TEGNA INC - Annual Report: 2011 (Form 10-K)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 25, 2011

For the transition period from                     to                     

Commission file number 1-6961

GANNETT CO., INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (703) 854-6000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ¨    No  x

The aggregate market value of the voting common equity held by non-affiliates of the registrant based on the closing sales price of the registrant’s Common Stock as reported on The New York Stock Exchange on June 24, 2011, was $3,252,839,302. The registrant has no non-voting common equity.

As of January 29, 2012, 236,934,167 shares of the registrant’s Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The definitive proxy statement relating to the registrant’s Annual Meeting of Shareholders to be held on May 1, 2012, is incorporated by reference in Part III to the extent described therein.

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INDEX TO GANNETT CO., INC.

2011 FORM 10-K

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PART I

Company Profile

Gannett is a leading international media and marketing solutions company, delivering content and services across an integrated, multi-platform portfolio. Our rich portfolio of iconic national brands, like USA TODAY and CareerBuilder, as well as our unique local brands in more than 100 communities sets us apart. Our properties cover a wide range of geographies, demographics and interest areas, which combine to form a uniquely powerful and comprehensive portfolio of offerings for consumers and marketers. Our connection to – and understanding of – our communities is unmatched by any other media company. The company provides consumers with the information they want and connects them to their communities of interest through multiple platforms including the Internet, mobile, tablet, print publications and TV stations. Gannett helps businesses grow by providing marketing solutions that reach and engage their customers across the company’s diverse platforms.

Gannett is an Internet leader with hundreds of publishing and TV web sites and several national web sites, reaching 50.8 million unique users monthly or about 23% of the Internet audience in December 2011, as measured by comScore Media Metrix. These web sites include CareerBuilder.com, the nation’s top employment site; USATODAY.com; PointRoll, an industry leader in rich media advertising solutions; and ShopLocal, a leader in multichannel shopping and advertising services. Gannett produces 82 daily U.S. publications, including USA TODAY, the nation’s largest-selling daily print publication, and about 500 magazines and other non-dailies including USA WEEKEND. The company also operates 23 television stations in 19 U.S. markets and Captivate, which operates video screens in office elevators in key urban markets. Gannett subsidiary Newsquest is one of the United Kingdom’s leading regional community news providers with 17 daily paid-for titles, more than 200 weekly print products, magazines and trade publications, and a network of web sites.

In broadcasting, the company’s 23 television stations in 19 U.S. markets with a total market reach of nearly 21 million households cover 18.1% of the U.S. population. Each of these stations also operates locally oriented web sites offering news, entertainment and advertising content, in text and video format. Through its Captivate subsidiary, the broadcasting group delivers news, information and advertising to a highly desirable audience demographic on video screens located in elevators of office towers and select hotel lobbies across North America.

Beginning in the third quarter of 2008 and concurrent with the purchase of a controlling interest in CareerBuilder, LLC and ShopLocal, the company began reporting a separate digital segment. In addition to CareerBuilder and ShopLocal, the digital segment also includes PointRoll, Reviewed.com and Planet Discover.

In March 2010, CareerBuilder expanded its reach in the U.K. when it purchased CareerSite.biz, which operates two online recruitment niche sites focusing on nursing and rail workers as well as a successful virtual career fair business. In 2011, CareerBuilder acquired JobsCentral, a leading jobs board in Singapore that also has a fast-growing presence in Malaysia. The company also acquired JobScout24, which solidified CareerBuilder’s position as one of the top three online recruitment sites in Germany. CareerBuilder is looking to expand its global operations further in 2012.

PointRoll and ShopLocal provide online advertisers with rich media marketing services. In early 2011, the company acquired Reviewed.com, which operates a group of product-review web sites that provide comprehensive and comparative reviews for technology products such as digital cameras, camcorders and high-definition televisions as well as household products and services.

Complementing its core publishing, digital and broadcasting businesses, the company has made significant strides in its digital strategy through key investments and partnerships in the online space. These include a partnership investment in the highly successful Classified Ventures, which owns and operates the Cars.com and Apartments.com web sites.

Gannett was founded by Frank E. Gannett and associates in 1906 and incorporated in 1923. The company went public in 1967. It reincorporated in Delaware in 1972. Its more than 237 million outstanding shares of common stock are held by approximately 8,385 shareholders of record in all 50 states and several foreign countries. The company has approximately 31,000 employees including 2,000 employees for CareerBuilder, LLC. Gannett’s headquarters are in McLean, VA, near Washington, DC.

Business Transformation and Initiatives: The company continues to evolve internally to meet the needs of consumers and business customers in the digital environment, to optimize its opportunities at its core publishing and broadcast operations and to solidify its position as a leading media and marketing solutions company.

Important steps taken to achieve these objectives included:

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In December 2011, the company announced an agreement under which The Cincinnati Enquirer and The Kentucky Enquirer will transition printing and packaging services to a third-party Columbus, OH, production facility. Use of the Columbus facility will enable the company’s publications to adopt a new and easy-to-use format, with improved graphics, including fuller use of color and photographs. The costs of operating the Columbus production facility will be shared by the parties, resulting in efficiencies and cost savings for the company. Efforts such as these will continue to be aggressively pursued in 2012.

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Business portfolio: The company operates a diverse business portfolio, established through acquisitions and internal development. Some examples of this diversification are:

Newspaper partnerships: The company owns a 19.49% interest in California Newspapers Partnership, which includes 19 daily California newspapers; a 40.64% interest in Texas-New Mexico Newspapers Partnership, which includes six daily newspapers in Texas and New Mexico and four newspapers in Pennsylvania; and a 13.5% interest in Ponderay Newsprint Company in the state of Washington.

Joint operating agencies: The company’s publishing subsidiary in Detroit participates in a joint operating agency. The joint operating agency performs the production, sales and distribution functions for the subsidiary and another publishing company under a joint operating agreement. Operating results for the Detroit joint operating agency are fully consolidated along with a charge for the minority partner’s share of profits. Through May 2009, the company also published the Tucson Citizen through the Tucson joint operating agency in which the company held a 50% interest. Because of challenges facing the publishing industry, combined with the difficult economy, particularly in the Tucson area, the company ceased publication of the Tucson Citizen on May 16, 2009. The company retained its online site and 50% partnership interest in the joint operating agency, which provides service to the remaining non-Gannett publication in Tucson. The company’s share of results for the Tucson operations are accounted for under the equity method, and are reported as a net amount in “Equity income in unconsolidated investees, net.”

Strategic investments: In January 2012, the company acquired the assets of Fantasy Sports Ventures/Big Lead Sports, the leading independent sports digital site. This business will be an important addition to the USA TODAY Sports Media Group, positioning it as one of the top five sports sites on the web.

In November 2011, the company acquired the mixed martial arts web site, MMAjunkie.com, one of the leading online news destinations for the sport and a content provider for several print, online and TV outlets.

In August 2011, the company acquired US PRESSWIRE, the global leader in the creation and distribution of premium digital sports images to media companies worldwide. US PRESSWIRE operates within the USA TODAY Sports Media Group and provides daily sports photo coverage for all of the company’s publishing and broadcast properties.

In January 2011, the company completed the acquisition of Reviewed.com, a group of product-review web sites that provide comprehensive reviews for technology products such as digital cameras, camcorders and high definition televisions. Its operations have been expanded to cover other household items and consumer services.

In November 2011, the company purchased a minority stake in ShopCo Holdings, LLC. ShopCo provides a common online shopping platform which allows advertisers to reach consumers in order to assist them in making informed purchasing decisions.

In 2011, CareerBuilder acquired JobsCentral, a leading jobs board in Singapore that also has a fast-growing presence in Malaysia. The company also acquired JobScout24, which solidified CareerBuilder’s position as one of the top three online recruitment sites in Germany.

