Tribune Q3 earnings drop as ad revenue slows
EmptyCHICAGO -- Media conglomerate Tribune Co. said Wednesday its third-quarter earnings dropped 7% as the housing slump and lower consumer spending worsened an ongoing decline in advertising revenue from its newspapers.
The reduced profit and a 4% drop in revenue still exceeded analysts' expectations, and Tribune's slumping stock rose.
Despite skepticism on Wall Street, Chief Executive Dennis FitzSimons said the transaction under which Tribune is going private remains on track to close in the fourth quarter.
Tribune is still waiting for the Federal Communications Commission to grant it waivers from rules banning same-market ownership of television and newspapers, nearly seven months after real estate magnate Sam Zell agreed to lead the $8.2 billion buyout.
Net income for the July-through-September quarter fell to $152.8 million from $164.3 million a year earlier. The per-share figure nearly doubled to $1.22 from 65 cents because the number of shares outstanding fell by half.
Earnings from businesses operated in both periods rose to 69 cents per share from 65 cents per share last year. Excluding one-time items, earnings were 38 cents per share, or 12 cents better than the consensus estimate of analysts surveyed by Thomson Financial.
Revenue slipped to $1.28 billion from $1.33 billion last year but topped Wall Street's estimate of $1.25 billion. Advertising revenue fell 9% to $674.5 million, from $741.2 million a year earlier.
Tribune shares rose 64 cents, or 2.3%, to $28.19 in morning trading. They remain well below the $34-a-share price agreed to by Zell on April 1, reflecting market doubts the deal will go through.
A downturn in the housing market has dampened real estate advertising, compounding a larger problem for the industry as ad spending and readers migrate to the Web.
The publishing unit, consisting of Tribune's 11 newspapers, saw its operating profit decline 15% to $123 million while revenues were down 7% to $871 million.
Tribune owns the Chicago Tribune, Los Angeles Times and nine other daily papers along with 23 television stations and the Chicago Cubs baseball team, which is to be sold as a condition of Zell's deal.
For the first nine months of 2007, net income fell to $165.7 million, or 88 cents per share, down from $354.9 million, or $1.22 per share, a year earlier. Revenue declined 5% to $3.8 billion from $4 billion.
Deutsche Bank analyst Paul Ginocchio said in a research note that he now expects the FCC to grant Tribune its sought-for waivers after it issues a public notice for a Dec. 18 vote, likely in mid- to late November. He said a late November waiver would give the company time to close the deal by the end of this year.