Tribune Q1 dips into red as ads falter

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Weak advertising and costs involving the planned sale of two newspapers put Tribune in the red in the first quarter, as execs canceled an earnings conference call because of the intended sale of the rest of the company.

Billionaire investor Sam Zell signed an agreement April 1 to take the Los Angeles Times parent private in a leveraged deal valued at the time at $8.2 billion.

On Thursday, the Chicago-based media group posted a $15.6 million loss and a 4% revenue drop to $1.21 billion. It wasn't a great day for several publishing groups, such as Gannett and the New York Times, which also reported disappointing results.

At Tribune, broadcasting revenue was flat, and publishing revenue slid 5%. Classified advertising was particularly soft in the period, and Tribune recorded an after-tax loss of $33 million to write down a pair of Connecticut papers it intends to sell off.

CEO Dennis FitzSimons -- who will remain in his post after Zell assumes the chairman's mantle -- has said the company doesn't intend to sell the Times or other newspapers in the foreseeable future. Zell has concurred. Some analysts suggest the company might sell some of its 23 TV stations.

The FCC will soon review Tribune operations in markets including Los Angeles, where waivers allowed it temporarily to operate TV properties and newspapers (HR 4/19). Tribune has said it hopes to finalize the complex Zell transaction in two stages this year. Separately, it has placed its Chicago Cubs baseball team on the sales block.

"The print advertising environment was challenging in the first quarter due to softness in classified categories," FitzSimons said. "Our interactive division continues to generate significant growth, and our newspapers continue to innovate. ... In broadcasting, revenue improvements in primetime helped offset weaker conditions due in part to the absence of political spending versus last year."

Gannett's quarterly net income tumbled 11% to $210.6 million, with the media group blaming soft print advertising in the March quarter.

Its revenue was roughly flat at $1.87 billion.

First-quarter profit at the New York Times publishing group slid 26% to $23.9 million.

Revenue at its continuing operations -- the company recently sold off a TV stations group -- dipped 1.6% to $786 million.

"This is not going to be a bang-up year for newspaper companies," said analyst John Morton of Morton Research. "We don't really see any surge in advertising this year. Indeed, it might even get worse. It appears the Internet is taking its toll, especially in classified."

Tribune shares fell 64 cents, or 0.6% to close at $32.48 on Thursday.

Gannett closed down 71 cents, or 1.2%, at $57.60.

Shares in the New York Times declined 66 cents, or 2.7%, to end the session at $23.90.
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