As an erstwhile journalism professor, I'd love to be in a position to proclaim that Tribune (NYSE:TRB) -- along with its publishing and broadcasting brethren -- cranked out a superb quarter to finish 2006. In some respects, the company's results did improve, but for the most part, they signaled a continued tough environment for the company.
As with other similar companies that had reported 2006 results, including Gannett (NYSE:GCI), McClatchy (NYSE:MNI), and Motley Fool Income Investor pick New York Times (NYSE:NYT), Tribune's fourth quarter and full year included an additional week versus comparable 2005 periods. This addition resulted from nothing more than each fiscal year ending on the final calendar Sunday of December, which in 2006 was a week later than in 2005. According to the company, the extra week increased 2006 fourth-quarter operating revenues by 5%, operating cash flow by 7%, and operating profit by about 9%, while raising cash operating expenses by about 6%.
At the same time, Tribune benefited during the quarter from a combination of non-recurring gains and the effects of tightening cost controls. The result, when combined with the effects of the extra week, was a more than 80% rise in net income for the quarter. Tribune's net profit reached $239.1 million, compared with $132.3 million in the final quarter of 2005.
However, the improved results included one-time gains totaling $69 million, including $33 million from income tax adjustments, $28 million from the sale of derivative investments, and $7 million from the sale of its corporate airplane. Per-share income for the quarter was $0.99, versus $0.43 the previous year. Tribune's full-year per-share earnings were $2.14, compared with $1.67 in 2005.
Revenues for the quarter were $1.47 billion, up 5.4% from the $1.39 billion in the 2005 quarter. However, the company acknowledged that without the extra week, revenue would have been 1% lower than in the prior year.
But concern with earnings growth or reductions at Tribune obscures the key consideration there: the progress of the special committee of the company's board of directors in sorting out its ultimate direction and structure. Last month, the committee received three offers to acquire or restructure the company, including one from the Chandler family, Tribune's largest shareholder.
On Monday, The Wall Street Journal speculated that Tribune may not accept any of the three offers, preferring instead to implement a "self-help" restructuring plan that would include spinning off the broadcasting division and paying a one-time cash dividend to shareholders. The board is expected to meet this week to discus options. The company essentially put itself up for sale four months ago.
Now Fools, please listen: Don't chase the possibility of a special cash dividend by dipping into Tribune stock. In the final analysis, this is still a newspaper and broadcasting company, and you'd be better off directing your attention elsewhere.
For related Foolishness:
- Will All Newspapers Fold?
- Fool on the Street: Gannett Moves Into the Future
- Newspaper Publishers Unite Online
Read all about why New York Times and other companies are Income Investor selections with a free 30-day trial to the newsletter devoted to dividends.
Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments.
