The decision to disband and merge the struggling WB and UPN networks looks like it might turn into a rare windfall for the Tribune Co., which has been faltering due to declining newspaper circulation, slipping ad revenues and other financial troubles.


When the new, resulting CW Network launches this fall, Chicago-based Tribune, parent of WB affiliate KTLA-TV (Channel 5) and the Los Angeles Times, will be in the cat-bird seat in a number of ways.


Tribune gave up its 22 percent stake in the WB in exchange for the security of an unusually long 10-year network affiliation agreement. After losing about $140 million from its WB investment over 11 years, the company's only financial exposure now will be the fees its stations pay for the right to air CW programming. And the company won't be on the hook for WB shutdown costs, such as severance for the Burbank-based network's employees who won't be going to CW. The two defunct networks have about 300 employees between them


"We feel this is a great day for us," Tribune Chief Executive Dennis FitzSimons said during a conference call with analysts soon after the merger was announced Jan. 24.


The new broadcasting network will be a 50-50 joint venture between WB founder Warner Bros. Entertainment and UPN parent CBS Corp. But Tribune is playing a key part and many on Wall Street agreed with FitzSimons' assessment.


"WB out, CW in good news (for a change) for TRB," said Goldman Sachs analyst Peter Appert in a note to investors. Appart pointed out that Tribune's stock has been whipped in recent years as the media company has struggled.


Among the problems: soft ratings for its WB stations a situation that may improve with the new network. While several other former WB and UPN affiliates now must scramble to find new programming this fall, 16 of the 19 affected stations owned by Tribune including KTLA will be part of the new network.


Particularly hard hit will be News Corp. subsidiary Fox Television Stations, which will have nine stations left out in the cold, including UPN affiliate KCOP-TV (Channel 13). That's because they're in the same market as a WB or UPN affiliate owned by Tribune or CBS, whose stations got first dibs on joining the new network.


Analysts and industry insiders anticipate that ratings and thus ad rates at the new CW stations will be higher since the network is expected to cherry pick the best shows from the two networks to reach its desired 18-to-34 demographic. The lineup is expected to include UPN's "America's Next Top Model," "Everybody Hates Chris," and "WWE Smackdown," plus the WB's "Smallville," "Gilmore Girls," and "Reba."


However, it's unclear how much of an effect improved ratings will have on Tribune's bottom line, considering the poor financial and circulation performance of the company's newspapers, including its marquee Times property.


Merrill Lynch analyst Lauren Rich Fine called the CW deal "a small positive" for Tribune because of the opportunity for better station ratings. Others agree.


"We think the combined networks should be able to increase market share, which is running at about 1.4 ratings share for each," Prudential Equity Group analyst Steven Barlow told his clients. "A combined 1.8 to 2.0 share would be very good for Tribune."


Tribune shares have fallen 40 percent in the last two years and closed at $29.45 on Jan. 25, 1.5 percent off their $29.90 closing price the day before the deal was announced last week.

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