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CHICAGO (AFX) -- Tribune Co. reported Thursday a 28% drop in first-quarter profit on charges related to severance costs, a non-operating loss on a decline in the value of certain investments, stock-compensation expense and advertising weakness at its broadcasting division.
Tribune Co. said net income slipped to 102.8 million, or 33 cents a share, from $142.8 million, or 44 cents a share.
Operating revenue fell about 1% to $1.3 billion.
Analysts, on average, had expected Tribune Co. to post a first-quarter profit of 36 cents a share on revenue of $1.3 billion.
During a conference call with analysts, Chairman Dennis FitzSimons said the company will continue to be aggressive about cutting costs, but he reiterated that asset sales are not on the company's near-term horizon. There has been speculation that Tribune Co. could divest some assets under pressure from certain shareholders.
"If there is a divestiture that really makes sense that we feel will provide value to shareholders, we will do it," FitzSimons said. "But in the environment with media companies and multiple [price-to-cash flow] compressions, we have not seen prices that make up for the tax bite. ...
"We continue to have conversations, but at this point, we're focused on results. We seem to be in a show-me market -- people want to see results, and that is what we want to deliver."
Newspaper advertising revenue was flat for the quarter, as strength in classifieds was offset by a decline in national and retail ads.
In the classified category, real-estate revenue soared 35%, with help-wanted up 7%. Automotive continued to slide, down 10%.
Scott Smith, president of Tribune Co.'s publishing business, said real-estate ad sales have been particularly strong in Florida, where homes are selling more slowly than in some parts of the country.
"We are seeing our best real-estate gains in both South Florida and Orlando and we think that can continue for a while," he said.
National ad revenue slid 8%, with most of the damage stemming from a decline in movie ad sales at the Los Angeles Times. Also within the national category, automotive and technology revenues were down, while telecom/wireless showed growth.
Retail ad revenue fell 2% on declines in food and drug store, department-store and electronics ad sales. A gain was seen in the hardware/home-improvement area.
Publishing's first-quarter operating revenue came in at $997 million, down 1%, as cash operating expenses rose 2%.
"As we begin the second quarter, we expect April ad revenues to be somewhat of a challenge in publishing because of the timing of Easter," FitzSimons told analysts on the call. "That is going to work against us slightly. However, we look for May and June to be better."
Broadcasting and entertainment revenue fell 2% to $303 million. First-quarter television revenue fell 2%, a smaller decline than it had in any quarter last year.
Station revenue at Tribune Co.'s New York station were up, while revenues in Chicago and Los Angeles declined. Increased ad sales were seen in the movie, restaurant, education and telecom categories, while auto and retail ads declined.
FitzSimons said that second-quarter ad sales at Tribune Co.'s television stations are on a pace to be similar to first-quarter totals but that the company is "especially encouraged" by signs of growth in New York and Los Angeles, its largest markets.
In the 2006 first quarter, Tribune Co. recorded a pretax non-operating loss of $14 million related to the marketing of some derivatives and a related Time Warner investment. The company also cited charges of $19 million associated with the new union contracts at Newsday and $7 million of stock-based compensation expense.
In the 2005 first quarter, Tribune recorded a pretax non-operating loss of $4 million. In addition, the company recorded favorable income-tax settlement adjustments of $12 million as a reduction in tax expense.
In the aggregate, non-operating items in the first quarter of 2005 resulted in an aftertax gain of $9 million, or 3 cents a share.
Tribune Co. shares rose 18 cents to close at $28.20. This story was supplied by MarketWatch. For further information see
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