influence actions by the FCC and Tom Wheeler? Can they effectively temper some of the votes that he's trying to make?.

Yes, I guess, that remains to be seen. The FCC obviously has been very active in legislating or regulating our industry, in specifically local broadcasters over the last year. We haven't always agreed with some of the decisions he'd made.

And so we're hopeful that any sort of influence would certainly be welcomed to recognize the value of local broadcasters..

[Operator Instructions] And we'll go back to Michael Kupinski with Noble Financial..

Just a couple of quick questions. I know that the FCC has been making calls to broadcasters now, and I was wondering if you guys have changed your stands on your participation in spectrum options. And I know that, that's, I guess, officially pushed back to 2016 now.

Any thoughts on that?.

Mike, it's Brian. No, I don't think our opinion has changed at all. We're in this for the long haul. We've been -- we bought -- acquired some of the early licenses when they were first given out in Washington and signed on some of the first television stations in America.

And we would expect that we'll be broadcasting in most of our communities for the next 50-plus years. And so I don't think our mindset's changed at all..

Company is in a very strong financial position as well.

And I was wondering if you could just talk a little bit about the M&A environment? I would imagine that you guys are looking at more digital opportunities than broadcast opportunities at this point, given that many of the broadcasters are likely to be sitting on the sidelines, waiting for the spectrum options and that sort of thing.

Can you just kind of give us the lay of the land in terms of the M&A opportunities, where you think that you might find the best opportunities? And whether or not you could actually consider or would consider making acquisitions in the midst of this merger with Journal?.

Mike, it's Rich. In the midst of the merger, it does make it -- it would make it more difficult. That's not to say if you found just streaming opportunity, you would let it go by. We could figure out how to get that done. I think our focus hasn't changed a lot.

We're still very interested in market opportunities to consolidate share and build additional voice in revenue and cash flow in markets that we like and do business. So we'll just have to see. I wouldn't say we're completely on the sidelines, but we are somewhat quiet during the acquisition period.

We'll look at all kinds of digital opportunities that fit within our strategy. As you know and everybody knows that valuations on digital businesses are very high,, and it's a difficult place to put money to work.

That's one of the reasons that Craig just asked about the -- around $20 million that we have invested through the P&L, which it's about that's redeploying about 2% of revenue back into growing businesses that we think we have a great return.

That we think is a very good place to continue to put money to work, where we can control it as it goes in and where it goes as opposed to doing very expensive acquisitions.

But that's not to say if we don't see other good little opportunities like WeatherSphere in a business and in a marketplace that we know extremely well, where we already have huge audiences and make a lot of money, we won't pull the trigger.

So I guess that the bottom line is yes, we're still a TV acquirer, but obviously, little slow during the merger. And we'll look for digital opportunities, where we think they make sense for our shareholders and fit well with our strategy.

And we'll probably continue to, as I said, take a little bit of revenue and reinvest it in what we think are very good long-term internal build opportunities..

We'll go to a follow-up from Craig Huber with Huber Research Partners..

I do have a couple of questions remaining.

Unless I missed it, what was the Granite TV revenue in the quarter so we could help us think about the model, please?.

It's a little north of $5 million..

Okay. Appreciate that. And then my other question just has to do with on the -- Tim, on the newspaper side. And I think one of you guys said that newspaper employees were down 6% year-over-year. Obviously, the trend has been here that costs are down, but not down as much as revenue.

It's down and something that which is clearly not sustainable, particularly when we get back into recession, which is going to happen at some point here. Sure, I realize you guys are investing pretty heavily in the business, digital included here, [indiscernible] much of that cost is in a separate line item.

My question is do you guys feel that you have many more costs you can take out of your newspaper division now before you get into recession, when you have a gun to your head? Because, I mean, this is obviously is not sustainable, cost down not as much as revenues were declining.

So I'm just wondering if you have much more cost you can take out in core business here?.

Yes, sure, Craig. And in fact, the third quarter was kind of a transition quarter in some ways. We did in September and October have a reduction in force across our newspapers market by market to, I guess, get in position for 2015. And so I think that action reduced our headcount by another 6% or 7%.

