Merrill Lynch Keeps Tribune Buy Rating

By: Merrill Lynch issued a note affirming its Buy rating of Tribune Co. yesterday, and Tribune announced that it was lowering its Q3 earnings to about 50 cents a share.

"We still have conviction in Tribune's long-term value," the report said. In the short-term, Tribune has been blindsided by circulation fraud at Newsday, a weak advertising climate for both its newspaper and TV division, disappointing ratings on the WB, and some possible "negative impact form the roll-out of People Meter in larger markets."

However, only the Newsday debacle may have "impaired" long term value. "Tribune is a value stock in need of a catalyst, but should appeal to investors with patience," the report said.

The investment firm is lowering its ad revenue growth forecast for Q3 from 3.2% to 3.0%. Merrill Lynch also reduced its EPS estimate for Q3 by 2 cents, to 51 cents per share. As for 2005, the firm expects to see newspaper ad growth at 3.4% but it's leaving its EPS estimate at $2.46 per share.