Los Angeles Times Has `One of Worst Quarters,' Publisher Says July 17, 2007
Posted by Mark Blei in : Uncategorized , trackbackLos Angeles Times Has `One of Worst Quarters,’ Publisher Says
By Tim Mullaney and Michael Janofsky
July 14 (Bloomberg) — The Los Angeles Times had “one of the worst quarters we have ever experienced” as advertising fell and cash flow dropped 27 percent, the newspaper’s publisher said in a memo to employees.
Second-quarter sales slid 10 percent, Publisher David Hiller wrote yesterday. A slump in advertising pages overwhelmed gains in Web ads and newspaper supplements, he said.
The Times is the largest newspaper owned by Chicago-based Tribune Co., which has agreed to be bought in an $8.2 billion leveraged buyout led by investor Sam Zell and an employee stock ownership plan. Sales and cash flow declined at other Tribune newspapers as well, Hiller wrote.
“Results were similar across Tribune, but overall Tribune was worse than the industry,” Hiller said in the memo, which didn’t provide more specific financial details.
Tribune is set to report second-quarter results on July 25 before U.S. financial markets open. The company’s newspaper revenue fell 10 percent in May and 8.6 percent in April.
The decline will complicate efforts to complete the sale, said analyst Ed Atorino of Benchmark Co. in New York. The decline in cash flow was steeper than the 15 percent he had estimated.
“It’s going to cast a pall over the deal,” Atorino said in an interview. “The stock is going to go down.”
Hiller, in an interview yesterday, confirmed the contents of the memo. He disagreed with Atorino, saying he didn’t believe the results would interrupt the sale.
Negative Trends
“The current trends across the whole industry are in the negative range,” he added. “We’re hoping to do a variety of things to improve upon them. It remains to be seen how fast we can do it.”
The landscape for newspaper publishers has become “extremely competitive and dramatically changed from what it had been not so long ago, with an explosion of options and choices for readers and advertisers,” Hiller said.
In the memo, Hiller said the Los Angeles Times is considering selling ads on its front page, a move that has been made at newspapers including The Wall Street Journal.
“They are common at reputable papers across the U.S. and Europe,” wrote Hiller, who said the ads would “raise several million dollars in revenue.” He invited employees to comment on the idea and on other planned initiatives to boost sales.
Shares of Tribune, which also owns 23 television stations and the Chicago Cubs baseball team, rose 60 cents to $30.58 yesterday in New York Stock Exchange composite trading. They are little changed this year.
Tribune agreed to the $34-a-share buyout in April after the publisher and broadcaster’s largest shareholder, the Chandler family trusts, pushed for a sale. The company has scheduled an Aug. 21 shareholder vote on the plan.
Zell was named to Tribune’s board in May after investing $250 million in the company, also publisher of the namesake Chicago Tribune and Newsday in New York, as part of the transaction.
To contact the reporter on this story: Tim Mullaney in New York at tmullaney1@bloomberg.net ; Michael Janofsky in Los Angeles at mjanofsky@bloomberg.net .
Last Updated: July 14, 2007 00:47 EDT
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