Privately held multimedia corporation Tribune Co., America's second-largest newspaper publisher, yesterday reported a $4.5 billion loss in the second quarter, largely on a charge reflecting a decrease in the value of its assets, and said advertising revenue at its newspapers dropped 15 per cent.
The company publishes the Chicago Tribune, Los Angeles Times, Newsday, Hartford Courant, Orlando Sentinel, and the Baltimore Sun, among others. Through other subsidiaries, the Tribune Company also owns Tribune Broadcasting, Tribune Entertainment, Tribune Media Services, and the Chicago Cubs baseball team.
Tribune has endured numerous financial difficulties since it was acquired by real-estate developer Sam Zell in an $8.2 billion deal that took the business private. The financing of his transaction involved the creation of an employee stock program that has incurred a significant amount of debt. (See: Tribune goes private; Sam Zell named chairman and CEO)
The pressure to make those payments comes amid declining revenue for the company's newspapers, including the Chicago Tribune and the Los Angeles Times, as their readership and advertising dollars dwindle.
Tribune paid $807 million to cover debt due in December 2008. Some of that money came from the sale of its Long Island newspaper Newsday to Cablevision Systems Corp. Tribune has an additional $593 million in debt to pay due June 2009.
Tribune reported a second-quarter loss of $4.5 billion, including a $3.8 billion loss from continuing operations because of a non-cash write-down of its newspapers, and a $705 million loss on discontinued operations from the sale of Newsday.
Revenue fell 6 per cent to $1.10 billion. Publishing revenue dropped 11 per cent to $700.6 million, reflecting a 15 per cent decline in advertising revenue. Classified advertising revenue, the traditional mainstay of newspapers, fell 26 per cent, as real-estate revenue dropped 26 per cent and help-wanted tumbled 33 per cent.
National advertising revenue fell 12 per cent, with particular weakness in the movie and telecom/wireless categories. Retail ad revenue dropped 8 per cent.
In June, Zell announced that he might be willing to sell the Tribune Tower, home of the Chicago Tribune. The Chicago Cubs National League baseball club is also on the block.
Zell and Chief Operating Officer Randy Michaels alarmed many newspaper industry veterans earlier this summer by announcing that the company's 12 newspapers would slash up to 500 pages per week from their editions, and that "a fair number" of journalists could be fired without significantly diminishing the content presented to readers. (See: Chicago Tribune and LA Times publisher looking to cut content, staff)