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In March 2010, CareerBuilder purchased CareerSite.biz, parent of three successful career-related operations in the U.K.; two online recruitment niche sites focusing on nursing and rail workers as well as a successful virtual career fair business.

The company also owns a 23.6% stake in Classified Ventures, a highly successful online business focused on real estate rental and automotive advertising. The company’s equity in the earnings of Classified Ventures grew by 45% and 25% in the years 2010 and 2011, respectively.

In February 2009, the company purchased a minority interest in Homefinder. Homefinder is a leading national online marketplace connecting homebuyers, sellers and real estate professionals.

In August 2008, the company purchased Pearls Review, Inc., an online nursing certification and continuing education web site operated within Gannett Healthcare Group.

In July 2008, the company purchased a minority stake in Livestream, a company that provides Internet broadcasting services.

In May 2008, the company purchased a minority stake in Cozi Group Inc. (COZI). COZI is a free web service that helps families manage busy schedules, stay in communication and share memories.

With these acquisitions and investments, the company has established important business relationships to leverage its publishing and online assets and operations to enhance its online footprint, revenue base and profits.

Business segments: The company has three principal business segments: publishing, digital and broadcasting. The company reports a “Digital” business segment, which includes CareerBuilder, PointRoll, ShopLocal, Reviewed.com and Planet Discover. Operating revenues and income from web sites that are associated with publishing operations and broadcast stations are reported in the publishing and broadcast segments.

Financial information for each of the company’s reportable segments can be found in the company’s financial statements, as discussed under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and as presented under Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

Publishing/United States

The company’s U.S. publications, including USA TODAY, reach 11.6 million readers every weekday and 12.6 million readers every Sunday – providing critical news and information from their customers’ neighborhoods and around the globe.

At the end of 2011, the company operated 82 U.S. daily publications, including USA TODAY, and about 500 non-daily local publications in 30 states and Guam. The U.S. Community Publishing (USCP) division and USA TODAY are headquartered in McLean, VA. At the end of 2011, U.S. Publishing had approximately 20,900 full- and part-time employees including 7,700 employees in the newly formed Gannett Publishing Services (see page 11.)

The company’s local publishing operations are managed through its U.S. Community Publishing division. These publishing operations are positioned in large and small markets; this geographical diversity is a core strength of the company.

Gannett publishes in major markets such as Phoenix, AZ.; Indianapolis, IN; Cincinnati, OH; Des Moines, IA; Nashville, TN; Asbury Park, NJ; Louisville, KY; and Westchester, NY.

Mid-sized markets are represented by Salem, OR; Fort Myers, FL; Appleton, WI; Palm Springs, CA; Montgomery, AL; and Greenville, SC.

St. George, UT; Fort Collins, CO; Sheboygan, WI; Iowa City, IA; and Ithaca, NY, are examples of smaller markets.

USA TODAY was introduced in 1982 as the country’s first national, general-interest daily publication. It is produced at facilities in McLean, VA and transmitted via satellite to offset printing plants around the country. It is printed at Gannett plants in 11 U.S. markets and commercially at offset plants, not owned by Gannett, in 22 other U.S. markets.

During 2011, USATODAY.com saw double digit growth in unique visitors, visits, and page views per month. In October 2011, the site saw its best month on record in nearly five years. Engagement on the site also increased, with average minutes per visitor increasing 34% from January 2011 to November 2011. Organic search increased more than 30% from January 2011 to November 2011. USA TODAY mobile traffic has increased by 154% from 114 million page views in January 2011 to over 290 million page views in December, with the iPad generating almost half the traffic. Social referrals are also up 61% (comparing November to January 2011), with Facebook, Twitter and StumbleUpon driving the majority of social referrals.

All of the company’s local publishing operations and affiliated web sites are fully integrated.

Other businesses that complement, support or are managed and reported within the publishing segment include: USA WEEKEND, Clipper Magazine, Gannett Government Media and Gannett Healthcare Group. Gannett Retail Advertising Group represents the company’s local publishing operations in the sale of advertising to national and regional franchise businesses; Gannett Direct Marketing offers direct-marketing services; and Gannett Media Technologies International develops and markets software and other products for the publishing industry and provides technology support for the company’s publishing and web operations. Gannett Publishing Services manages the production and other publishing services for all of these businesses and also oversees third-party commercial printing activities for all U.S. publishing locations.

News and editorial matters: In 2011, Gannett information centers focused on producing unique, high-impact, local news. Journalists were trained to create different experiences for the audiences of different platforms.

Several initiatives were designed to protect distinctive local content:

A common content-management system (CMS) enables communication and collaboration needed to build strong design remotely. By the end of 2011, 2,743 USCP and USA TODAY employees were using CCI Newsgate (the CMS).

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Each of these three initiatives is designed to promote unique, high-value local content that will drive dramatic operational transformation.

The drive to enhance journalism was also the catalyst for collaboration among journalists across Gannett’s divisions. The Gannett divisions participated in several collaborative efforts:

The company’s domestic daily publishing operations received Gannett’s wire service in 2011 and subscribe to The Associated Press. Some publishing operations use supplemental news services and syndicated features.

The company operates news bureaus in Washington, DC, and four state capitals – Albany, NY; Baton Rouge, LA; Trenton, NJ; and Tallahassee, FL.

In 2011, Gannett publishing operations and journalists received national recognition for their outstanding work:

Gannett journalists took five honors in the Scripps Howard National Journalism Awards:

Four sites were honored with Sigma Delta Chi awards:

The National Cartoonist Society’s Reuben Award, given for best editorial cartoonist, was won by Gary Varvel of The Indianapolis Star.

The Toner Prize for Excellence in Political Reporting, given by Syracuse University, went to Craig Harris of the Arizona Republic for his series on Arizona’s public pension system.

The Associated Press Managing Editors awards included:

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Audience research: As Gannett’s publishing businesses continue their mission to meet consumers’ news and information needs anytime, anywhere and in any form, the company remains focused on an audience aggregation strategy. The company considers the reach and coverage of multiple products in its communities and measures the frequency with which consumers interact with each Gannett product.

Results from 2011 studies indicate that many Gannett local media organizations are reaching more people more often. For example, in Wilmington, DE, the combination of all Gannett products reach 84% of the adult population, an average of 6.1 times a week for 2.09 million total impressions each week – an 8% increase since 2008.

The company has gathered audience aggregation data for 52 Gannett markets and will continue to add more data in 2012. Aggregated audience data allows advertising sales staff to provide detailed information to advertisers about how best to reach their potential customers and the most effective product combination and frequency. This approach enables the company to increase its total advertising revenue potential while maximizing advertiser effectiveness.

Scarborough Research measures 77 of the nation’s top markets. In a report on market penetration, the number of adults in a community who access a publication and its related web site, it noted that more than 3 out of 4 adults in the Rochester, NY, market in a given week either read the print version of the Rochester Democrat and Chronicle or visited its web site (democratandchronicle.com), making it the top-ranked publishing/web operations in the country for integrated audience penetration. Gannett had three of the top six such operations (Rochester, Gannett East Wisconsin and The Des Moines Register) in combined print and web site penetration. These markets are industry leaders because they understand and aggressively pursue different audiences for different platforms – true audience aggregation.

In addition to the audience-based initiative, the company continues to measure customer attitudes, behaviors and opinions to better understand customers’ web site use patterns and use focus groups with audiences and advertisers to better determine their needs. In 2009, the U.S. Community Publishing research group launched an ongoing longitudinal study to measure audience and sentiment of consumers in key markets. To date, the group has conducted more than 23,200 interviews for the study.

