CHICAGO, IL (November 10, 2008) – In what headline writers might think is a contender for Gross Understatement of the Year, Tribune Co. chairman and CEO Sam Zell said "We are operating in an exceptionally difficult financial and economic environment" as his company announced Q3 loses of $124 million from continuing operations today.
In 2007's Q3 the Tribune Co. reported income of $84 million from continuing operations.
"The newspaper industry continues to see extraordinary declines in ad revenues, and Tribune is no exception," Zell said. "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 mindset."
That mindset included mass layoffs and cutbacks at Tribune Co. newspapers throughout 2007, including the Los Angeles Times and the Chicago Tribune, and moving the emphasis of some of their newspaper's efforts from the printed product to the Web.
Today the company reported that in their publishing division their Q3 operating revenues dropped 10 percent, or $122 million, to $1 billion while their consolidated cash operating expenses were up 6 percent, or $57 million. Operating cash flow decreased 67 percent to $90 million in this year's Q3, compared to $268 million in 2007's same period, and operating profit took a nose dive of 83 percent to $37 million (compared to last year's $217 million).
Tribune Co. also said their advertising revenues dropped 19 percent, or $111 for the third quarter. Retail advertising revenue was down 10 percent ($24 million), national advertising revenue was down 21 percent ($30 million), and classified advertising was down 30 percent ($58 million). And circulation revenues were down 2 percent.
Additionally, real estate advertising was down 44 percent, help wanted advertisement revenues were down 37 percent, and auto sales advertisements were down 11 percent. Interactive revenues were also down 7 percent, or $4 million.
Tribune Co. went private in December 2007 when Zell bought it for $8.2 billion, but it's still required to report financial results in order to meet the requirements of bondholder agreements.
Today's third quarter results included what Zell's trying to sell.
During the third quarter the Tribune Co. sold a 10 percent interest in the online job site CareerBuilder.com to the Gannett Co. for $135 million.
Having publicly said that he's not a baseball fan, Zell has been trying to sell the Tribune Co.'s stake in the Chicago Cubs and Wrigley Field for $1 billion to offset some of the company's horrendous losses, but the financial crisis and the credit crunch stalled any sales opportunities, The Wall Street Journal reported, so the Tribune Co. may be stuck with the Cubs and their historic stadium until the economy turns around.
True to his real estate mogul roots, Zell and Tribune Co. have also considered selling the Chicago Tribune's historic Tribune Tower in the Windy City and the Los Angeles Times' iconic headquarters, Times Mirror Square, in California to pay off some of the debt that saddles the company.
Earlier sell-offs to relieve debt this year included the sale of Newsday on Long Island, NY, to Cablevision Systems Corp. for $632 million in May for all but at 3 percent stake.
