Producing metropolitan daily newspapers is a business with, at best, a questionable future. At Tribune Company (NYSE: TRB), the wheels of broadcast television are also beginning to squeak. That combination was confirmed yet again by second-quarter results reported by the company.
For the quarter, Tribune recorded diluted earnings per share from continuing operations of $0.17 per share, down 68% from the $0.53 in the second quarter of 2006. This includes one-time charges of $0.08 for reducing the company by 450 jobs, $0.07 for writing off plant and equipment at the Los Angeles Times, and $0.15 for a multitude of non-operating sins, including losses related to the company's PHONES, a Time Warner (NYSE: TWX) investment, and expenses related to the company's plans to go private.
Excluding that group of items, the company's profits were $0.47 a share. Revenues were $1.31 billion, down 6.8% in the quarter. In publishing, advertising revenues were down 11%, while circulation revenues fell by 6%. On the broadcasting side, television revenues slipped 7.3%.
"Our second quarter results reflect the difficult advertising environment, although strong cost controls partially offset revenue declines," said CEO Dennis FitzSimons. FitzSimons also noted that second-quarter interactive revenues increased 17% year over year and that real estate comparisons were affected by record real estate spending -- especially in Florida -- during 2006.
Tribune spent the last quarter of 2006 and the first quarter of this year having its tires kicked by a variety of potential private purchasers. However, the company will apparently be privatized by the end of the fourth quarter in an $8.2 billion transaction conceived by Chicago real estate tycoon Sam Zell, who overcame other offers for the property. According to FitzSimons, "Our going-private transaction is on track and the financing for it is fully committed."
So Tribune is in a similar boat with New York Times (NYSE: NYT), Gannett (NYSE: GCI), McClatchy (NYSE: MNI), and Media General (NYSE: MEG), all of which are experiencing an accelerating slowdown in advertising revenues and a reduction in circulation numbers. But as indicated, Tribune's privatization likely will be completed by the end of this year, and this trend will then become the concern of Zell and the company's lenders.
In the meantime, the financial fortunes of essentially all the newspaper companies are sliding faster than my kids at a water park. I'd suggest that Fools with a penchant for media investments assuage their desires elsewhere in the sector.
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Fool contributor David Lee Smith still gets much of his news from his daily paper. He doesn't, however, own shares in any of the companies mentioned. He does welcome your thoughts and comments. The Motley Fool has a disclosure policy that likes the really scary water slides.
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