Tribune’s Q3 Profit Plunges

Oct 13, 2005  •  Post A Comment

Tribune reported Thursday that its third-quarter profit tumbled 82 percent, hurt by an unfavorable tax ruling related to its purchase of Time Mirror five years ago.

The Chicago-based owner of newspapers and television stations reported a profit of $21.9 million, down from a year-earlier $119.6 million. The decline was largely the result of a federal tax court ruling in late September that could put Tribune on the hook for a tax bill of $1 billion. That tax bill forced the company to record $150 million in additional income tax expenses, as well as loss of good will valued at nearly $460 million.

Revenue slipped less than 1 percent to $1.4 billion.

At the company’s broadcasting and entertainment units revenue fell 2 percent to $422 million, while operating profit fell 6 percent to $131 million. A significant portion of the decline was linked to the impact Hurricane Katrina had on Tribune’s two television stations in New Orleans.

Meanwhile, its television unit recorded a 6 percent drop in revenue to $307 million, while operating profit sank 23 percent to $94 million.

The company blamed the results on advertising weakness in several key categories and the revenue impact of lower ratings in Boston, Chicago, Los Angeles and New York from the deployment by Nielsen of Local People Meters in those cities.

Tribune owns 26 television stations and holds a 22.5 percent stake in The WB Network.

The company noted that despite its stake in The WB, it is no longer recording losses linked to the network because it has written down its investment in the network to zero.

Tribune Chairman and CEO Dennis FitzSimons declined to elaborate on last week’s resignation of broadcast group President Pat Mullen, other than to say, “We came to a decision that change would be a positive.”

However, sources familiar with the situation said Mr. Mullen was removed because he lacked sufficient management experience to navigate the group though choppy advertising waters.