Company reports loss of $124 million
Tribune Co. has posted a big third-quarter loss, fueled by declining revenues in a weak advertising market and the cost of mass layoffs at the Los Angeles Times, Chicago Tribune and other newspapers.
The Chicago-based newspaper and TV station owner reported a $124 million loss for its third quarter, compared with a profit of $84 million a year earlier. Operating revenues were down 10% to $1 billion.
“We are operating in an exceptionally difficult financial and economic environment,” said Tribune chairman-CEO Sam Zell.
Fueling the red ink at Tribune were a 13% year-to-year decline in publishing revenues to $654 million. Advertising revenues sank 19%, or $111 million, compared with the year-earlier benchmark. Even its interactive revenues declined 7% to $4 million.
Tribune also took a $45 million charge for “severance and special termination benefits” related to companywide layoffs, which have included more than 300 staffers at the Los Angeles Times alone since July.
The biggest ad declines came in the sectors most immediately hammered by the economic downturn: retail outlets, furniture and hardware stores, and department stores. Automotive advertising was also down, along with telecom services and movies, Tribune said. The largest revenue declines came from the Chicago Tribune, Hartford Courant and Los Angeles Times.
Tribune’s 23 TV stations held up better than the newspapers but were hardly immune to the slowdown in ad spending. Operating revenues at Tribune’s broadcasting and entertainment sector — which includes its TV stations, WGN Superstation and Chicago Cubs baseball team (which the company is trying to sell to pay down debt) — declined 6% from a year earlier to $383 million. Operating cash flow was down 33% to $87 million.
Tribune’s eroding earnings raises renewed concerns about the company’s ability to handle the heavy debt load it took on last year when the company was taken private in an employee-ownership buyout led by Chicago real estate mogul Zell.
On Monday, Tribune said its debt load at the end of the third quarter stood at $11.8 billion, with its interest expense costs alone reaching $233 million for the quarter. The amount of cash the company has on hand has declined sharply, to $260 million at the end of the quarter vs. $446 million a year earlier.
Tribune used proceeds from the $635 million sale of its Newsday newspaper to Cablevision in May to help pay off its most immediate debt problem for this year, a $650 million payment on a $1.4 billion loan connected to the going-private transaction completed in December. The remainder of that loan is due to be paid off in June.