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(Corrects to remove Miami Herald and Philadelphia Inquirer.)
Tribune Co., publisher of the Los Angeles Times and Newsday in New York, said profit fell 80 percent after the company set aside $150 million to pay a tax claim. Newspaper and television revenue beat some analysts' estimates.
Third-quarter net income dropped to $24 million, or 7 cents a share, from $121.7 million, or 37 cents, a year earlier. Excluding the tax costs and a gain, profit was 50 cents, beating the 48-cent average estimate. Sales fell 0.8 percent to $1.4 billion, Chicago- based Tribune said today in a statement.
Newspaper advertising revenue increased, as hardware and home improvement store spots countered a decline in automotive ads. Tribune, the No. 2 U.S. newspaper publisher, said circulation fell. The company trimmed the number of pages it prints, capping the rise in newsprint costs at 5 percent. TV revenue sank 6.2 percent after a spurt of Olympic ads a year earlier.
``On the newspaper side, things look pretty good,'' said John Miller, an Ariel Capital Management money manager in Chicago. His firm is Tribune's No. 5 investor with 10 million shares. ``On the broadcasting side, they're going up against Olympic and political advertising from last year that they don't have this year.''
Shares of Tribune rose 58 cents to $32.39 at 10:43 a.m. in New York Stock Exchange composite trading and had dropped 25 percent this year before today.
Five analysts suggest buying the stock, 10 recommend holding it and two have ``sell'' ratings.
Tribune, like publishers including No. 1 newspaper owner Gannett Co. and Knight Ridder Inc., in the past few years has reduced the size of its publications and cut jobs to help cope with rising newsprint costs and the defection of advertisers to the Internet and cable TV.
Gannett this week reported third-quarter profit fell 4.3 percent as costs rose and advertising declined at its TV stations and USA Today newspaper.
Tribune last month lost a court fight over as much as $1 billion in taxes with the Internal Revenue Service, with a U.S. judge ruling that Times Mirror Co.'s 1998 sale of its Matthew Bender & Co. unit didn't qualify as a tax-free reorganization. Tribune acquired Times Mirror in 2000.
The company took a $55 million charge in the third quarter last year related to settlements with advertisers related to misstated circulation at the Newsday and Hoy newspapers.
Sales in Tribune's publishing business were little changed at $980.4 million, and operating profit in the unit surged 29 percent as expenses declined. Credit Suisse First Boston analyst William Drewry expected sales of $979.4 million.
Advertising revenue in the business increased 2.1 percent. Retail ad sales gained 0.9 percent. National advertising dropped 3.5 percent, while classified was up 7.1 percent and circulation revenue fell 7.5 percent.
The company is vulnerable in large markets as circulation drops and free newspapers offer more competition, New York-based J.P. Morgan Securities Inc. analyst Frederick Searby said in a note to clients yesterday.
Newspaper ads sales industrywide rose 1.9 percent to $13.9 billion in the first half, while Internet advertising rose 9.4 percent, according to New York-based TNS Media Intelligence, which tracks advertising spending. Cable ad spending rose 15.3 percent.
Sales from broadcasting and entertainment fell 2.3 percent to $422.5 million, the company said. TV revenue fell, and radio and entertainment sales gained 9.7 percent. Broadcast operating profit dropped 5.5 percent to $130.7 million.
Television revenue was $306.6 million, hurt by an ``uneven advertising environment,'' particularly in major markets, and a drop in movie, telecom and car ads, the company said. Drewry expected $303.9 million.
Poor ratings crimped station revenue in New York, Los Angeles, Chicago and Boston. The broadcast unit is suffering as ratings fall at the WB TV network, in which Tribune owns a stake and distributes on affiliate television stations, Searby said.
``The WB networks struggle to compete in a crowded, highly competitive broadcast market,'' he said.
The radio business improved, helped by an increase in home games at the Chicago Cubs and higher broadcast and marketing revenue.
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