The Tribune Co., parent of the Los Angeles Times and KTLA-TV (Channel 5) , said Wednesday that quarterly profit fell 38 percent, hurt by declines in advertising revenue and circulation, in addition to costs associated with staff cuts at the Times and its other newspaper properties.
Fourth-quarter operating revenues dropped 5 percent to $1.41 billion with net income falling to $132.3 million (43 cents a share), compared to year-ago profit of $214.7 million (67 cents).
Operating expenses rose 2.7 percent to $1.15 billion, fed by $45 million in severance charges and $6 million of expenses related to the shutdown of the L.A. Times' San Fernando Valley printing plant. The company anticipates that the local plant shutdown and elimination of approximately 900 positions company-wide will result in annual savings of $55 million to $60 million.
Publishing advertising revenue fell 2 percent. Paid daily circulation for Tribune papers, including the Chicago Tribune and Spanish-language Hoy, slipped 3.7 percent, with circulation revenue down 4.3 percent.
Revenue from broadcasting and film advertising was down 11 percent, hurt by a combination of weaker ratings at the company's WB affiliates and a softer ad market as marketing money shifts to the Internet. In addition, the company's broadcast outlets last year did not benefit from the same level of political advertising that buoyed 2004's fourth quarter.
Merrill Lynch analyst Lauren Rich Fine maintained her "neutral" rating on Tribune stock. "As the fundamental picture remains murky at best, we don't see material appreciation potential in the shares," Fine said in a note to investors.
Dominion Bond Rating Service downgraded the company's debt from "A" to "A-low" noting that company officials indicated they would use free cash flow for stock buybacks rather than reducing debt. "With a difficult business environment, the company will need to be disciplined about its financial position in order to preserve its strong credit profile," analyst Bato Kacarevic said in his report.
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