Federal regulators on Tuesday settled with Los Angeles Times parent Tribune Co. over charges the media company reported falsified circulation figures for two of its newspapers in New York.
And in a separate action, Tribune, which also owns KTLA-TV (Channel 5), announced plans to buy back a quarter of its outstanding shares for more than $2 billion and to sell at least $500 million in noncore assets. It's an effort to boost its slumping stock price, which is half of what it was two years ago.
Tribune shares were up 7.5 percent to 29.98 in late trading Tuesday.
The SEC accused Chicago-based Tribune of failing to uncover inflated circulation figures at Newsday and Spanish-language Hoy from January 2002 to March 2004 because it lacked adequate internal financial controls. In its announcement, the SEC cited Tribune's cooperation with the agency's investigation and prompt corrective actions to explain its decision to settle without fining the company.
Tribune, the nation's third-largest newspaper company in terms of circulation, wasn't fined and settled without admitting or denying the SEC's claims. The Securities and Exchange Commission settlement comes as nine former employees and contractors of the two papers have pleaded guilty to criminal charges related to the alleged scheme.
"We're happy the SEC's findings are consistent with our own investigation results and that we have closed this matter," said Chief Executive Dennis FitzSimons in a statement. The company has set aside $90 million to reimburse advertisers who were overcharged on the basis of the alleged inflated circulation figures.
As for the stock repurchase, Tribune said it plans to finance it with bank debt and bonds. Fitch Ratings and Standard & Poor's on Tuesday slashed their ratings on Tribune, citing the repurchase announcement.
"The leveraged share buy-back represents a significant departure from Tribune's historically conservative financial policies and emphasizes the pressures that slower-growing traditional media companies are under to boost their stock prices," Fitch said in a release.
But Prudential Equity analyst Steven Barlow praised the strong expense controls of the company and upgraded the stock to "overweight" from "neutral weight."
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