Tribune Takes Huge Write-Off, Operations Steady
Tribune follows Media General, LIN TV, Gannett down write-off path.
By Robert Marich -- Broadcasting & Cable, 8/13/2008 12:51:00 PM
Tribune took a $3.8 billion noncash after-tax write-off Wednesday in what is a growing epidemic of slashing internal values of media-company balance sheets.
The bookkeeping charge mainly lowered valuations of Tribune newspapers.
The Chicago-based media conglomerate joined Media General, LIN TV and Gannett in a write-off parade, which is expected to grow in traditional media. The charges reflected the drain of new media and also general economic weakness, and they will cut into borrowing capacities.
Tribune was sold in December for $8.5 billion in a transaction where internal values of its assets were valued high, and they are now being knocked down.
On a normal accrual basis, Wednesday’s second-quarter results were more favorable at the company, which is owned by private-equity investor Sam Zell and employees. Operating cash flow from continuing operations (which excludes the impact of the write-off) decreased 2% to $221 million in the second quarter. Revenue declined 6% to $1.1 billion.
For TV operations alone, revenue rose 4% to $409 million and operating cash flow slipped 4% to $116 million.
Tribune’s bottom-line net loss was a staggering $4.5 billion for the second quarter compared with a net profit of $36.3 million in the same period a year earlier. On top of the $3.8 billion writedown, the company took an additional charge of $704.7 million on the sale of its Newsday newspaper to Cablevision Systems. Both are noncash charges, and the Newsday sale was beneficial by bringing in $630 million in cash.
“Since the beginning of the year, we have launched dozens of programs and products that have the potential to make a meaningful impact on our future, and we have made significant progress in aligning our expenses with the realities of an industry in recession,” Tribune chairman and CEO Zell said in a statement. “We remain optimistic and are confident in the strength of our brands and the talent within our company.”
Zell added that the company is doing reasonably well in making debt payments, which are substantial after the debt-financed takeover in December. Interest expense in the quarter was $211 million.
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