U.S. Community Publishing Research is supporting the content evolution initiative by conducting consumer research in 78 markets to determine the local passion topics, those readers are most interested in seeing covered by their Gannett local media organizations. Through December 2011, research studies had been conducted in 14 markets, with the remaining 64 slated to be completed in early 2012.

Advertising: U.S. Community Publishing has advertising departments that sell retail, classified and national advertising across multiple platforms including print, online, mobile and niche publications. The company has a national ad sales force to focus efforts on the largest national advertisers and a separate sales organization to support classified employment sales – the DESC. Additionally, GannettLocal provides marketing specialists to small and medium sized businesses and Gannett Client Solutions groups which can provide customized marketing solutions. The company also has relationships with outside representative firms that specialize in the sale of national ads.

Retail display advertising is associated with local merchants or locally owned businesses. In addition, retail includes regional and national chains – such as department and grocery stores – that sell in the local market.

Classified advertising includes the major categories of automotive, employment, legal, real estate/rentals and private party consumer-to-consumer business for merchandise and services. Advertising for classified segments is published in the classified sections, in other sections within the publication, on affiliated web sites and in niche magazines that specialize in the segment.

National advertising is display advertising principally from advertisers who are promoting national products or brands. Examples are pharmaceuticals, travel, airlines, or packaged goods. Both retail and national ads also include preprints, typically stand-alone multiple page fliers that are inserted in the daily print product.

The division’s audience aggregation strategy gives it the ability to deliver specific audiences that advertisers want. Although some advertisers want mass reach, many want to target niche audiences by demographics, geography, consumer buying habits or customer behavior. In 2011, due to Gannett’s new partnership with Yahoo!, U.S. Community Publishing’s local media organizations are able to enhance audience delivery for customers by offering behavioral targeting. Whether it is mass reach or a niche audience, the approach our sites use is to identify an advertiser’s best customers and develop advertising schedules that combine products within a site’s portfolio to best reach the desired audience with the appropriate frequency.

In 2011, U.S. Community Publishing expanded the use of online reader panels for measuring advertising recall and effectiveness to include the Green Bay and Appleton markets. The reader panels, now in 18 markets, include nearly 30,000 opt-in respondents who provide valuable feedback regarding the ROI and effectiveness of more than 6,000 advertisements and 3,600 news articles. Reader panels are also used to identify consumer sentiment and trends. This capability allowed markets to provide deeper insights for advertisers and ROI metrics that are in high-demand from customers.

The company’s consultative multi-media sales approach has been directed at all levels of advertisers, from small, locally owned merchants to large, complex businesses. Along with this sales approach, the company has intensified its sales and management training and improved the quality of sales calls. Digital knowledge and a Gannett five step consultative sales process were formal training topics in 2011 in all Gannett markets. Front line sales managers in our largest 14 markets participated in intensive training to help them coach their sales executives for top performance.

A major company priority is to restructure U.S. Community Publishing sales organizations to match customers’ needs while creating additional efficiencies to lower the cost of sale. U.S. Community Publishing local media organizations redesigned their sales teams around three general groups of customers: strategic regional, key local and small local accounts. The structure aligns sales and support resources to customers’ needs and provides efficient service and affordable packages to smaller accounts and customized, innovative solutions to larger, more market driven clients. The structure includes digital specialists who expand online share in the local market for retail and classified verticals, including Cars.com, Homefinder.com, Apartments.com and CareerBuilder.com. There are also product specialists in larger markets who focus on growing niche advertisers in non-daily publications.

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To better serve top local customers and win more market share, the company created five Gannett Client Solutions Groups. Functioning like local ad agencies, the groups develop highly designed creative campaigns to give customers a competitive edge in the marketplace. The campaigns are comprehensive and often extend beyond the local media organizations’s product portfolio, providing a high level of service.

The national ad sales team is responsible for large national retail accounts. These resources give national customers one point of contact for all Gannett markets, enable Gannett to have more strategic conversations, allow teams to respond better to customers’ needs, and permit local sales personnel to focus on advertisers in their markets.

This national team works with the national sales resources of Digital, Broadcast and USA TODAY to create multi-market, multi-platform solutions for national advertisers scalable across the country.

Ad revenues from affiliated online operations are reported together with revenue from print publishing.

Online operations: The company’s local web sites achieved significant growth in audience reach in 2011, as visitors rose 10% year over year as measured internally. In 2011, in coordination with the Digital group staff, U.S. Community Publishing completed the roll-out of a significant redesign of its web sites aimed at creating a more relevant and enjoyable experience for users, driving audience growth, and establishing unique marketing opportunities for advertisers. Results have been positive, including a substantial increase in online video consumption given the more prominent placement of video players throughout the site.

During 2011, Gannett expanded its partnership activity with Yahoo! to enable more of its local sales force to sell Yahoo! advertising inventory as part of Gannett’s local advertising solutions. As a result of this successful partnership, local advertisers are benefiting from expanded digital reach.

The overriding objective of U.S. Community Publishing’s online strategy is to provide compelling content that best serves our customers. A key reason customers turn to a Gannett online site is to find local news and information. The credibility of the local media organization, a known and trusted information source, includes its web site and differentiates the web site from other Internet sites. This factor allows Gannett’s local media organizations to compete successfully as Internet information providers.

A second objective in the company’s online business development is to maximize the natural synergies between the local media organizations and local web sites. The local content, customer relationships, news and advertising sales staff, and promotional capabilities are all competitive advantages for Gannett. The company’s strategy is to use these advantages to create strong and timely content, sell packaged advertising products that meet the needs of advertisers, operate efficiently and leverage the known and trusted brand of the local media organization.

Gannett Media Technologies International (GMTI) provides technological support and products for the company’s domestic local media organizations and Internet activities, including ad software and database management, editorial production and archiving, and web site hosting. In addition, GMTI provides similar services to other media companies.

Non-daily operations: The publication of non-daily products continued to be an important part of Gannett’s market strategy for 2011. The company produces non-daily publications in the U.S. including glossy lifestyle magazines, community publications and publications catering to one topic, such as health or cars. The company’s strategy for non-daily publications is to appeal to key advertising segments (e.g. affluent women, women with children or young readers). Non-daily products help print operations increase overall impressions and frequency for advertisers looking to reach specific audience segments or in some cases, like community weeklies, provide a lower price point alternative for smaller advertisers with specific geographic targets, thus helping to increase the local media organization’s local market share.

Circulation: Detailed information about the circulation of the company’s newspapers may be found later in this Form 10-K. Circulation declined in nearly all publishing markets, a trend generally consistent with the domestic publishing industry.

Home-delivery prices for the company’s publications are established individually and range from $1.70 to $3.80 a week for daily products and $0.85 to $3.40 a copy for Sunday products.

Twenty-one U.S. Community Publishing sites increased Sunday circulation volume from the previous year based on the ABC September 2011 Publisher’s Statement, including Alexandria, LA; Clarksville, TN; Cherry Hill, NJ; Chillicothe, OH; Cincinnati, OH; Des Moines, IA; Fort Collins, CO; Greenville, SC; Jackson, TN; Lafayette, IN; Montgomery, AL; Murfreesboro, TN; Nashville, TN; Newark, OH; Pensacola, FL; Phoenix, AZ; Reno, NV; Salisbury, MD; Staunton, VA; Wilmington, DE; and Zanesville, OH. In total, U.S. Community Publishing total Sunday circulation was down just slightly to the previous year, 0.1% based on the September 2011 statement.

At the end of 2011, 70 of the company’s domestic daily publications, including USA TODAY, were published in the morning, and 12 were published in the evening. For local U.S. publications, excluding USA TODAY, morning circulation accounts for 97% of total daily volume, while evening circulation accounts for 3%.

