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Tribune Stations Prop Up Sagging Print Sales

Apr 17, 2008  •  Post A Comment

Tribune Chairman and CEO Sam Zell said Thursday that revenue trends this year are “significantly worse” than expected and are forcing the debt-laden conglomerate to consider divestitures not originally envisioned.
In contrast to print advertising declines expected to run in double digits, Mr. Zell said Tribune broadcasting is having a better than expected year so far with its television properties.
The Tribune CEO said on a call with analysts that broadcasting year to date is running ahead 2007, ahead of projections and ahead of “the industry average.” However, he said, the company has had “no time yet to fully realize these gains.”
Translating internal shifts at Tribune into traction with consumers and advertisers is an uphill battle in the current business environment, said Steve Ridge, the television president and corporate executive VP for Frank N. Magid Associates consultants.
“There is no doubt that some markets are ripe for fresh ideas and dramatic new ways of doing business,” he said. “Ultimately, consumers and advertisers will judge whether what shows up on all three screens is worthy of greater investment of their time and/or money.”
On the Tribune call today, there was a good deal of focus on the print side of the Tribune empire and on changes being made in selling advertising throughout Tribune. Tribune executive VP and CEO of Interactive and Broadcasting Randy Michaels talked about bright signs on the Tribune TV front.
In San Diego, Tribune’s KSWB-TV is scheduled to become an affiliate of Fox Broadcasting, a move Mr. Michaels said could add $150 million to the intrinsic value of the station, which is a WB affiliate turned CW affiliate.
Indeed, he said, Tribune sees much “tremendous upside” potential in all of six of its current Fox affiliated stations, most of which have been languishing as earners in what Mr. Michaels called the bottom 20%. (Tribune’s TV properties also include 30-year-old Superstation WGN-TV in Chicago, 14 CW affiliates, two MyNetworkTV affiliates and one ABC affiliates.)
The former Clear Channel executive talked of plans to add newscasts and morning shows that can boost revenue on Fox-affiliated stations.
“In the past we have been afraid to go after the No. 1 position that a Fox station with news can achieve,” Mr. Michaels said.
In South Florida, Tribune’s CW affiliate, WSFL-TV, is moving into the company’s Sun-Sentinel newspaper building. The plan is to leverage the news off the paper’s Web site for a morning show.
According to Mr. Michaels, it will incorporate a “very high-tech but very slick look, not all that expensive, but repurposing the very expensive newsgathering that we already done for a completely different look and feel.”
In Seattle, he said, a lineup shuffle earlier this year already has paid off for KCPQ-TV. The Fox affiliated-station carries MyNetworkTV programming after Fox programming.
By pushing the MyNetwork lineup back by an hour and putting news at 9 p.m., KCPQ has become “the first Fox station that Tribune has that has kind of broken out of the pack,” Mr. Michaels said. “We have stronger news, are winning in prime and … for the first time are No. 1 in billing in Seattle.”
Mr. Michaels said that hasn’t happened for any Tribune station since WGN-TV consolidated the superstation signals.
Out West cameras have been added to the Sacramento bureau of Tribune-owned Los Angeles Times to service sister stations KTLA-TV in Los Angeles, KTXL-TV in the California capital and KWSB in San Diego, Mr. Michaels said.
WGN is to be “relaunched” in May, said Mr. Michaels, who characterized the superstation as a huge opportunity for the company.
He bragged that a “completely inexpensive experiment” at the beginning of the baseball season involving the packaging of baseball-themed movies with game telecasts and a countdown clock has boosted viewership by 250%.
Mr. Zell, a real estate magnate, bought Tribune a year ago in a complex and heavily leveraged deal said to account for almost $8 billion of the multimedia company’s debt.
He took control in December and since then Tribune has begun cutting jobs and other costs company-wide. Mr. Zell wants to sell Chicago’s Wrigley Field to the state of Illinois before selling the Chicago Cubs. There also has been interest by News Corp. Chairman Rupert Murdoch and New York Daily News owner Mort Zuckerman in buying Newsday, one of the Tribune-owned newspapers.
Some recent headlines have focused on the specter of default because Tribune owes almost $1 billion in debt service alone this year, in addition to a $650 million balloon payment from the takeover financing that is due in December. An additional bill for $750 million will be due the middle of next year.
First-quarter 2008 results are not yet processed and more information is expected to be made available in late May with the filing of quarterly results with the Security and Exchange Commission, Mr. Zell said.
Mr. Zell said periodic updates, such as the well-attended call with analysts Thursday afternoon, are planned.
“From where we sit now, it does not appear we will have difficulties meeting our commitments going forward,” Mr. Zell said. “Our challenge continues to be short-term issues, cash flow, and obviously a tough environment in a weak economy. That has basically only made us all work significantly harder to achieve the objectives.”
During the three months he has run Tribune, he said, “There’s a great sense of ‘this company once was truly great, once was truly the leader in its industry,’ and everybody, including yours truly, and Randy and everybody sitting around this table, very much wants that to be the case once again.”
Earlier Thursday, several key Tribune management appointments were announced.
Jack Kersting, an alumnus of Clear Channel Communications, has been named to the newly created position of executive VP charged with helping to identify “opportunities and efficiencies” for Tribune businesses. Mr. Kersting most recently was CFO for Clear Channel’s radio division.
Jack Rodden has been promoted from assistant treasurer to VP /treasurer. He succeeds Chandler Bigelow, who became Tribune’s CFO last month.
Brian Litman, who was assistant controller, was named VP/corporate controller. He will succeed Mark Mallory, who has decided to leave Tribune in early May after assisting with transition issues.
Naomi Sachs, who has served as director of investments in Tribune’s finance department since 2005, has been named VP/strategy. Her duties expand to include the evaluation of revenue and expense opportunities across the company.
Harry Amsden, who has been VP/finance for the publishing group, will become senior VP/financial operations for Tribune Corporate.
(Editor: Baumann. Updated at 3:45 p.m. Pacific.)

3 Comments

  1. Mr. Zell recalls how the Tribune company was once “truly great… truly the leader” and he wants very much for that to be the case again.
    Sorry, but putting top management in formerly of Clear Channel is not the leadership to make the company truly great again… if even truly mediocre.
    Dan

  2. Thank you for a great post

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