Despite Ad Boost, Tribune Co. Profits Drop

By: Mark Fitzgerald Classified, retail, national and preprint advertising was up at Tribune Co. newspapers in the first quarter, but the Chicago-based media giant reported net profit fell because of a loss on investments.

Tribune said its first-quarter net profit was $120.7 million, or 35 cents per share, compared to $141.1 million, or 41 cents a share in the same quarter last year. Non-operating losses amounted to 5 cents a share, including a loss on derivatives and a gain in the sale of its 50% share of the Spanish-language Los Angeles newspaper La Opini?n.

"After a slow start in January, revenues improved month-over-month during the first quarter," said Dennis FitzSimons, Tribune's chairman, president and chief executive officer. "We saw strong growth in help wanted advertising and solid increases over last year in our television group. Cash operating expenses grew in line with our expectations this quarter, due in large part to the impact of higher benefit and newsprint costs this year."

First quarter operating revenues of its publishing properties reached $1 billion, up 3% from the same quarter last year. Tribune said cash operating expenses were up 5% and that operating cash flow decreased 3% to $235 million. Operating profit of the sector was down 4% to $190 million from the year before.

Advertising was up across the board, Tribune said. Retail advertising revenues rose 5%. Increases in furniture/home furnishing, hardware, food, and health care were partially offset by a decline in department stores and electronics.

Preprint revenues increased 7%, led by a 14% increase in Los Angeles, a 13% jump in South Florida and a 6% boost in Chicago. Tribune said preprint revenue at its New York properties was flat.

National advertising increased 4% for the quarter, led by gains in the financial, auto manufacturers and travel categories, which Tribune said were partially offset by decreases in high-tech and movies and entertainment.

Classified advertising rose 5% for the quarter. Help wanted revenues for the group were up 10%, with a 10% increase in Los Angeles, 6% in New York and 5% in Chicago. Auto classified was up 5% and real estate increased 3%.

Interactive revenues were $29 million, up 38%, which Tribune attributed to strength in classified and banner/sponsorship advertising. It said revenues at its CareerBuilder network increased 66% from last year's first quarter. March unique visitors grew 124% from last year.

Cash operating expenses increased 5% in the newspaper/publishing sector, primarily because of higher newsprint prices, higher retirement and other benefit expenses, and new publications. Newsprint and ink expense was 10% higher than 2003 as newsprint cost per ton was up 9% and consumption increased slightly, Tribune said.