The single copy price of USA TODAY at newsstands and vending machines is $1.00. Mail subscriptions are available nationwide and abroad, and home, hotel and office delivery in many markets. Approximately 47% of its net paid circulation results from single-copy sales at newsstands, vending machines or to hotel guests, and the remainder is from home and office delivery, mail, educational and other sales.

Production: Product quality and efficiency improvements continue in several areas, as continually improving technology allows for greater speed and accuracy and led to continued consolidation of job functions for all divisions of Gannett now managed by Gannett Publishing Services. That efficiency trend is expected to continue through 2012.

The roll-out of U.S. Community Publishing sites into the Gannett Imaging and Ad Design Centers (GIADC) was completed in 2011. Properties being serviced by the GIADC total 79 and include all U.S. Community Publishing dailies with the exception of Muncie and Guam. In addition to U.S. Community Publishing Sites, USA TODAY is now included.

In 2011, the GIADC built 1.3 million ads (includes digital, print and spec). Of the 1.3 million ads, almost 100,000 were digital and 36,000 were spec ads. Of the spec ads produced, over 11,000 of those were reported to the GIADC as being sold. All sites were live going into the fourth quarter (with the exception of USA TODAY) and on average the GIADC processed 28,829 ads per week and 64,968 images per week. In October, the GIADC launched a Creative Campaign program which allows sales representatives to work directly with a team of highly creative artists to target particular customers and develop a comprehensive multimedia program.

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Digital needs continue to increase from U.S. Community Publishing and other Gannett divisions. The GIADC has assisted Digital on several initiatives and built ads for the Broadcast division for a good portion of the year. Broadcast will be transitioning a portion of its work to the GIADC in 2012. There have been inquiries by non-Gannett customers about the ad production process, and the GIADC is positioning the organization to assume commercial work in 2012.

USA TODAY Prepress transitioned to GPS in the fourth quarter. With this transition, workflow will change. USA TODAY print sites are being moved from USA TODAY owned plate equipment, and new guidelines are being established for workflow, print standards and overall quality monitoring. This initiative will continue throughout 2012.

At the end of 2011, all 82 domestic daily publications (including USA TODAY) were printed by the offset process and the majority at 44-inch web and on 45 gram paper. Also at year end, more than 70% of its domestic community daily publications were either printed in Gannett owned facilities that print multiple daily publications or non-Gannett printers.

Sixteen publications are now producing work in Gannett’s five Design Studio locations in Asbury Park, NJ; Nashville, TN; Louisville, KY; Des Moines, IA; and Phoenix, AZ. All U.S. Community Publishing sites, except Guam, will have their design work produced in Design Studios by the end of 2012.

Gannett Publishing Services: Reducing the costs associated with the production and distribution of publications across all divisions is a major strategic transformation initiative for Gannett. In late September 2011, Gannett Publishing Services (GPS), a single business unit of Gannett, was formed to directly manage all of the production and circulation operations of Gannett’s 81 domestic community publications, USA TODAY and Gannett Offset. GPS encompasses approximately 7,700 employees.

GPS will more fully leverage Gannett’s existing assets, including employee talent and experience, physical plants and equipment, and its vast national and local distribution networks. The tactical objectives of the new unit are to optimize commercial services, leverage expertise, standardize best practices to optimize efficiency and eliminate duplication. The strategic objectives are to allow local unit management to focus on growing audience, content and revenue development and GPS management to focus on consumer sales and the transition of the company’s print subscribers to multi-media subscribers on the new content subscription model.

GPS will be responsible for imaging, ad production, internal and external printing and packaging, internal and external distribution, consumer sales, customer service and direct marketing services. GPS expects revenue gains from the sales of pre-media services, commercial printing, third party product delivery and customer services capabilities and expects cost savings from standardizing best practices across the printing and distribution networks and the elimination of redundancies.

Competition: The company’s publishing operations and affiliated web sites compete with other media for advertising principally on the basis of their performance in helping to sell the advertisers’ products or services. Publishing operations also compete for circulation and readership against other professional news and information operations and amateur content creators. While most of the company’s publishing operations do not have daily competitors that are published in the same city, in select larger markets, there are such competitors. Most of the company’s print products compete with other print products published in suburban areas, nearby cities and towns, free-distribution and paid-advertising publications (such as weeklies), and other media, including magazines, television, direct mail, cable television, radio, outdoor advertising telephone directories, e-mail marketing, web sites and mobile-device platforms.

Web sites which compete for the principal traditional classified advertising revenue streams such as real estate, employment and automotive, have had the most significant impact on the company’s revenue results.

The rate of development of opportunities in, and competition from, digital media, including Internet and mobile platforms, is increasing. Through internal development, content distribution programs, acquisitions and partnerships, the company’s efforts to explore new opportunities in the news, information and communications business and in audience generation will keep expanding. The company continues to seek more effective ways to engage with its local communities using all available media platforms and tools.

Environmental regulation: Gannett is committed to protecting the environment. The company’s goal is to ensure its facilities comply with federal, state, local and foreign environmental laws and to incorporate appropriate environmental practices and standards in its operations.

The company is one of the industry leaders in the use of recycled newsprint, increasing its purchases of newsprint containing recycled content from 42,000 metric tons in 1989 to 223,715 metric tons in 2011. During 2011, 56% of the company’s domestic newsprint purchases contained recycled content, with an average recycled content of 39%.

The company’s publishing operations use inks, photographic chemicals, solvents and fuels. The use, management and disposal of these substances are sometimes regulated by environmental agencies. The company retains a corporate environmental consultant who, along with internal and outside counsel, oversees regulatory compliance and preventive measures. Some of the company’s subsidiaries have been included among the potentially responsible parties in connection with sites that have been identified as possibly requiring environmental remediation. Additional information about these matters can be found in Item 3, Legal Proceedings, in this Form 10-K.

Raw materials – U.S. & U.K.: Newsprint, which is the basic raw material used in print publication, has been and may continue to be subject to significant price changes from time to time. During 2011, the company’s total newsprint consumption was 488,414 metric tons, including consumption by USA WEEKEND, USA TODAY, tonnage at non-Gannett print sites and Newsquest. Newsprint consumption was 9% less than in 2010. The company purchases newsprint from 22 domestic and global suppliers.

In 2011, newsprint supplies were adequate. The company has and continues to moderate newsprint consumption and expense through press web-width reductions and the use of lighter basis weight paper. The company believes that available sources of newsprint, together with present inventories, will continue to be adequate to supply the needs of its publishing operations.

The average cost per ton of newsprint consumed in 2011 increased by 13% compared to 2010. The effect of price increases was partially offset by consumption declines. In 2012, the company expects newsprint expenses to decline due to decreases in consumption.

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Publishing/United Kingdom

Newsquest produces 17 daily paid-for publications and more than 200 weekly publications, magazines and trade publications in the U.K., as well as a wide range of niche products. Newsquest operates its publishing activities around regional centers to maximize the use of management, finance, printing and personnel resources. This approach enables the group to offer readers and advertisers a range of attractive products across the market. The clustering of titles and, usually, the publication of a free print product alongside a paid-for print product, allows cross-selling of advertising serving the same or contiguous markets, satisfying the needs of its advertisers and audiences. Newsquest produces free and paid-for print products with quality local editorial content. Newsquest also distributes a substantial volume of advertising leaflets in the communities it serves. Most of Newsquest’s paid-for distribution is outsourced to wholesalers, although direct delivery is employed as well to maximize circulation sales opportunities.

Newsquest’s publishing operations are in competitive markets. Their principal competitors include other regional and national newspaper and magazine publishers, other advertising media such as broadcast and billboard, Internet-based news and other information and communication businesses.

