Posted on 05/09/2008 4:48:18 AM PDT by abb
A continued weak advertising environment resulted in an 8% decline in first-quarter operating revenue and a 16% drop in operating cash flow for Tribune Co., parent of the Los Angeles Times, KTLA-TV Channel 5, the Chicago Tribune and other media holdings.
However, because of Tribune's conversion to a tax-advantaged, employee-owned company in December, it posted a one-time, $1.86-billion income tax adjustment that resulted in net income of $1.82 billion for the quarter that ended March 31, compared with $11 million in the same 2007 period.
Quarterly operating revenue was $1.11 billion, compared with $1.21 billion a year earlier, and operating cash flow was $200 million, down from $239 million.
"Print ad revenues continue to be challenged by the weak economy's impact on real estate and classified advertising," Tribune Chairman and Chief Executive Sam Zell said in a statement accompanying Thursday's earnings report. "Broadcasting operating results are notably more stable."
In the publishing division, which includes Tribune's nine newspapers, operating revenue fell 11% to $823 million, from $936 million in the first quarter of 2007.
Advertising revenue was down 15%, with the sharpest drop -- 27% -- coming in the classified segment, where real estate ad sales fell by 41%. Operating cash flow in publishing plunged 56%, to $80 million from $184 million. The drop resulted partly from a $37-million charge for severance and special termination benefits arising from an employee buyout this year.
The broadcasting and entertainment division's operating revenue rose 3%, to $292 million, helped by higher national TV ad sales. An $83-million gain on the sale of KTLA's studio production lot helped double operating cash flow to $148 million. The division includes Tribune's 23 TV stations, the WGN cable TV superstation, Chicago's WGN radio and the Chicago Cubs baseball team.
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(Excerpt) Read more at latimes.com ...
ping
http://online.wsj.com/article/SB121030299369380075.html?mod=hps_us_whats_news
Publishing Division Weighs on Tribune
By SHIRA OVIDE
May 9, 2008; Page B10
Operating profit at Tribune Co.’s publishing division dived 74% in the first quarter, the newly private company said, even as its broadcasting operations posted improved results.
The severity of the decline in publishing — Tribune’s biggest division, which includes newspapers such as the Los Angeles Times and Chicago Tribune — highlights the challenges facing the company as it grapples with a heavy debt load and eroding print-ad revenue.
Tribune said the division’s ad revenue fell 15% in the quarter. Chairman Sam Zell, who took effective control of the company in an $8.2 billion buyout in December, said Thursday that the print-ad market continues to be “challenged” amid a cooling U.S. economy. Sales of classified advertising dropped 27% in the first quarter as a weak housing market continued to bleed newspapers of real-estate ads.
Tribune said tax benefits tied to the buyout resulted in sharply higher first-quarter net income. But the company had a pretax loss of $30 million from continuing operations in the quarter compared with a pretax profit of $31 million from continuing operations a year earlier.
The one bright spot was Tribune’s broadcasting and entertainment operations, which posted 3% higher revenue in the quarter than a year earlier.
Operating profit at the broadcast division more than doubled on higher sales of national television advertising and an $83 million gain from the sale of a Hollywood studio lot.
Release of the quarterly results comes as Tribune pursues a deal for its Long Island newspaper Newsday. The paper is the object of a three-way bidding contest between News Corp., which owns the New York Post and The Wall Street Journal; New York Daily News owner Mortimer Zuckerman; and Long Island cable operator Cablevision Systems Corp.
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www.chicagotribune.com/business/chi-080508-tribune-earnings,0,2540019.story
chicagotribune.com
Tax gains lift Tribune Co. to first-quarter profit
By James P. Miller
Tribune reporter
5:03 PM CDT, May 8, 2008
Tribune Co. reported a big first-quarter profit, thanks to a mammoth tax gain the Chicago media concern recorded in connection with the leveraged buyout by which it went private at the end of 2007.
Without that artificial boost from the tax change, the company swung to a loss, as interest payments soared to service Tribune’s heavy load of buyout-related debt.