So to answer your question, yes, there are further expenses that can be reduced to match potential declines in revenue. Although it would be clearly our intention to stabilize those revenues as quickly as we can.

But we've already taken that action this fall, and some of the -- we probably had about $400,000 worth of severance in our third quarter numbers, and the guidance that we have for fourth quarter includes even more. So absent those, we would probably be matching the revenue decline with the expense control in the fourth quarter..

Okay.

So that your guidance then, Tim, of revenues within newspapers down mid-single digits, expenses down low single digits, if you take out severance cost, you think we'll see match dollar for dollar?.

Pretty close..

Okay. Let me ask you though, I appreciate you giving that feedback there, but do you feel you have even more that you can take out here? I wonder, if we're going to go through this again in 3 months, so I'm just asking just an outsider view..

Absolutely, and as we're heading into a combination with the Journal Sentinel in Milwaukee, we wanted to make sure that we were in good position to hit the ground running as a new company in 2015 and so a lot of this is to get in position for that..

Does that -- can I read into that, that you feel that there is significant more cost you can take out on top of what you've already done?.

Right, we're going to also going to have a lot going on with just creating a new public company and sizing the infrastructure, the support costs for that new company that will be different from, perhaps where we are today. A lot of that has been detailed in our investor presentation tied to the announcement back in July..

Tied, to that $35 million of synergies on a combined basis.

You're saying it's part of that?.

Yes. But you can also look at what the illustrative metrics were for us for Journal Media Group. I think it was $55 million or $60 million-ish of EBITDA for that new company. So that's what we're focused on, Craig.

And it is to have as wide a footprint as possible from a corporate standpoint and to devote resources to their highest and best use locally, which is generating content and strengthening relationships with local advertisers..

Sorry to push on this, but does that mean then, Tim, that you don't feel in your core Scripps newspaper operation there's much more costs to take out, that you actually need to roll together with another big newspaper operation, Journal in this case, and then on a combined basis, take out that much more costs?.

I don't think that's the point at all. We'll do what we need to do from a cost standpoint to make sure that we remain profitable and healthy as a local media enterprise. For me, the biggest area of focus is going to be on the consumer-facing side of the business, and we need to make that transition quickly.

So that's going to be the area of focus for me and hopefully, the management team when we get started in Journal Media Group, is to build out those relationships with local consumers. Where today, we have that relationship with well, what, 40% plus of the households and build upon that..

We'll go to the line of Barry Lucas from Gabelli & Company..

I was just hoping maybe you could flesh out the time line a little bit more, Rich.

If you're going to file the S-4 later this month, what are the hurdles do you have to go through before, let's say, closing kind of the middle of the year or toward the end of the first half? So what are the other benchmarks that we have to look for?.

Well, the major hurdle that's -- hurdle or just unknown in there is how long it takes through the SEC. And then that could go back and forth a few times, and there's just no way to know until you file and start to talk to the staff there. And then once you clear the SEC, then you got notice and then the shareholder votes.

So once you have the SEC, obviously you're going to go through the holidays and then notice and the shareholder votes, you find yourself somewhere into next year. That's why we're saying we really think the first half of next year is realistic.

But heck, we'll close this as soon as we can get there, put in front of the shareholders as fast as we can get there. So we're moving as fast as we can. And actually, if you look how to compare it to a lot of transactions, at this point, we feel like we're in really good shape and on a fast pace..

[Operator Instructions] I'm showing no one else in queue at this time. Please continue..

Thank you, Cynthia. Thank you very much, everyone, for joining us. Have a good day..

Thank you. And ladies and gentlemen, today's conference call will be available for replay after 11 a.m. today until midnight November 21. You may access the AT&T teleconference replay system by dialing (800) 475-6701 and entering the access code of 339709. International participants may dial (320) 365-3844.

That does conclude your conference call for today. Thank you for your participation and for using AT&T Executive TeleConference service. You may now disconnect..