Newsquest revenues for 2011 were approximately $513 million, down 6% in local currency reflecting the continuing difficult economy. While in-paper advertising revenue categories declined, digital revenues grew by 5%. As in the U.S., advertising, including ad revenue from online web sites affiliated with the publications, is the largest component of Newsquest’s revenue, comprising approximately 70%. Circulation represented 22% of revenue. Printing for third-party newspaper publishers accounts for most of the remainder of revenue.

Editorial quality was recognized through the awards won in the year. Herald Chief Reporter Lucy Adams won the European Lorenzo Natali Journalism Prize for her writing on the plight of women in the Democratic Republic of Congo suffering sexual abuse.

The Sunday Herald became European Weekly Newspaper of the year at the European Newspaper awards in Vienna in March. It was also named best designed newspaper in the U.K. at the Newspaper 2011 Awards in London in May.

Newsquest media organizations also won a number of other regional press awards for playing an effective role in the community. For example, The Worcester News was presented with a certificate of achievement by the U.K. government for encouraging local employers to hire young people for apprenticeships. It set a target of creating 100 apprenticeships within 100 days. In fact, it got 100 employers to offer 206 apprenticeships within the time period.

Following the successful launch of Northern Farmer in 2010, a sister title to The Scottish Farmer, Newsquest launched Southern Farmer and Wales Farmer in 2011. An additional farming product is planned for 2012.

Significant restructuring in response to the economic unevenness and lower revenues resulted in reducing the number of employees at Newsquest to 4,500 at year end, a decrease of 8% compared to 2010. Cost reduction initiatives included the consolidation of a number of back-office functions.

In October 2010, after discussion with its pension plan trustees and employees, the decision was made to close the Newsquest defined benefit plan to future accrual, effective March 31, 2011. The plan closure reduced pension expense and funding volatility and was part of a package of measures to address the plan’s deficit.

Despite an increase in the cost of newsprint, total costs finished down from 2010 in local currency, as a result of the range of cost reduction measures taken.

Digital operations: Newsquest actively seeks to maximize the value of its local media brands through digital channels. Newsquest’s most recent data indicated that an average of 8.3 million unique users accessed the Newsquest site network each month during the period July—December 2011.

Newsquest’s total online revenue increased by 5% in local currency. Online banner revenues grew by 14%, propelled by improved audiences and sales activity. During the year national banner sales were managed by dealing directly with advertising agencies rather than selling through third-party ad networks.

Testing of a subscription on the Herald Scotland web site began in 2011.

Beginning in 2011, Newsquest’s digital employment advertising was served by CareerBuilder, increasing the potential audience to both CareerBuilder and Newsquest’s customers.

In Scotland, the group’s wholly owned market leading recruitment web site, s1, increased revenues by 12% from 2010.

Digital operations—Publishing and Broadcasting

Gannett Digital’s mission is to be Gannett’s catalyst for revenue growth and innovation. During 2011, under the leadership of newly hired Chief Digital Officer David Payne, Gannett Digital was reorganized into a product development and shared services organization that supports, hosts and manages the key infrastructure for the company’s digital operations, including databases, applications, templates, architecture, user experience, project management, digital video production, mobile and web development, distribution, packaging, ad solutions, and paid content systems.

At its core, Gannett has unparalleled, original content assets, including its national brand, USA TODAY, and its over 100 local print and television brands, as well as a large audience reach. In December 2011, Gannett’s total online U.S Internet audience totaled 50.8 million monthly unique visitors, reaching about 23% of the Internet audience, as measured by comScore Media Metrix.

During the first quarter of 2011, the redesign of the local publishing and broadcast web sites was completed. Results have been positive to date, including a substantial increase in online video consumption given the more prominent placement of video players throughout the sites. Specifically, the local publishing and broadcast sites saw an 82% year-over-year increase in on-demand video plays during 2011.

Following the reorganization in mid-2011, Gannett Digital has developed an aggressive roadmap to 1) develop next generation mobile, tablet and browser experiences for its more than 100 properties and 2) integrate its back-end editorial, publishing and advertising platforms. New video and user-generated content (UGC) systems and capabilities, combined with an invigorated social integration and distribution strategy, will be key components of the new digital experiences that will drive engagement. The advertising strategy for the new products will be focused on higher impact, higher value advertising units that will drive better results for marketers.

Additionally, back-end tools will be built to enable Gannett to more effectively leverage its content across all divisions.

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Gannett Digital is managing a series of infrastructure enhancements that will streamline operations to enable easier workflows for the editorial and sales/marketing teams. Areas of work include new advertising operations and processes, merging and integrating disparate publishing systems from across the company, building out asset management capabilities and improving front-end tools for editorial workflow. The first of these infrastructure projects began in late 2011 with the migration of USA TODAY to a new order management platform. This will be followed in 2012 by migrating ad servers to DoubleClick, simplifying sales processes and developing richer targeting and profiling systems that deliver more attractive ad solutions for clients.

Gannett Digital is also supporting U.S. Community Publishing’s new content subscription model through the development and enhancement of digital applications for tablets and smartphones and mobile and web sites that will provide access to all of its digital content offerings. Additionally, Gannett Digital is working with a cross-divisional technology team and a third-party vendor to build the infrastructure to support the new subscription model.

Video remains a key growth opportunity for Gannett. In December 2011, Gannett’s total on-demand video plays, including BNQT Media Group, totaled 122 million, up over 380% year over year. The strong growth can be attributed to creating and licensing more video content, optimizing video players for mobile sites and search engines, and better promoting video via site redesigns. In 2012, Gannett will be opening a Video Production Center (VPC) in Atlanta, GA, housed with WXIA-TV, to curate, publish and distribute on-demand and live video content across Gannett and to/from third-parties. Other key areas of focus in 2012 will be increasing video content in the local markets through investment in technology and training, developing analytic capabilities and continuing to drive increased monetization.

The consumer adoption of mobile devices remains a critical area of opportunity and product development for Gannett. In 2011, Gannett’s properties served 2.86 billion mobile page views and for USA TODAY specifically, mobile page views surpassed web site page views in December 2011. During the first several months of 2011, a new mobile content management system that supports both mobile sites and native applications rolled out across Gannett, enabling both centralized and local resources to more rapidly build and manage content (including video) using a common development framework.

Throughout the year, USA TODAY continued its leadership role in mobile by developing a broad product portfolio to address established and emerging platforms and devices. Both USA TODAY’s iPhone and iPad applications lead the news category; the iPhone application reaches 1.4 million monthly visitors and has over 4.7 million downloads, while the iPad application reaches 1.1 million monthly visitors and has over 2.8 million downloads. In addition to products for Apple’s iOS, USA TODAY has also built products for Android systems, including the Samsung Galaxy and Motorola Zoom, and Microsoft systems, including Windows Phone 7 and the upcoming Windows 8 product that is scheduled to be in Beta release during the first half of 2012.

Recently, Gannett capitalized on Amazon’s release of its low-cost Kindle Fire tablet and released an Android application specifically built for the device in time for the gift-giving season. The strategy yielded strong results; USA TODAY acquired over 125,000 new users in the seven days between December 25 and December 31. As of mid-January 2012, the USA TODAY application was the number one free application in the News & Weather category and maintained a 4.5 star rating.

New product development remains a focus for Gannett and will benefit from the aforementioned improvements to technology through better collaboration across the company and increased speed to market. The most significant new product development effort in 2011 was the launch of DealChicken, Gannett’s owned and operated social commerce/daily deals product. During the third and fourth quarters of 2011, DealChicken was launched in 57 markets, joining Phoenix, which originally launched DealChicken in September 2010. DealChicken has expanded Gannett’s advertiser base; approximately 80% of DealChicken’s advertisers have been new to Gannett. Additionally, DealChicken has been able to leverage its broad reach to offer both regional and national deals. Overall, DealChicken brings a new email marketing capability to Gannett’s growing suite of marketing services and will be a key component of Gannett’s new Digital Marketing Services group.