Tribune’s publishing operation saw an 11 percent slump in revenue, and Chairman and Chief Executive Sam Zell noted that “print ad revenues continue to be challenged by the weak economy’s impact on real estate and classified advertising.” Operating results at the company’s broadcast group, he said, “are notably more stable.”
In the latest quarter, Tribune’s revenue declined 7.8 percent, to $1.11 billion from $1.21 billion a year earlier.
As expected, Tribune’s bottom-line results were skewed by a number of onetime factors, many of which reflect the tumultuous changes the company has undergone in the wake of the company’s LBO.
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related.
www.chicagotribune.com/business/chicago-sun-times-earnings-may8,0,4467251.story
chicagotribune.com
Sun-Times loss deepens to $35.8 million
By James P. Miller
Tribune staff reporter
3:52 PM CDT, May 8, 2008
Sun-Times Media Group Inc., wounded by declining ad revenues and eroding circulation, said Thursday that its first-quarter loss deepened to a painful $35. 8 million from $4.8 million a year ago.
The Chicago-based publisher of the Chicago Sun-Times and other area newspapers said revenue dropped 11.7 percent to $81 million from $91.7 million in last year’s quarter.
Ad revenue tumbled 13 percent to $61.1 million, Sun-Times Media said, and circulation revenue weakened 8.4 percent in the quarter to $18.3 million.
Like other companies in the newspaper industry, Sun-Times Media has been hurt by an ongoing exodus to web-based platform by readers and advertisers. But Sun-Times is smaller than many other media companies, and in addition it was damaged by neglect and management misbehavior during the tenure of former CEO Conrad Black, who was ousted in late 2003.
The company’s year-ago loss would have been deeper, but it was helped by a $27.6 million recovery of certain legal-related expenses.
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Could you explain what is the deal with the 1.86 billion?
Is it real cash in a bank somewhere or is it smoke and mirrors money?
I think (but am not sure) that it is imaginary money. The number to watch is the cash flow. That’s real money from advertisers that comes in and is available to pay wages, and meet the mortgage. That number has been steadily decreasing over several years. It is near a danger point.
Thanks. Keep up the good work with the DMDW. It’s my favorite site on Free Republic.
I guess some find it cheaper then toilet paper.
Second - the tax benefit is just an accrual (record / report it without the event having actually happened) of what the organization believes the tax will be. It will impact cash flow in the future because it's taxes they won't have to pay. The impact is recognized on their financials now because it occurs in the current period.
Which leads me to another point, which everyone tends to miss, especially politicians (how convenient). Taxes are, at the end of the day, just another expense of doing business, now matter how much liberals rant about who pays their fair share and such nonsense. All businesses will avoid taxes as much as possible, just like they avoid other expenses.
The key difference between taxes and other expenses is that other expenses involve actual costs of doing business (salaries, office supplies, etc). Taxes are the arbitrary claim of the government to a share of your profits, without their having lifted a hand in any way to produce those profits.
Yes. And sometimes when I hear people refer to them as tax "contributions" I just about lose it. There is no contribute to it. They are seized at the point of a gun.
Now with the change of ownership the accountants realize that "someday" will never come. So they throw the whole $1.86 odd billion back into income.
No cash was ever paid out, and no cash is coming in.
If you need a fuller explanation, you must talk to your accountant buddy, because I can't explain it better than that in a forum like Free Republic.
The Chicago Tribune’s silence on the dark side (not his light skin color) of Hussein Obama’s activities in Chicago are prime examples of the evil the left wing fishwraps do.
http://www.freerepublic.com/focus/f-news/2013514/posts
Tribune Covers For Obama’s Terrorist Friends
GOPUSA ^ | May 8, 2008 | Cliff Kincaid
Posted on Friday, May 09, 2008 4:56:26 AM by libstripper
The Chicago Tribune, which once employed Barack Obama campaign strategist David Axelrod, is refusing to publish the truth about a Weather Underground terrorist bombing that killed a policeman. The paper apparently does not want to tarnish the image of Obama friends Bill Ayers and Bernardine Dohrn, who were allegedly part of or had direct knowledge of the bombing plot that also injured several other police officers. The Tribune considers Ayers an education expert and has published various articles by him.
