Writedowns mark $3.8 billion loss for Tribune Co.

BY BENJAMIN MIRASKI, MEDILL NEWS SERVICE

In the continuing downward spiral of the publishing business, the now quasi-private Tribune Co. reported a $3.8 billion loss from continuing operations in its second quarter. This was mainly due to a $3.8 billion non-cash writedown of assets related to the Times Mirror acquisition in 2000.

The details of the release show a bleak picture for the Tribune Co. and don’t give much hope for Sam Zell being able to pay off the large debt he built up in acquiring the media conglomerate. The sale of the Chicago Cubs franchise might not come soon enough for Zell.

Depressing items in the second quarter:

• Publishing’s second quarter operating revenues were $701 million, down 11 percent, or $83 million, from 2007.
• Advertising revenues decreased 15 percent, or $91 million, for the quarter.
• Classified advertising revenues declined 26 percent, or $55 million, for the quarter. Real estate revenues fell by 38 percent, help wanted revenues declined 33 percent and auto revenues were down 9 percent. (A silent victim of the current housing crisis?)
• Circulation revenues were down 2 percent, or $3 million, due to a decline in total net paid circulation copies for both daily and Sunday, partially offset by selective price increases. The largest revenue declines were at Chicago and Los Angeles.

That Cubs sale may generate a quick infusion of cash, but might have other issues associated with it, like the loss of an important stream of revenue in the segment of the business that is performing well.

Radio/entertainment revenues were up $11 million and operating cash flow increased $4 million primarily as a result of gains at the Chicago Cubs. The improvement was partially due to two more home games compared to last year’s second quarter.

I wouldn’t go as far as to say this is Sam Zell’s fault. The entire sector is bleeding money (and employees).

But for Medill Money Mavens, this is a hometown tragedy that we are definitely keeping our eyes on.

Update: Two other things. One, the total loss was $4.5 billion, the additional $700 million coming from discontinued operations (the sale of Newsday). Second, if you are wondering why the company still puts out earnings, it is due to the existence of publicly traded debt, so they have some responsibility to those debt holders. They will be holding a conference call with the debt holders in two weeks.

Sculpture photo by Paul McDermott used under a creative commons license.

Tags: Chicago, Chicago Cubs, Chicago Tribune, circulation, newspaper, Sam Zell, Tribune Company