Tribune Posts $124 Million Third Quarter Loss, Job Cuts At WPIX

The Tribune Company announced Monday that it had a $124 million loss compared with net income of $84 million in the third quarter of 2007.

Operating revenue for the third quarter decreased 10 percent, to $1 billion. Advertising revenue decreased 19 percent ($111 million), to $584 million, for the quarter. As part of that, interactive revenues dropped 7 percent ($4 million) "due to a decline in classified advertising, partially offset by increases in retail and national advertising."

Retail advertising revenue dipped 10 percent, to $240 million as home furnishings, department stores and other retail segments pull back spending amid weak consumer spending.

Broadcasting and entertainment's third quarter operating revenues decreased 6 percent to $383 million, down from $406 million in 2007. Cash operating expenses increased 8 percent, or $21 million, to $296 million. Operating cash flow was $87 million, down 33 percent from $130 million in 2007.

Television's third quarter operating revenues decreased 8 percent to $264 million in 2008. Television cash operating expenses were up 5 percent, or $10 million, from last year. Television operating cash flow was $64 million, down 34 percent from $98 million in 2007.

The decrease in television revenues in the third quarter of 2008 was due to lower cable copyright royalties and soft advertising demand, partially offset by station revenue share gains in most markets. The third quarter of 2007 included an additional $18 million of cable copyright royalties at Chicago and WGN Cable.

Television cash operating expenses were up $10 million primarily due to severance costs of $3 million as well as increases in broadcast rights expense and news expansion.

Radio/entertainment revenues were up $1 million and operating cash flow decreased $10million primarily due to higher player compensation at the Chicago Cubs and two fewer home games in 2008.

Tribune reported a non-operating pre-tax $79 million gain on the third quarter sale of its 10 percent interest in CareerBuilder to Gannett (NYSE: GCI) for $135 million.

During the quarter, Tribune repaid $888 million of debt using proceeds from the sale of receivables, Newsday and a 10% stake in CareerBuilder. Third-quarter operating costs rose 6.2%, including the $45 million in severance costs, a $25-million software write-off and $14 million in compensation costs related to an incentive plan and the company's stock ownership plan.

Tribune said its debt load increased to $11.8 billion at the end of the third quarter, up from $9.4 billion a year earlier.

The company hopes to sell the Chicago Cubs baseball team by year-end to avoid violating loan covenants. It also plans to sell other sports properties to help pay down its debt.

The company also has been considering selling its Tribune Tower headquarters building in Chicago and the headquarters of the Los Angeles Times, formerly known as Times Mirror Square.

Tribune CEO Sam Zell's entry in the understatement of the week contest:

"We are operating in an exceptionally difficult financial and economic environment.
"The newspaper industry continues to see extraordinary declines in ad revenues, and Tribune is no exception. But, we continue to aggressively pursue our operating strategy, and to tightly manage the factors that are within our control. Internally, we have established momentum on developing new initiatives and our culture now reflects that focus and mindset."

But Zell isn't understating anything when he talks of how aggressively Tribune is moving, as evidenced by the $45 million charge for severance and termination benefits. Nearly all of that went to reducing publishing headcount; overall, the company cut the equivalent of 1,300 full-time positions.

The company's staff reductions are supposed to help offset revenue losses and loan interest of $ 231.8 million dollars per quarter on their 11.8 billion dollar debt. Interest expense has surged 33 percent, to $231.8 million from $175 million a year ago.

This is much like moving the deck chairs around on the Titanic.

At WPIX, Tribune's flagship New York television station, IBEW represented engineers have already lost 2 screening shifts, 21 air control shifts, and 5 post production/floater shifts. An additional 10 shifts were lost due to a retired editor and an open studio relief job not being filled. 5 additional shifts were lost when a Deco operator job was eliminated. This total of 43 lost shifts represents a loss of 8.75 full time IBEW represented positions.

While this IBEW engineer head count reduction was made by eliminating shifts held by freelancers, it is expected that futher cuts could result in a layoff of full time staff IBEW engineers.

TRIBUNE is America's largest employee-owned media company, operating businesses in publishing, interactive and broadcasting.

In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun-Sentinel (South Florida), Orlando Sentinel, Hartford Courant, Morning Call and Daily Press.

The Company's broadcasting group operates 23 television stations, WGN America on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team.

SOURCES: Tribune Company press release, The New York Times, The Wall Street Journal