By and large, those who report the news don't like to actually be part of the news. Yet Chicago-based Tribune Company (NYSE: TRB) seems to attract attention for all the wrong reasons. If it's not a scandal regarding dramatically inflated numbers at Newsday, it's a hissy fit with car (and advertising) giant General Motors (NYSE: GM) that led to the automaker's withdrawing its advertising from Tribune's Los Angeles Times.
Then again, seeing the most recent earnings report, I can understand why all of the above would be a lot more interesting. While first-quarter results weren't really "bad," per se, they weren't anything to capture headlines, either.
Total revenue at the newspaper, TV, and radio operator dropped about 1% from last year. Although cash operating expenses were well-controlled (up less than one-half of one percent), reported operating profit declined 8%, and operating cash flow was down 7%.
In the publishing business, revenue was flat, while operating profit and operating cash flow were both up (5% and 4%, respectively). While ad revenue was only about 2% and circulation revenue dropped 9%, the company did a good job of keeping a lid on costs.
In the broadcasting space, results were a little uglier. Revenue was down 6%, operating profits were down 31%, and operating cash flow dropped 27%. While the TV business did a little better than those numbers suggest, the consolidated results were hurt by the impact of the Sammy Sosa trade on the radio/entertainment business.
Listening to management, it's hard to muster up a lot of conviction that things are going to get markedly better any time soon. Ad trends in April seem to be tracking first-quarter levels, and the TV business isn't really expected to perk up until the fall -- and that's assuming that the WB network comes out with an attractive lineup that draws viewers -- something that hasn't been happening of late.
If there's a silver lining here, it's that management seems to be working with owners' interests at heart. Even with sluggish ad spending and bad circulation revenue trends, Tribune still has one of the best operating margins in the business. What's more, the company has a reputation for pinching pennies and squeezing dollars -- something that occasionally drives Cubs fans to distraction but should bring a smile to shareholders.
Lastly, Tribune management is good about returning capital to shareholders. The dividend yield is in the top tier of all newspaper companies, and the company has been an avid repurchaser of its shares -- so much so that shares outstanding in March were nearly 5% lower than a year ago.
So, in a nutshell, Tribune is having the same problems that Gannett (NYSE: GCI), NewYork Times (NYSE: NYT), and most other papers are having with weak ad sales. But given Tribune's relatively superior cost controls and willingness to return cash to shareholders, investors thinking about dallying in the dailies may want to give Tribune a lengthy read.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
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