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Tribune swings to a loss

L.A. Times' owner loses $121.6 million in the third quarter as newspaper ad sales fall.

November 11, 2008|Times Wire Services

Tribune Co., owner of the Los Angeles Times, Chicago Tribune and other media properties as well as the Chicago Cubs and Wrigley Field, said Monday that it lost $121.6 million in the third quarter as newspaper advertising revenue fell.

The privately held company's net income a year earlier was $152.8 million. Revenue fell 10.5% to $1.04 billion from $1.16 billion, the company said.

"This is slightly worse than we were expecting but certainly within the parameters we would expect given the types of numbers posted by others" in the newspaper industry, Fitch Ratings credit analyst Mike Simonton said.

During the quarter, Tribune repaid $888 million of debt using proceeds from the sale of receivables, Newsday and a 10% stake in CareerBuilder. Third-quarter operating costs rose 6.2%, including $45 million in severance costs, a $25-million software write-off and $14 million in compensation costs related to an incentive plan and the company's stock ownership plan.

"We are operating in an exceptionally difficult financial and economic environment," Chief Executive Sam Zell said in a statement. "The newspaper industry continues to see extraordinary declines in ad revenues, and Tribune is no exception."

Publishing revenue fell 13% to $654 million as advertising revenue dropped 19% and total weekday paid circulation fell 7% to 2.2 million.

Revenue from the broadcasting division, which includes 23 television stations, fell 8.3% to $264.4 million from $288.3 million a year earlier.

The company was taken private last December in an $8.2-billion buyout led by Zell, a real estate mogul. It still must report its results to comply with bondholder agreements.

Tribune said its debt load increased to $11.8 billion at the end of the third quarter, up from $9.4 billion a year earlier.

The company needs to sell the Chicago Cubs baseball team by year-end to avoid violating loan covenants, Simonton said. It also plans to sell other sports properties to help pay down its debt.

The company also has been considering selling its Tribune Tower headquarters building in Chicago and the headquarters of the Los Angeles Times, formerly known as Times Mirror Square.

"The second half is proving to be very weak, and the credit crunch has made it very difficult to execute an asset sale in this environment," Simonton said.

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