Tribune Co., in its first earnings report since buying Times Mirror Co. for $8 billion, said second-quarter profit rose 14 percent on the popularity of its WB network-affiliated television stations.
The publisher of the Chicago Tribune and Los Angeles Times said profit from continuing operations climbed to $119 million (44 cents a share), from $104.8 million (39 cents) a year earlier. Times Mirror's operations were included in the latest quarter's results beginning April 17.
Sales jumped 79 percent to $1.33 billion from $743.7 million, boosted by the inclusion of the Times Mirror operations. Revenue from Tribune's 22 television stations rose 20 percent to $347.7 million, led by the company's WB affiliates in New York, Dallas and Los Angeles, the purchase of WB stations in Atlanta, Washington and New Orleans, and gains at the WGN Superstation.
"Tribune is outperforming the industry in terms of its broadcasting strength," said Peter Appert, a Deutsche Banc Alex. Brown analyst who has a "strong buy" rating on the shares. "The ad market in New York (at WPIX) is strong, and Los Angeles was up 15 percent."
Tribune owns 25 percent of the WB Network, known for youthful programming such as "Buffy the Vampire Slayer" and "Dawson's Creek." Time Warner Inc. owns the majority share. Tribune's WB-affiliated TV stations were buoyed by local news shows and syndicated programs such as "Friends," which made up for a slide in the ratings of some WB shows this season.
The Chicago-based company was expected to earn 42 cents a share, the average estimate of analysts surveyed by First Call/Thomson Financial. That had been reduced from the original 49-cent forecast when Tribune told analysts last month that the early closing of the Times Mirror purchase would cut profit by 6 cents a share.
Tribune stock has fallen 38 percent this year, with most of the drop coming after the company said it would buy Times Mirror.
"Obviously, it will take time for the company to digest the acquisition and get through the early stages without stumbling," said John Miller, assistant portfolio manager with Ariel Capital Management, which owned about 560,750 Tribune shares as of its June filing. "It will prove to be a good move in the long run."
Tribune said revenue, assuming Times Mirror had been owned in both quarters, rose 8 percent to $1.49 billion. Pro-forma operating profit rose 11 percent to $316 million. The acquisition closed June 12, though Tribune owned about 39 percent of Times Mirror on April 17.
Revenue from the Tribune newspapers, including its flagship Tribune and Orlando Sentinel, rose 3 percent to $402.4 million from $389.6 million. Times Mirror papers, including the Los Angeles Times, Newsday on New York's Long Island and the Baltimore Sun, added another $503.6 million to revenue.
Advertising revenue, excluding the Times Mirror papers, rose 5 percent to $309 million. Newsprint expenses, excluding Times Mirror papers, climbed 7 percent to $51 million because of higher prices.
Tribune has agreed to sell Tribune Education business to McGraw-Hill Cos. for about $635 million and is looking to dispose of its Jeppesen and Times Mirror Magazine units in an effort to focus on its television, newspaper and Internet businesses. The company accounted for the businesses as discontinued operations.
In the latest quarter, Tribune had a loss of 33 cents a share from the discontinued operations, a gain of 9 cents from the sale of its stake in Digital City and a charge of 7 cents from investments in America Online Inc. and Mattel Inc. The items made net income $37.8 million, or 13 cents a share after preferred dividends.
Separately, the Los Angeles Times last week announced the surprise appointment of Dean Baquet, national editor of The New York Times, as the paper's new managing editor. Observers had expected new L.A. Times Editor John Carroll to select someone from inside the Times organization for the No. 2 editorial post.
Baquet will be the highest-ranking African-American in the history of the Los Angeles Times.
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