Tribune Reports Weak July -- Shareholder Activist Peltz Buys Stake

By: E&P Staff The Tribune Co. reported today consolidated revenue for July declined 1.4% to $503 million compared to the same period a year ago.

Publishing revenue dropped 1.9% to $353 million. Advertising revenue slipped 1.4% to $278 million. Excluding Newsday, advertising revenue was nearly flat, down 0.3%.

Retail advertising revenue decreased 2% with weakness in the department store and specialty merchandise categories. Preprint revenue, which is included in retail, was down 1%. Excluding Newsday, preprint revenue grew 1%.

National advertising revenue dropped 3.8% due to softness in the movie and telecommunications categories. Classified advertising revenue grew 0.7%. Within that category, real estate jumped 32%. Help wanted declined 8%. Automotive was down 14%. Interactive revenue, which is primarily included in classified, rose 23% to $21 million.

Circulation revenue dropped 5.6% due to selective discounting.

Meanwhile, the Chicago Tribune's Phil Rosenthal reported today that shareholder activist Nelson Peltz has purchased 2.8 million shares of Tribune or 1.2% during the quarter ended June 30.

Peltz is known for being a "demanding, disruptive presence," Rosenthal wrote. The billionaire, who made his fortunate in the 1980s, is currently embroiled in a battle with the H.J. Heinz Co. Peltz's investor group is seeking five seats on the Heinz board.

Eric McKissack with Channing Capital Management, which owns 600,000 shares of Tribune, told the paper in regards to Peltz buying Tribune stock: "It is somewhat disturbing that the high water mark for [Tribune] stock recently was the buyback price [of $32.50 a share]. It's our belief that the assets are worth more than that. What it takes to unlock that value is to be determined. But there will be more to follow."

The Tribune board has been locked in an internal and public battle with representatives from its largest shareholder, the Chandler Trusts. The Chandler family did not want the company to buy back shares and instead insisted Tribune put itself on the block. The two parties are trying to untangle Chandler's complex ties to the company.

Also, it was revealed that the board unanimously rebuffed the offers of three California investors, including Ron Burkle, to buy the flailing Los Angeles Times on July 19.