10-K Watch: Tribune: Newsday Numbers; Disposals Planned; Interactive Revs Up 12 Percent

Privately-held Tribune has filed its 10-K, a day after reports suggested that the company was shopping Newsday. Also yesterday, the company released Q4 numbers showing it had swung to a loss. The filing gives a fuller picture of the challenge ahead for owner Sam Zell, as he copes with a struggling business and a monster debt load:

-- Newsday: Revenue at the Long Island-based paper is in a steady decline. 2007 revenue was $498 million, down from $541 million in 2006 and $574 million in 2007. Note that in addition to the actual Newsday paper, the unit includes a few niche, Long Island-serving magazine, as well as a number of pennysavers in the region. Presumably all of these assets would be included in any sale of the unit.

-- Interactive: The filing makes you do a little bit of legwork to figure out the company's annual interactive revenue. What they say is that total interactive revs increased by 12 percent or $27 million, by which we can calculate that 2007 interactive revenue came to $252 million, up from $225 million in 2006. Using another clue, 2005 interactive revenue was $174 million. This means that the rate of interactive growth slowed precipitously year-over year, from 29 percent (05-06) down to the aforementioned 12 percent (06-07). Given that digital growth will be key for Zell, this decline is troubling.

-- Balance sheet: Just to give you a sense of how much leverage is behind this deal. At the end of 2006, Tribune had $3.6 billion worth of long-term debt on its books. At the end of 2007, post-acquisition, that number is up to $11.8 billion. Cash and cash equivalents on hand comes to $233 million, up from $174 million. Note that Zell invested an extra $65 million into the company, upon closing his purchase.

-- Deals: Tribune may make some acquisitions, but it's definitely more interested in divestitures: " We intend to pursue dispositions of certain assets or businesses or other transactions to enable us to repay a portion of our indebtedness and meet our financial or operating covenants contained in our debt agreements. In addition, we continuously evaluate our businesses and make strategic acquisitions and investments, either individually or with partners, and divestitures as part of our strategic plan." It also made mention of possible interactive deals, using almost the exact same language as was found in MSO's 10-K earlier this week (must be the preferred legalese at the moment): "Moreover, competition for certain types of acquisitions is significant, particularly in the Interactive space. Even if successfully negotiated, closed and integrated, certain acquisitions or investments may prove not to advance our business strategy and may fall short of expected return on investment targets."

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