Throughout 2012 and beyond, Gannett Digital will remain focused on building products that delight and engage consumers, while also driving the highest possible monetization.

Digital segment

The digital business segment includes CareerBuilder, as well as PointRoll, ShopLocal, Reviewed.com and Planet Discover. At the end of 2011, the digital segment had approximately 2,400 full-time and part-time employees.

CareerBuilder is the global leader in human capital solutions, helping companies target, attract and retain talent. Its online job site, CareerBuilder.com, is the largest in North America with the most traffic and revenue. Currently, CareerBuilder operates web sites in 20 countries outside the U.S., including the U.K., France, Germany, Canada, Singapore, India and China, and has a presence in 51 markets. CareerBuilder offers everything from employment branding, and talent and compensation intelligence to recruitment solutions. Most of the revenues are generated by its own sales force but substantial revenues are also earned through sales of employment advertising placed with CareerBuilder’s owners’ affiliated media organizations.

In 2011, CareerBuilder acquired JobsCentral, a leading jobs board in Singapore that also has a fast-growing presence in Malaysia. The company also acquired JobScout24, which solidified CareerBuilder’s position as one of the top three online recruitment sites in Germany. CareerBuilder is looking to expand its global operations further in 2012.

CareerBuilder has a long-term strategic marketing agreement with Microsoft. CareerBuilder is headquartered in Chicago, IL, and at the end of 2011, it had approximately 2,000 full-time and part-time employees.

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PointRoll is the leading provider of digital marketing services and technology. PointRoll enables advertisers, agencies, and publishers to create, target, deploy, and optimize digital campaigns in real time across any digital channel including display, rich media, in-stream video, mobile, tablet and more. PointRoll provides the creative tools, analytics and expertise marketers need to effectively engage consumers and convert them into buyers and brand supporters. Founded in April 2000, PointRoll has been instrumental in the evolution of digital engagement and has evolved beyond the expandable banner ad to offer marketers the ability to find consumers wherever they are across any digital platform and deliver a relevant brand or direct response experience, dramatically improving ad effectiveness while gaining actionable insights. In early 2012, PointRoll plans to launch its next-generation technology platform called OnPoint, which will provide advanced audience analytics, new creative formats, added dynamic advertising functionality, and enhanced insights for customers’ campaigns. PointRoll is headquartered in King of Prussia, PA, and maintains offices across the U.S.

ShopLocal, a leader in multi-channel shopping services, connects retailers with shoppers through innovative, effective and measurable marketing solutions, enabling over 80 of the nation’s top retailers to deliver highly interactive, targeted and engaging localized promotions to shoppers through online circulars, display advertising, search, social media, digital out of home and mobile. The result is highly effective communications that deliver the right message, to the right person, at the right time. Pioneering the use of the Internet for driving in-store sales with online circulars, ShopLocal has spent the past decade developing digital marketing solutions and building a powerful publisher network that connects one-to-one with shoppers. ShopLocal’s leading client base includes Target, Best Buy, Home Depot, CVS, Super-Value and Sears. ShopLocal is headquartered in Chicago, IL.

Planet Discover provides hosted search and advertising services that allow clients to offer consumers robust local information through search. Its innovative technology enables clients to provide specialized, private-label search functionality that gives users a simple-to-use interface for finding all the local information they need, and gives advertisers valuable exposure to local consumers at that critical time when purchases are considered. Planet Discover is headquartered in Fort Mitchell, KY.

Competition: For CareerBuilder, which is currently the largest online employment site in North America, the market for online recruitment solutions is highly competitive with a multitude of online and offline competitors. Competitors include other employment related web sites, general classified advertising web sites, professional networking and social networking web sites, traditional media companies, Internet portals, search engines and blogs. The barriers for entry into the online recruitment market are relatively low and new competitors continue to emerge. Recent trends include the rising popularity of professional and social media networking web sites which have gained traction with employer advertisers. The number of niche job boards targeting specific industry verticals has also continued to increase. CareerBuilder’s ability to maintain its existing customer base and generate new customers depends to a significant degree on the quality of its services, pricing and reputation among customers and potential customers.

For PointRoll, the market for rich media advertising technology solutions is highly competitive with a dozen or so competitors. Competitors include divisions of larger public media and technology companies, and several earlier-stage independent rich media, dynamic ad, video, mobile, and social advertising technology specialists. The barriers to entry in the rich media market are moderate. Recent trends include the shift towards audience-centric, exchange-based media buying, entry of dynamic ad generation specialists, the move towards automated creative design tools, and the shift of video content online with associated in-stream advertising opportunities. Increasingly, marketers and their agencies are looking for advertising technology providers that can scale across media platforms, including rich media, video and mobile. PointRoll’s ability to maintain and grow its customer base and revenue depends largely on its continued product innovation, level of service quality, depth of marketing analytics and ultimately the effectiveness of its rich media advertising and resulting customer satisfaction.

For ShopLocal, the market for digital store promotions is highly competitive and evolving as digital media transforms marketing programs. ShopLocal competitors in the online circular space are also numerous. Recent trends include the increasingly rapid consumer media shift to digital formats and the growth in research-online-buy-offline shopping behavior. These are driving an evolution and eventual transformation of marketing for the store which creates potential challenges from traditional as well as new competitors. The barriers to entry in the space are moderate. ShopLocal’s ability to retain and grow its client base and revenue depends largely on expansion of the types of promotions managed, innovation in distribution methods and continued high-quality service.

Regulation and legislation (for digital segment businesses and digital operations associated with publishing and broadcasting businesses): The U.S. Congress has passed legislation that regulates certain aspects of the Internet, including content, copyright infringement, taxation, access charges, liability for third-party activities and jurisdiction. In addition, federal, state, local and foreign governmental organizations have enacted and also are considering other legislative and regulatory proposals that would regulate the Internet. Areas of potential regulation include, but are not limited to, user privacy and intellectual property ownership. With respect to user privacy, the legislative and regulatory proposals would regulate behavioral advertising, which specifically refers to the use of user behavioral data for the creation and delivery of more relevant, targeted Internet advertisements. Some Gannett properties leverage certain aspects of user behavioral data in their solutions.

Broadcasting

At the end of 2011, the company’s broadcasting division, headquartered in McLean, VA, included 23 television stations in markets with nearly 21 million households covering 18.1% of the U.S. population. The broadcasting division also includes Captivate Network.

At the end of 2011, the broadcasting division had approximately 2,600 full-time and part-time employees, approximately 2% more than at the end of 2010.

The principal sources of the company’s television revenues are: 1) local advertising focusing on the immediate geographic area of the stations; 2) national advertising; 3) retransmission of the company’s television signals on satellite and cable networks; 4) advertising

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on the station’s web and mobile products; and 5) payments by advertisers to television stations for other services, such as the production of advertising material. The advertising revenues derived from a station’s local news programs make up a significant part of its total revenues. Captivate derives its revenue principally from national advertising on video screens in elevators of office buildings and select hotel lobbies. As of year-end, Captivate had over 9,700 video screens located in 25 major cities across North America.

Advertising rates charged by a television station are based on the ability of a station to deliver a specific audience to an advertiser. The larger a station’s ratings in any particular day part, the more leverage a station has in asking for a price advantage. As the market fluctuates with supply and demand, so does the station’s pricing. Almost all national advertising is placed through independent advertising representatives. Local advertising time is sold by each station’s own sales force.

