Tribune Company (NYSE:TRB) executives today updated business progress and outlined company strategies for 2006 at the annual UBS and Credit Suisse First Boston Media Week conferences in New York City.
“Tribune’s local businesses continue to be leaders in their communities, valued by consumers and advertisers alike,” said Dennis FitzSimons, chairman, president and chief executive officer. “We are local media, and provide crucial news and information for the markets we serve. This is especially true in times of crisis, such as when the hurricanes hit New Orleans and South Florida this fall.”
Additionally, FitzSimons said, “Our newspapers and broadcast stations continue to generate significant cash flow, and that enables both our important journalistic mission and our ability to create value for shareholders.”
He highlighted the company’s expense reduction initiatives and said Tribune was redeploying resources and investing in areas that will contribute to future growth, like further expansion on the Internet.
Scott Smith, Tribune Publishing president, cited growing responsive readership and subscriber retention as top priorities for 2006. He also said the newspaper group is “committed to leading the aggressive changes required to best serve our customers and communities, and to deliver better financial results.”
John Reardon, Tribune Broadcasting president, said the company’s 26 television stations aim to maximize cash flow by emphasizing innovation, economies of scale and tight cost controls. He pointed to several bright spots for the group, including solid ratings for several shows on the WB and Fox networks, strong local news franchises and growth at Superstation WGN.
“Clearly, our goal is to improve performance in 2006,” Reardon said. “With some help from our local markets, we’re optimistic we can achieve that.”
Don Grenesko, Tribune chief financial officer, said actions taken to reduce the company’s cost structure will result in special charges in the fourth quarter. Staff reductions totaling 900 positions, mostly in publishing, will generate severance charges of $40 to $45 million. In addition, the closing of a Los Angeles Times production facility will result in a non-cash charge of $50 to $60 million. Grenesko said annual expense savings of $55 to $60 million beginning in 2006 will provide a nine-month payback of the cash expenses associated with the restructuring.
Tribune’s capital expenditures in 2006 will be about $220 million, unchanged from 2005, Grenesko added. Debt should also be flat, he said, and interest expense will increase by approximately $40 million. The company’s effective tax rate will be 39.25 percent.