Total newspaper ad revenues on a pro forma basis declined 8% in 2001. All advertising classifications showed declines reflecting a soft and very uncertain general U.S. economy, which was worsened by the attacks of Sept. 11. In addition, revenue comparisons are negatively impacted by the additional 53rd week in 2000 and an overall decline in the exchange rate for sterling. Ad spending by larger retailers declined for the year, reflecting closings and consolidations, partially offset by greater revenue from small- and medium-sized advertisers. Classified advertising revenues declined 9%. Employment ad revenues fell 21% for the year as job market conditions in the U.S. continued to worsen. National advertising revenues were down 15%. Most of the national revenue loss was at USA TODAY, which reported a 22% decrease in revenues. Advertising revenues at USA TODAY were adversely affected by the absence of year-earlier Olympics-related ad spending and significantly lower demand for travel-related advertising following the terrorist attacks. Preprint and other advertising revenues declined 2%.  On Dec. 30, 2001, the company’s television division, headquar- tered in McLean, Va., included 22 television stations in markets with a total of more than 18.6 million households.  At the end of 2001, the broadcasting division had approxi- mately 3,000 full-time and part-time employees. Broadcasting revenues accounted for approximately 10% of the company’s reported operating revenues from continuing operations in 2001, 13% in 2000 and 14% in 1999. The principal sources of the company’s broadcasting revenues are: 1) local advertising focusing on the immediate geographic area of the stations; 2) national advertising; 3) compensation paid by the networks for carrying commercial network programs; 4) advertising on the stations’ Web sites; 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. The company’s newspaper segment advertising and other  revenues from Internet activities totaled approximately $69  million in 2001, $62 million in 2000 and $39 million in 1999. Looking to 2002, modest ad revenue and volume growth is anticipated in most categories. Price increases are generally planned at most properties, and the company will continue to expand and refine sales and marketing efforts. Changes in  economic factors such as interest rates, employment levels and the rate of general economic growth will have an impact on  revenue at all of the company’s newspapers. Raw materials:  Newsprint is the basic raw material used to  publish newspapers. During 2001, the company’s total newsprint consumption was 1,216,000 metric tons, including the compa- ny’s portion of newsprint consumed at joint operating agencies, consumption by USA WEEKEND, USA TODAY tonnage  consumed at non-Gannett print sites and consumption by Newsquest. Newsprint consumption was flat with 2000 despite an increase resulting from a full year impact of the acquired properties in 2000. Newsprint consumption savings were  realized due to reduced advertising space and web width reduc- tions at a number of the company’s properties in the years  1999-2001. The company purchases newsprint from 20 North American, European and other offshore suppliers under  contracts that expire at various times through 2010. For all of its stations, the company is party to network  affiliation agreements. The company’s three ABC affiliates have agreements which expire between 2005-2007. The agreements for all of its six CBS affiliates run through 2004-2005. The  company’s 13 NBC affiliated stations have agreements that will expire in December 2005.  Advertising rates charged by a television station are based pri- marily upon the station’s ability to attract viewers, demographics and the number of television households in the area served by the station. Practically 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, sells commercial advertising announcements within the network programs and compensates the local stations by paying an amount based on the television station’s network affiliation agreement. Programming: The costs of locally produced and purchased syndicated programming are a significant portion of television operating expenses. Syndicated programming costs are deter- mined based upon largely uncontrollable market factors,  including demand from the independent and affiliated stations within the market and in some cases from cable operations. 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 and to better control costs. During 2001, all of the company’s newspapers consumed some recycled newsprint. For the year, more than 80% of the company’s domestic newsprint purchases contained recycled content.  In 2001, newsprint supplies were adequate. The company believes that the available sources of newsprint, together with present inventories, will continue to be adequate to supply the needs of its newspapers.  The average cost per ton of newsprint consumed in 2001 increased 10% compared to the 2000 average cost.  Broadcasting 57