Generally, a network provides programs to its affiliated television stations and sells on its own behalf commercial advertising for certain of the available ad spots within the network programs. The company’s television stations produce local programming such as news, sports, and entertainment.

The company broadcasts local newscasts in High Definition (HD) in all of its 19 markets. These telecasts have been well received given the dramatic increase in sales of HD televisions.

For all of its stations, the company is party to network affiliation agreements as well as cable and satellite carriage agreements. The company’s 12 NBC-affiliated stations have agreements that expire on Jan. 1, 2017. The agreements for the company’s six CBS affiliates expire on Dec. 31, 2015. The company’s three ABC affiliates have agreements which expire on Feb. 28, 2014. The company’s two MyNetworkTV-affiliated stations have agreements that expire in October 2014.

In 2011, the company completed retransmission negotiations with multiple providers including hundreds of cable operators in its local markets. All are multi-year agreements that provide the company with significant and steady revenue streams. There are no incremental costs associated with this revenue and therefore all of these revenues contribute directly to operating income. Retransmission revenues are expected to grow by double digits again in 2012.

The transition to DTV has provided the company with the ability to offer additional services to its viewers. The company is very active in creating a Mobile DTV service for viewers nationwide. In 2011, Gannett’s partnership in Pearl (a group of nine broadcast companies) continued making progress with FOX, NBC and ION executing a nationwide Mobile DTV business called Mobile Content Venture (MCV). MCV made several announcements in 2011 which demonstrated significant advancements of the business: 1) stations continue to power up mobile transmitters around the country (eight Gannett stations), 2) over 32 markets will launch the MCV service in 2012 across the country, 3) a consumer nationwide brand was announced and the product will be named “Dyle,” and 4) agreements with both Metro PCS/Samsung and Belkin to provide the service were announced at the Consumer Electronics Show in January 2012.

As part of our growing engagement and innovation with social media, Gannett joined 10 leading television broadcast groups and invested in a long-term commercial partnership with a Silicon Valley-based start-up called ConnecTV. The service being developed is a free, real-time social network built for TV viewers. ConnecTV expands the TV experience by allowing viewers to interact with other fans watching the same program, while providing a broad range of related content and promotional opportunities. The product is an application that can be downloaded to any mobile device.

Programming and production: The costs of locally produced and purchased syndicated programming are a significant portion of television operating expenses. Syndicated programming costs are determined based upon largely uncontrollable market factors, including demand from the independent and affiliated stations within the market. In recent years, the company’s television stations have emphasized their locally produced news and entertainment programming in an effort to provide programs that distinguish the stations from the competition, to increase locally responsible programming, and to better control costs.

The company’s television stations continue to improve their Information Centers with a renewed emphasis on creating powerful, focused and dynamic newscasts with the help of the division’s newly created “9 Areas of Focus.” Following a year-long research project, Gannett TV stations have focused on several content areas and presentation methods that will engage current viewers and help return non-viewers to local TV news. The focus areas range from Community Advocacy to Watchdog Journalism to Debate and Opinion. Furthermore, staff members are much more engaged in the product.

In early 2011, the company’s Phoenix station launched a resource sharing effort with the company’s Phoenix publishing and online operations which brought the company’s channel 12 News television operation into the Republic Media building. The television station is broadcasting from a high-tech street-level studio. The combined news staff is part of a print, broadcast and online collaboration designed to add breadth and depth to coverage for readers and viewers, and initially is focusing on four areas: breaking news, sports, features/entertainment and photo/video.

The broadcast division is currently installing an updated news-room workflow solution that allows it to share content seamlessly throughout the entire company. New, lower cost cameras, are also part of this new workflow and allow more people to shoot and edit their own video while improving the overall quality of Gannett Broadcasting’s on air look.

The stations are also aggressively deploying a new technology that allows Gannett Broadcasting to do high quality, even HD, live shots from any location where cellular service is available. This technology will allow the company to greatly expand its live news distribution abilities at a far more efficient cost. This combination gives Gannett television stations greater flexibility and ease in the use of live shots while at the same time reducing capital purchases and depreciation. Both of these are examples of using new technologies to increase content, quality and efficiency while reducing cost.

The Broadcast Division has established several centralized operations including Gannett Graphics Group (G3), web and digital developers, “hubbing centers” for each of its three network affiliate groups for master control monitoring, and the Center for Credit and Collections (CCC). Operational efficiencies and cost reductions have been realized from these centers. The Broadcast Division also established a centralized traffic center called Gannett Traffic Operation (GTO). While GTO created some efficiencies and permitted a slight reduction in workforce, the key strategic reason for centralizing was to give the company a mechanism to better standardize best practices with inventory, and better position the company for future opportunities for business with a single point of entry to its inventory.

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Broadcasting stations were recognized with several regional and national awards. Thirty-nine regional Edward R. Murrow Awards from the Radio Television Digital News Association were awarded to Gannett television stations, including four Overall Excellence Awards received at KARE in Minneapolis-St. Paul, MN; KUSA in Denver, CO; WGRZ in Buffalo, NY; and KSDK in St. Louis, MO. Three Gannett TV stations – WGRZ, KARE and KUSA – won five national Edward R. Murrow awards for a variety of locally produced work, with WGRZ winning for overall excellence in the small market category. KUSA won its 12th consecutive Station of the Year award from Colorado Broadcasters Association.

Competition: In each of its broadcasting markets, the company’s stations and affiliated web sites compete for revenues with other network- affiliated and independent television and radio broadcasters and with other advertising media, such as cable television, newspapers, magazines, direct mail, outdoor advertising and Internet media. Other sources of present and potential competition for the company’s broadcasting properties include home video and audio recorders and players, direct broadcast satellite, low-power television, radio, video offerings (both wire line and wireless) of telephone companies as well as developing video services. The stations also compete in the emerging local electronic media space, which includes Internet or Internet-enabled devices, handheld wireless devices such as mobile phones and iPads, social media platforms, and digital spectrum opportunities associated with DTV. The company’s broadcasting stations compete principally on the basis of their audience share, advertising rates and audience composition.

In 2011, the Broadcast Division focused on increasing engagement with local customers across all platforms, not just television, and those efforts paid off. The division saw very strong growth in digital metrics as its content remains in high demand and it re-structured workflows and re-designed consumer products. Overall in 2011, online visitors increased 27% and page views were up 24%. This is a significant improvement over 2009-2010 when page views increased 6%. The most valuable content, from an advertising perspective, is video. On demand video plays increased 100% in 2011 as a direct result of the workflow and design initiatives.

Consumer engagement on mobile devices is also a priority. 2011 saw strong growth despite an exponential growth in competition. Mobile video consumption increased almost every month in 2011, growing 275% from January 2011 to December 2011. In the second half of 2011, the stations began rolling out local station apps for the iPhone. Page views from these apps are now double the page views from the mobile web.

Social media is a positive development for broadcasters. Broadcast television news, sports and entertainment programming drive some of the largest engagement numbers on Facebook and Twitter, and that engagement in turn creates more interest in that programming, as well as free marketing. Whether it’s following big breaking news, such as Hurricane Irene or the East Coast Earthquake, or getting involved to change laws or policies, or even helping to replenish a food bank or volunteering in breast cancer awareness events, customers engage with local brands using Facebook and Twitter. Gannett Broadcast Facebook fans increased over 200% in 2011 and Twitter increases were similar. The benefit is not only in having customers who “like” or “follow” Gannett TV stations, but also in engaging people who contribute pictures, comments, and give input every day on local content. Social media has enabled a true two-way conversation that results in deep consumer engagement and loyalty while providing new means for local advertisers to reach targeted customers.

