Tribune, Times Co. Profits Keep Falling

As Newspapers Lose Readers, Advertising Revenue Plummets

Earnings continued their downward trend at the Tribune and New York Times companies, the newspaper publishers reported yesterday.

The numbers mirror those throughout the industry, as readers flee the ink-on-paper product to find their news elsewhere. The change also is reflected in falling circulation and advertising revenue. At the same time, online readership of newspapers was up 5 percent in the first quarter from the first quarter of 2006, according to a Nielsen/NetRatings report released this week, outpacing overall Internet audience growth by more than 2 percent.

At Tribune, which is becoming a private company jointly owned by its employees and real estate billionaire Sam Zell, second-quarter profit fell 59 percent, to $36 million. Revenue fell to $1.3 billion, from $1.4 billion.

Though newspaper ad revenue at Tribune was down 11 percent for the quarter, the sharp drop in profit was attributed to one-time charges, including elimination of 450 jobs across the company and a write-off for equipment at a closed Los Angeles Times printing plant.

Nevertheless, the company's second-quarter results were not encouraging heading into the Aug. 21 shareholder vote on Zell's offer for the company. Tribune's poor performance through the first half of the year may increase the cost of loans required for the transaction.

Zell's deal asks the company to take on $13 billion in debt, and it assumes a cash flow of at least $1.3 billion for 2007 to begin paying back the loans. Now, at the halfway mark, Tribune is on pace to book less than $1 billion in cash flow for the year, showing $493 million through the first six months of 2007, down 22 percent from last year.

The Times Co., whose bond rating was cut this month by Standard & Poor's for the second time in a year, reported second-quarter profit of $118 million on $789 millionin revenue, compared with profit of $60 million and revenue of $820 million in the second quarter of 2006.

The profit, however, was boosted largely by the sale of the company's nine television stations, which netted $94 million, and a radio station, which netted $21 million.

Subtracting the sale of the stations, the Times Co.'s picture was grimmer.

Second-quarter revenue across the company was down 4 percent and ad revenue was down 6 percent. Ad revenue at the company's newspapers was down 7 percent. The company said it would continue to cut costs.

Revenue at the company's online properties, including About.com and the Times's Web site, was up 23 percent in the quarter from a year earlier, and accounts for 10 percent of the Times Co.'s revenue.