Tribune ‘Will Look to Move Forward Constructively’ With Chandlers

By: Jennifer Saba

Dennis FitzSimons, Tribune’s chairman and CEO, said the company “will look to move forward constructively” with the Chandlers but declined to comment on any specifics or potential negotiations.

In June, the Chicago-based company came under fire from the Chandler Trusts, its largest shareholder — three of the trustees sit on Tribune’s board. The trusts sent the board a hostile letter criticizing Tribune’s strategy to buy back 25% of its shares, calling the action “hasty and ill-informed.”

Tribune completed its Dutch Auction tender buying 45 million shares or 15%. During a quarterly conference call this morning, FitzSimons reiterated the company will buy an additional 20 million shares on the open market. FitzSimons also said Tribune would consider any asset sale beyond the $500 million announced in May.

Meanwhile Tribune reported today that advertising revenue for its publishing division was flat for Q2. Excluding Newsday, which has been hammered on the preprint front, advertising revenue increased 2%.

For the quarter, ad revenue was up 1% in Los Angeles and 4% in Chicago. Ad revenue at Newsday slipped 10%.

For the company, retail advertising revenue was up 1% and preprint revenue was flat. National advertising dropped 7%.

Classified advertising was up 3%. Within the category, real estate grew 29% while auto and help wanted declined 13% and 3% respectively.

There are signs that classified revenue — a bright spot over the past several quarters — is starting to slow. Auto revenue has been under siege and executives with Tribune indicated they don’t know when the category will recover. “It’s still a really challenging environment for auto dealers,” Scott Smith, president of Tribune publishing, said on the call. “We are not seeing any big signs of [a] pick-up,”

Recruitment ad revenue — once a strong category — is staring to show some weakness. Smith said it’s a fairly broad trend across the industry since print revenue is down and job creation has slowed. Online revenue for the category is growing and Tribune is “aggressively” raising its online prices, Smith said.

Executives said they are starting to improve the situation at Newsday after the paper severed a relationship with a preprint representative that took away many advertisers. “It will be a battle,” FitzSimons said about Newsday’s “strong competitor” CBA Industries. “We will do whatever it takes to get the business back.”

On the call, executives said Newsday recently won back a large grocery advertiser and expects to cycle through the preprint issue in the next quarter. In addition, the paper has settled with about 90% of its advertisers — though one major account has not signed on yet — over the circulation inflation that was revealed in June 2004.

On the circulation front, Tribune reported that revenue for the quarter was down 5%. Individually paid circulation fell about 2% and total net paid circulation declined 5%. The company is still cutting other paid circulation and is offering selected discounting to customers to reduce churn.

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