Please help Accuracy in Media expose the Tribune’s cover-up.
I sent a copy of the following email message to Tribune reporter Liam Ford on April 27. He was the co-author of an article that consisted of a series of questions and answers about Ayers, the communist terrorist who became a friend of Obama’s and helped launch Obama’s political career. My message said:
excerpt
Good enough. Thanks, Cheburashka.
Thanks for the attribution.
The Trib’s silence on and spiking the real history of Hussein Obama in Chicago re his church, pastor, terrorist buddies and fundraising criminal buddies is a prime example of why these dinosaur fishwraps need to die off and fade into history.
http://newsosaur.blogspot.com/2008/05/why-tribune-has-to-sell-newsday.html
Sunday, May 11, 2008
Why Tribune has to sell Newsday
If you can imagine your mortgage payment tripling at the same time your take-home pay is shrinking, then you can understand the financial pain forcing the Tribune Co. to sell Newsday.
The first-quarter earnings release issued by the company late Friday, which touts a $1.82 billion “profit” based on an technical accounting adjustment, dances around the magnitude of the challenge the company faces in servicing a debt load that climbed to $263 million in the first three months of this year from $83 million in the same period a year ago.
As Tribune’s interest payments surged 317% in the three-month period, revenues fell 7.8% from the prior year to $1.1 billion. The situation would have been worse, if the 11.2% drop in newspaper revenues in the first period had not been offset by a 5.2% increase in broadcast sales.
The huge sums necessary to service Tribune’s debt, as well as the requirements that some of the $12.6 billion it has borrowed be paid down at yearend and in mid-2009, has motivated the company to sell its Connecticut newspapers, dispose of its Hollywood studio, put Newsday on the block and promise to auction off the Chicago Cubs. More dispositions could be in prospect, if revenue-generating or cost-cutting initiatives don’t produce cash fast enough to satisfy the lenders.
The magnitude of Tribune’s indebtedness at the most perilous time in the history of the American media is best illustrated by one simple fact: Its interest obligations in first three months of the year were equal to 24% of the company’s total sales. A year ago, interest payments represented only 7% of its revenues.
Although the Tribune may be the most heavily leveraged publishing company, it is far from alone. McClatchy, Lee, Media News Group, Journal Register, the Minneapolis Star Tribune and the Philadelphia Newspapers all borrowed vast sums to fund acquisitions in recent years.
They, like Tribune, today find themselves struggling with rising principal and interest obligations at a time of deteriorating sales and rising expenses for paper, fuel and health care. Some of them, including JRC and the Strib, appear to months from potential default, assuming they cannot boost sales, divest assets or significantly lower their operating costs.
The Tribune’s bodacious interest bill results from the $7.6 billion in debt that was added to the company’s existing $5 billion in obligations when Sam Zell took the company private in December in a complex employee stock ownership plan (ESOP).
One place that cash won’t magically appear to pay down Tribune’s loans is from the $1.82 billion in “profit” that the company claimed as the result of a bookkeeping adjustment in its first-quarter financial statement.
The “profit” is a legitimate accounting transaction occasioned by the reorganization of the New Tribune as a Subchapter S corporation, which is not required to pay taxes as Old Tribune did when it as a Subchapter C corporation. Gains and losses in an S corp are passed through to shareholders, who then are personally on the hook for any resulting taxes.
While Old Tribune was required to carry $1.86 billion of deferred tax liabilities on its balance sheet, New Tribune doesn’t have to, because any future taxes would be the obligation of such S-corp shareholders as Mr. Zell and the ESOP.
Even though the accounting adjustment didn’t produce any extra cash to fund interest payments or retire Tribune’s debt, the company this year did get to save the $19.4 million it spent on taxes in the first quarter of 2007. The $19.4 million in savings, however, hardly puts a dent in the $180 million in additional interest payments that the company had to pay in 2008.
Given the circumstances, it’s easy to see how an extra $70 million for Newsday could come in handy.
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