Tribune Co., publisher of the Los Angeles Times and Chicago Tribune newspapers, said fourth-quarter profit fell 38 percent, hurt by costs to eliminate jobs and declines in advertising sales and circulation.
Net income dropped to $134.4 million, or 43 cents a share, from $216.8 million, or 67 cents, a year earlier, the Chicago- based company said today in a statement. Sales slipped 4.7 percent to $1.41 billion.
Tribune, the second-largest U.S. newspaper publisher, cut 900 jobs and is closing a plant as advertisers defect to the Internet and newsprint costs rise. Sales of both newspaper and broadcast ads declined. Chief Executive Officer Dennis FitzSimons slowed the growth in operating expenses to 2.7 percent in the quarter, down from a 4.3 percent increase a year earlier.
``It is going to become increasingly difficult for Tribune and all the publishers to avoid cutting into muscle,'' said UBS AG's Brian Shipman, in Stamford, Connecticut, who rates Tribune shares ``neutral'' and said he doesn't own them. ``Revenues have been very disappointing, and I fear they are going to be worse in the current year.''
Tribune shares fell 30 cents to $28.71 at 4 p.m. in New York Stock Exchange composite trading after slipping 28 percent last year.
Net income includes 9 cents a share in costs for the job cuts, 4 cents to close a Los Angeles Times printing facility in San Fernando Valley, a pension gain of 3 cents and a non-operating loss of 4 cents.
Excluding those items, profit would have been 57 cents a share, matching an estimate from Shipman and beating a 56-cent average estimate of 14 analysts surveyed by Thomson Financial.
Tribune said job cuts and the plant closure will save $55 million to $60 million a year starting this year.
``We have taken steps to improve expenses for 2006 and will continue to do so,'' FitzSimons said on a conference call. ``We have our cost structure in-line with challenging revenue, and now our priority is growing revenue.''
The company's newspaper advertising revenue fell 2.1 percent, as sales slumped at the Los Angeles Times, the company's biggest newspaper. Newsprint costs rose 6 percent, and circulation revenue fell 4.3 percent.
Circulation of daily papers declined 3.7 percent to 3 million copies and Sunday circulation fell 1.9 percent to 4.4 million.
Sales at Tribune's television and radio business dropped 11 percent as demand for ads from telecommunications and automobile companies fell. The advertising decline was partly caused by Hurricane Wilma in Florida, where Tribune owns the South Florida Sun-Sentinel and a TV station.
Ad sales may drop this month as advertisers in some markets pull spots from Tribune and run them on networks airing the Olympic games, FitzSimons said on the call.
Tribune last month agreed to affiliate 16 of its 26 TV stations with the CW Television Network, the new combination of CBS Corp.'s UPN and Time Warner Inc.'s WB networks. Tribune gave up a holding in WB in return for the affiliate agreement.
FitzSimons may find it tough to shore up sales this year as the industry's growth wanes. Newspaper-industry advertising sales will rise 4.3 percent this year, trailing the 5.4 percent gain estimated for all U.S. advertising, according to New York-based researcher TNS Media Intelligence.
Tribune is under more strain than rivals such as New York Times Co., the third-biggest U.S. newspaper publisher, according to Shipman.
``They will have an extra tough time posting revenue growth at all in 2006,'' Shipman said. ``Advertisers will resist rate increase and pull ads given precipitous declines in circulation. Ad revenue growth will slow further in 2006.''
Gannett Co., the biggest U.S. newspaper publisher and owner of USA Today, and Knight Ridder Inc., which publishes the Philadelphia Enquirer, both reported lower fourth-quarter profit after labor costs and newsprint expenses increased.
McLean, Virginia-based Gannett on Jan. 27 said fourth-quarter profit fell 9.2 percent as costs rose after its purchase of the Detroit Free Press. San Jose, California-based Knight Ridder, which put itself up for sale last year, said yesterday that fourth-quarter profit fell 22 percent.
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