Credit Agencies Warn Declining Newspaper Revenue Threaten Debt Agreements, Or In Layman Terms, Who Was Expecting An 18% Downturn?
Sam Zell simply explained why Tribune may now consider selling newspaper properties, “We started with the assumption that print would be down two or three per cent this year, not 18%.”
Everyone knows that once Sam Zell got his hands on Tribune he wasn’t about to screw up the investment by missing debt payments or falling foul of debt covenants. But whereas before he had a “no sale” sign on the newspaper properties, apparently he has now hung out the “For Sale” sign on Newsday.
Rupert Murdoch would love to get his hands on Newsday (competition authorities allowing) for the synergies (read: savings) it could bring to back office functions at his New York Post that still loses millions of dollars annually. That’s probably why Mort Zuckerman, publisher of the New York Daily News, has also expressed interest, and thus with that kind of competition Newsday may be the one newspaper (the Los Angeles Times possibly a second) where the going price could be higher than financial market value.
When Murdoch wants something badly enough he’s not afraid to pay over the odds (the $5 billion plus for Dow Jones proved that yet again) and Zell and Murdoch have been discussing Tribune newspapers in California and Florida possibly printing the Wall Street Journal so one could almost see a win-win deal in the making.Zell says Tribune Co. will continue 'strategic review' of assets
By Michael Malone -- Broadcasting & Cable, 3/24/2008
Tribune Co. is having a tough recovery. It reported a loss from continuing operations of $78 million for the fourth quarter of 2007 compared with income of $233 million in the same quarter of 2006, and full-year 2007 income from continuing operations at $55 million compared with $661 million in 2006.
Tribune's fourth-quarter 2007 operating revenue decreased 12%, or $180 million, to $1.27 billion. Operating cash flow decreased 44% to $214 million, while operating profit decreased 92% to $27 million. The quarter had one fewer week than 2006's fourth quarter.
New chairman and CEO Sam Zell, who assumed control of Tribune Co. near the end of 2007, said the company will continue a strategic review of assets.
Zell said he sees ample growth opportunity amid a rough business climate.
"Despite the continued difficult operating environment and weakness in print revenue, we see significant opportunity within Tribune Co.," he said. "In our first 75 days, we've made a series of key leadership changes, launched a number of programs and projects to drive new revenue and initiated a fundamental shift in culture. In addition, we have begun a strategic review of certain Tribune assets to determine whether capital can be more effectively redeployed into our core operations or toward reducing our outstanding leverage."
Just Wednesday, Tribune announced that it was moving WSFL Miami into the South Florida Sun-Sentinel newspaper headquarters in Fort Lauderdale, Fla.
Revenue for the broadcasting and entertainment division (generally, Tribune's syndication arm), its baseball Chicago Cubs and radio station for the quarter were down 11% to $316 million compared to a year earlier.
Television station revenue decreased 9% for the fourth quarter to $297 million; television operating cash flow was down 24% to $90 million and television operating profit slid 26% to $79 million.
For the full year 2007, which also had one fewer week than 2006, broadcasting and entertainment operating revenue decreased 2% to $1.4 billion, operating cash flow dropped 8% to $408 million and operating profit slid 9% to $357 million.
Television's operating revenue for the full 2007 were off 4% to $1.14 billion and operating profit decreased 10% to $322 million.