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Tribune Reduces Newspapers' Circulation Figures Again

The publisher of Newsday and Hoy also will record a charge of as much as $60 million.

September 11, 2004|From Reuters

Tribune Co. said Friday that an internal investigation has uncovered more circulation problems at its two New York newspapers, forcing a further reduction in the overall numbers and resulting in a third-quarter charge of as much as $60 million to settle claims from advertisers.

That charge follows a second-quarter pretax charge of $35 million for the estimated cost of settling claims from the initial circulation correction.

Tribune -- which says it is the leading major-market newspaper group, with the third-largest total U.S. circulation -- had cut circulation figures at its Melville, N.Y.-based Newsday and the New York edition of Spanish-language daily Hoy in June after advertisers claimed it had inflated numbers.

Tribune's shares, however, dropped less than 1% on the New York Stock Exchange on Friday because investors had expected additional charges related to the inflated figures, according to Fulcrum Global Partners analyst Edward Atorino.

"It's a lot of money, and more than I thought it would have been, but the bad news is out," said Atorino, who believes the latest charges probably would represent the bulk of the financial effect of Tribune's misstatements.

The scandal has roiled other big newspaper groups, including Belo Corp. and Hollinger International Inc., both of which have admitted to overstating past circulation figures.

Tribune, which also publishes the Los Angeles Times and the Chicago Tribune, said the newest revisions were based on ongoing audits by the company and the Audit Bureau of Circulations, or ABC, the nonprofit organization that conducts audits of publications.

The company expects to record a charge of $45 million to $60 million in the third quarter related to its latest reductions of circulation figures, which cover the 18 months ended March 31.

The charge also includes the effect of misstatements for the 12 months ended Sept. 30, 2002, which the ABC is still reviewing.

Tribune has said it will negotiate with advertisers on a case-by-case basis to discuss a settlement of cash or "make-good" advertising space.

The company said it now believed its 2003 daily circulation figures for Newsday were 480,000 to 490,000, about 50,000 to 60,000 lower than it indicated when it first revealed its misstatements in June.

Tribune estimates Newsday's Sunday circulation figures at 570,000 to 580,000, about 30,000 to 40,000 lower than it said in June.

The company estimates that Hoy New York's daily circulation was 45,000 to 55,000 for the year ended September 2003. This is about 22,000 to 32,000 lower than the Hoy circulation figures it released in June.

Tribune said it was withdrawing reported circulation numbers for the Hoy newspapers in Chicago and Los Angeles because those papers were still starting up, with circulation numbers based mainly on promotional or sample copies of the paper.

"It is difficult to obtain a true circulation number when you have that much sampling going on," Tribune spokesman Gary Weitman said.

Hoy Chicago was launched in September of last year and Hoy Los Angeles started in March.

Tribune shares fell 14 cents to $41.35.

Tribune said it expected ABC reports on both Newsday and Hoy New York in October and November.

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