Tribune Promises Quick Action on Circ Scandal

By: Jennifer Saba Knowing that the current circulation scandal at two of his newspapers was much on the mind of Wall Street, Tribune Co. Chairman, President and CEO Dennis FitzSimons addressed the concerns at today's Mid-Year Media Review presentation.

"We are taking action to quickly address circulation. Eighty percent of our revenue comes from advertising and we must have the confidence of our advertisers," he told a group of about 150 analysts and investors who spent half an hour firing tough questions at Tribune executives.

FitzSimons announced that the company was planning to implement internal quarterly certification circ standards in addition to designing compensation packages that can pull bonuses or stock options from those caught red-handed.

When pressed about how long it will take for details to emerge about the probe involving the company's Newsday (Click for QuikCap) and Hoy properties, and the response of advertisers, Tribune Publishing President Jack Fuller reported that advertisers' reactions "have been good." But he added that the company would rather be right than quick about the final completion of the internal investigation currently taking place. "We really want to do this in a methodical way," Fuller said. "We are going about it with a lot of energy and we're taking our advertisers lead. We want to do it right the first time."

The Newsday and Hoy circ debacles come on the heels of a fairly weak second quarter for the company. Tribune Co. had projected an aggressive revenue growth rate for the year at 6%. FitzSimons said the current mid-year growth rate of 3.2% was not meeting goals and consequently, the company revised its outlook to 4% growth for 2004.

The Los Angeles Times was singled out in the short fall, as the paper makes up 30% of the publishing group's revenue. Tribune is taking $35 million to $40 million in expense reductions in the second half, with the majority of it coming from Los Angeles. Fuller said the year for the Times did not start off badly but that they were caught off-guard by May's weak performance. For the month, national advertising at the Times was off by one-third because of softness in the technology, travel and entertainment categories.

Earlier this week, the Times and its affiliates cut about 190 positions.

Ad revenue was up 4% for the month of May overall for the publishing group. Taking the Times out of the picture, revenue was up 7%. Fuller said that advertising for Los Angeles is still shaky in June but executives expect growth to improve over the rest of the year. "The downturn was sharp and severe [in May] and there will be lingering effects in June," he said. The company still plans to increase color capacity in L.A. and Chicago.