Local news and information is highly important to a station’s success, and there is a growing emphasis on other forms of programming that relate to the local community. Network and syndicated programming constitute the majority of all other programming broadcast on the company’s television stations, and the company’s competitive position is directly affected by viewer acceptance of this programming.

Regulation: The company’s television stations are operated under the authority of the Federal Communications Commission (FCC), the Communications Act of 1934, as amended (Communications Act), and the rules and policies of the FCC (FCC Regulations).

Television broadcast licenses are granted for periods of eight years. They are renewable upon application to the FCC and usually are renewed except in rare cases in which a petition to deny, a complaint or an adverse finding as to the licensee’s qualifications results in loss of the license. The company believes it is in substantial compliance with all applicable provisions of the Communications Act and FCC Regulations. Nine of the company’s stations filed for FCC license renewals in 2004, eight did so in 2005, another five in 2006 and the remaining station filed on Feb. 1, 2007. As of January, 2012, 18 of the 23 license renewal applications were granted and the company expects the remaining five pending renewals to be granted in the ordinary course.

FCC Regulations also limit concentrations of broadcasting control and regulate network and local programming practices. FCC Regulations governing multiple ownership limit, or in some cases prohibit, the common ownership or control of most communications media serving common market areas (for example, television and radio; television and daily newspapers; or radio and daily newspapers). In addition, the Communications Act includes a national ownership cap under which one company is permitted to serve no more than 39% of all U.S. television households. (The company’s 23 television stations currently reach approximately 18.1% of U.S. television households.) FCC rules permit common ownership of two television stations in the same market in certain circumstances provided that at least one of the commonly owned stations is not among the market’s top four rated stations at the time of acquisition.

In 2007, the FCC revised its ownership regulations by adopting a modified daily newspaper/broadcast cross-ownership rule. In adopting this new rule, the FCC granted a permanent waiver authorizing the company’s continued ownership of both KPNX-TV and The Arizona Republic in Phoenix, AZ. The revised rule may be of limited value in permitting expanded ownership opportunities because it contains presumptions that (i) common ownership of a television station and a daily newspaper may be permitted in the top 20 television markets only if the television station is not one of the top four rated stations, and (ii) in all other television markets, common ownership of a newspaper and television station in the same market is not in the public interest. (Most of the company’s stations are rated number one or two in their markets.) Applicants for proposed combinations that are presumed not to be in the public interest will be required to satisfy specified criteria to rebut the presumption against common ownership. The FCC did not revise any other aspect of the FCC ownership rules. Following an appeal, in July 2011 a court remanded the FCC’s

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relaxation of the newspaper/broadcast rule back to the FCC for its failure to comply with statutory notice requirements. The court rejected a challenge to the FCC’s grant of a permanent waiver to the company’s continued ownership of the Arizona Republic and KPNX-TV. The court also rejected a challenge to the FCC’s retention of the local television ownership rule. Media parties have sought Supreme Court review of the court’s decision not to further liberalize the ownership rules. In addition, the FCC has commenced a new review of its ownership rules, as it is required to do every four years, and this review may result in additional rule modifications. The FCC has proposed to retain the local television ownership rule (but is seeking comment on a possible waiver standard for smaller markets), and has proposed a modest relaxation of the newspaper/broadcast rule (similar to the rule that the FCC had adopted during the last ownership review that was rejected in court). The FCC’s notice of proposed rulemaking also seeks comment about shared services agreements and local news agreements, including whether such arrangements should be attributable for purposes of the ownership rules. This review process is expected to continue throughout 2012.

Congress and the FCC are considering possible changes to the Communications Act and to other FCC Regulations, respectively, including a “repacking” of the television spectrum, which might entail the company’s stations moving to different channels, having smaller service areas, and /or accepting additional interference; the rules concerning retransmission consent (which govern cable and satellite operators’ carriage of the signals of the company’s stations); the statutory cable and satellite copyright regime; and the rules and policies concerning the specific amount and type of public-interest programming required to be carried by broadcast stations to satisfy their license obligations and requirements concerning the disclosure of such programming efforts.

Employees

At the end of 2011, the company and its subsidiaries had approximately 31,000 full-time and part-time employees including 2,000 for CareerBuilder. At certain operations, headcount reductions were made in 2011 as part of efficiency and consolidation efforts taken in response to the uneven recoveries in the U.S. and U.K. economies and declining revenues, particularly in the company’s publishing businesses.

Approximately 11% of those employed by the company and its subsidiaries in the U.S. are represented by labor unions. They are represented by 64 local bargaining units, most of which are affiliated with one of seven international unions under collective bargaining agreements. These agreements conform generally with the pattern of labor agreements in the publishing and broadcasting industries. The company does not engage in industrywide or companywide bargaining. The company’s U.K. subsidiaries bargain with two unions over working practices, wages and health and safety issues only.

The company provides competitive group life and medical insurance programs for full-time domestic employees at each location. The company pays a substantial portion of these costs and employees contribute the balance.

The company and its subsidiaries have various retirement plans, including plans established under some collective bargaining agreements.

The company has a 401(k) Savings Plan, which is available to most domestic non-represented employees and unionized employees who have bargained participation in the plan.

In June 2008, the Board of Directors approved amendments to each of (i) the Gannett Retirement Plan; (ii) the Gannett Supplemental Retirement Plan (SERP); (iii) the Gannett 401(k) Savings Plan (401(k) Plan); and (iv) the Gannett Deferred Compensation Plan (DCP). The amendments were designed to improve the 401(k) Plan while reducing the amount and volatility of future pension expense. As a result of the amendments to the Gannett Retirement Plan and SERP, most participants in these plans had their benefits frozen as of Aug. 1, 2008. Participants whose Gannett Retirement Plan and, if applicable, SERP benefits were frozen will have their frozen benefits periodically increased by a cost of living adjustment until benefits commence. Effective Aug. 1, 2008, most participants whose benefits were frozen under the Gannett Retirement Plan and, if applicable, the SERP, receive higher matching contributions under the 401(k) Plan. Under the new formula, the matching contribution rate generally increased from 50% of the first 6% of compensation that an employee elects to contribute to the plan to 100% of the first 5% of compensation. The company also makes additional employer contributions to the 401(k) Plan on behalf of certain long service employees. The DCP was amended to provide for Gannett contributions on behalf of certain employees whose benefits under the 401(k) Plan are capped by IRS rules.

Newsquest employees have local staff councils for consultation and communication with local Newsquest management. Newsquest had provided the majority of its employees with the option to participate in a retirement plan that incorporates life insurance. In October 2010, after discussion with its pension plan trustees and employees, the decision was made to close the Newsquest defined benefit plan to future accrual, effective March 31, 2011. The plan closure was made to reduce pension expenses and funding volatility and was part of a package of measures to address the plan’s deficit. The company expects that some of the savings from closing the defined benefit plan will be partially offset by increased membership in Newsquest’s defined contribution plan.

A key initiative for the company is its Leadership and Diversity program that focuses on finding, developing and retaining the best and the brightest employees and a diverse workforce that reflects the communities Gannett serves.

Environmental Initiatives

For 2011, Gannett invested in seven large green HVAC equipment project upgrades. The total investment, after rebates, was $892,000 with an annual cost savings of $766,000. This program achieves an energy reduction of 6.9 million kilowatt hours (KWH) of electricity every year. Gannett has also identified new projects that will reduce power consumption by another 4 million kilowatt hours in 2012.

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MARKETS WE SERVE

DAILY LOCAL MEDIA ORGANIZATIONS AND AFFILIATED ONLINE SITES

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DAILY LOCAL MEDIA ORGANIZATIONS AND AFFILIATED ONLINE SITES

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DAILY LOCAL MEDIA ORGANIZATIONS AND AFFILIATED ONLINE SITES