Tribune Bottom Line Suffers

Media companies should be able to fend off a slight downturn in the advertising market--but not the Tribune Co.

The prominent TV station and newspaper group got hit big time having to tell analysts that for the three months ended in September its stations' revenues dropped 6 percent to $302.3 million, while operating cash flow plunged 21 percent to $106.6 million.

The national spot TV advertising market is taking its usual break this year--an off-Olympics and non-political year--with lower revenues. But this factor, coupled with some struggling big market newspapers, and its suffering association with the WB, has caught Tribune on the ropes.

Tribune had been a big investor in the WB--both in terms of a cash investment and affiliation agreements. Now, for the second year in the row, the WB is looking at double digit percentage ratings drops, which could leave it really falling behind its competitor UPN.



The WB's ratings are now off 12 percent this year versus the year before. Tribune, which had a 22 percent stake in the network, according to recent financial disclosures now has no financial stake left.

Well, not quite. Of Tribune's 26 stations, 19 are still WB affiliates. Negotiations will start on a new affiliation agreement next year. Tribune's prime-time programming lifeblood is still connected to the WB.

Dragging advertising sales in print media have caused the company to announce cutbacks at some of its big market newspapers.

If that's not all, there could be more bad news to come. Much adversity stems from Pat Mullen's abrupt recent resigning as president of Tribune Broadcasting. Rumors abound this move was caused, at least partly, by Nielsen's use of local people meters. In the coming months, Tribune's stations could see a worsening outlook ratings-wise because of LPMs. LPMs cuts viewers--specifically ethnic viewers--out of Tribune's stations' programming. Lower ratings means lower advertising revenue.

Mullen did his best to put the brakes on LPMs--as well as the Fox station group--by complaining to Nielsen to alter its methodology. But this strategy didn't really work. So Mullen jumped, according to analysts.

Also not working has been Tribune's investment in the WB. Dennis FitzSimons, president of the Tribune Company, who made the deal for the WB back in the mid-90s when it invested $130 million, said the network is still important, representing 17% of its revenue.

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