Tribune CEO to Stockholders: No Guarantee We Won't Be Another KR (DINO MEDIA EXT. ALERT!)

CHICAGO Speaking at Tribune Co.'s brisk annual meeting Tuesday, Chairman, President and CEO Dennis J. FitzSimons told anxious shareholders that the newspaper and broadcast giant will "win" eventually -- but he could not guarantee the company will suffer the same fate as Knight Ridder Inc.

"As Knight Ridder found out, in this environment anything is possible," FitzSimons said in response to a question from an unidentified Tribune employee.

FitzSimons noted, however, that unlike Knight Ridder -- bought last month by The McClatchy Company in a $6 billion deal -- big blocks of Tribune stock is in friendly hands. The McCormick Tribune Foundation, for instance, owns a 14% stake, the Chandler Trusts own another 12%, and 9% is held by employees.

"That makes it a little less likely for us to face the situation that Knight Ridder did, but it is possible," FitzSimons said.

This year's bare-bones annual meeting represented a big break from recent decades in which the meetings have been high-tech, multi-media affairs held in posh local hotels with the proceedings broadcast by satellite to it properties around the nation.

Tuesday, shareholders met in a small auditorium in the company's Tribune Tower headquarters in Chicago. The 7th floor room held the TV studios of its WGN-TV station back in the 1950s, FitzSimons said. The satellite feed was replaced by a Web broadcast. The changes saved Tribune $200,000 on the cost of past annual meetings, FitzSimons said in a memo to employees last month, Crain's Chicago Business reported Monday.

Tribune stock has been hammered on Wall Street, like every other media company. It cut its workforce by 4% last year, 900 positions shed on top of the 600 jobs lopped off in 2004. Shareholders were meeting two weeks after Tribune announced that first-quarter 2006 revenues were down 1% from last year.

"As you can see, 2005 was clearly a difficult year for Tribune," FitzSimons said after CFO Donald C. Grenesko reviewed the bad financial news.

But Grenesko and FitzSimons said there was reason to be optimistic about the future. Grenesko noted that despite the huge tax bill from the ill-fated spin-off of the Matthew Bender book division it inherited from Times Mirror -- a bill Tribune paid off with bank borrowings -- the company's debt amounts to $2.8 billion, giving it a comfortable 2X debt-to-cash ratio.

FitzSimons said its free dailies were now attracting 3 million readers weekly, and had signed up 1,500 new print advertisers. The new union contracts at Newsday will save the paper $7 million this year, and $10 million annually for the next three years.

But FitzSimons made CareerBuilder.com exhibit number one in the case for optimism. He said the jobs site's monthly unique visitors now total 22 million--nearly double the 12 million visitors to Monster.com, the online pioneer in help-wanted. This year, CareerBuilder.com -- a partnership of Tribune, Knight Ridder and Gannett Co. -- will surpass Monster.com in revenue, he added.

"Everybody said we couldn't win with CareerBuilder -- and we did win," Fitzsimons says. "And we will win."

For all the grief Tribune has been getting from Wall Street analysts, this 40-minute annual meeting was as low-key as it was brief.

A shareholder proposal to elect all directors annually that was advanced by corporate gadfly Evelyn Y. Davis was, as expected, defeated. The peppery Davis herself was not present. In her place, Chicago businessman Martin Glotzer urged shareholders to follow the example of Chicago Tribune founder Joseph Medill.

"If Joseph Medill were here presiding over this meeting, we would have annual election of directors and we would have cumulative voting to give voice to minority stockholder interests," Glotzer said.

Four directors were re-elected at the meeting: FitzSimons; former Kraft President Betsy D. Holden; retired PepsiCo. North America Chairman Robert S. Morrison; and retired attorney William J. Stinehart Jr.

More info

Crain's ChicagoBusiness.com

Low stock price makes Tribune vulnerable to takeover: CEO

By Gregory Meyer
May 02, 2006
(Crain’s) — Tribune Co. Chairman and CEO Dennis J. FitzSimons acknowledged Tuesday that the media company’s weak stock price makes it potentially vulnerable to a bid from an outside buyer.

In the context of the pending sale of newspaper giant Knight Ridder Inc. to McClatchy Co., “everything in this environment is possible,” Mr. FitzSimons said at the company’s annual shareholder meeting. “That’s one of the reasons we have to operate as efficiently as we are operating right now and continue to look for efficiencies.”

Tribune’s shareholder base — the Robert R. McCormick Tribune Foundation, the Chandler Trusts and company employees collectively own a 35% stake in the company — could potentially complicate a takeover play.

“But still, it’s very possible,” Mr. FitzSimons said in response to a question submitted in writing by a company employee.

Investors have been raising the specter of takeover for months as Chicago-based Tribune’s share price drifted to multi-year lows. The stock closed Monday at $28.57, down 39% since Mr. FitzSimons replaced John Madigan as chief executive on Jan. 1, 2003. “Tribune is not the next Knight Ridder, unless it’s in the mid-$20s,” wrote one Deutsche Bank analyst in a research note in mid-March.

Unlike Knight Ridder, no big shareholders are publicly urging Tribune to sell. But “patience is wearing a little thin,” said Barry Lucas, an analyst at Gabelli & Co. in Rye, N.Y. Still, “I would characterize (a sale) as ‘possible.’ ‘Very possible’ would be a reach, in my view,” Mr. Lucas said.

The meeting went off without fireworks in a converted TV studio inside Tribune Tower. A shareholder resolution calling for Tribune’s board of directors to be elected annually instead of on staggered three-year terms was defeated by a margin of 53% to 46% of votes cast, with 1% abstaining.

Only three attendees rose to question Mr. FitzSimons: perennial corporate gadfly Martin Glotzer, a man from Wilmette angry about a couple of mistakes and omissions in the Chicago Tribune and a representative of the Rainbow/PUSH Coalition who pressed the company to make its executive ranks more diverse.

Kathryn C. Turner, the board’s only African-American member and one of two female members, stepped down Tuesday in a previously announced resignation. The company has not yet set a timetable for replacing her, a spokesman said.

Mr. FitzSimons underscored management efforts to cut costs and find new revenue opportunities, noting that Internet revenue is expected to make up 6% of Tribune’s publishing ad revenue this year and 12% of it in three years. About 65% of Tribune’s $5.6 billion in revenue last year came from its newspapers and other publishing properties, while the rest came from broadcasting.

He did not address pressures to sell off Tribune’s assets, which in addition to newspapers in 11 markets and TV stations in 26, include WGN-AM 720, the Chicago Cubs and stakes in CareerBuilder and the TV Food Network.

But recent operating results hung over talk of growth plans. Last year’s revenue was down 2.3%, while profit slipped 3.8%. In the first quarter of 2006, Tribune reported a profit of $102.8 million, down 28% from $142.8 million the year earlier.

“2005 was clearly a difficult year for Tribune. A choppy advertising environment and continued competition from all media posed additional challenges,” Mr. FitzSimons said. “Nonetheless, as the media landscape evolves, newspapers and broadcast television remain very valuable tools for marketers.”

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.