Chicago Tribune to cut 120 positions (DINOSAUR MEDIA DEATHWATCH™)

The Chicago Tribune, challenged by weaker-than-expected first-half financial results, plans to eliminate around 120 positions from the newspaper's workforce of about 3,000, Publisher and Chief Executive David Hiller said Thursday.

No decision has been made on exactly how many jobs each department and operation will lose, Hiller said. But, he said, 40 or so jobs have been vacant and left unfilled since the beginning of the year, meaning roughly 80 more will be deemed unnecessary and eliminated in the coming months.

"We would hope to have most of this decided by Labor Day .. and, as much as possible, completed," said Hiller, who did not give a dollar figure for the savings the cutbacks represent.

Managing Editor James O'Shea said he didn't have a ballpark figure for how many newsroom positions will be lost.

"We're working through the numbers now, and we're trying to see if we can avoid layoffs," O'Shea said.

The latest cutbacks follow 80 to 90 Chicago Tribune positions eliminated at the end of 2005, and parent Tribune Co.'s promise in May to trim $200 million in costs companywide over the next two years to help finance a $2.5 billion stock buyback.

"Our reason to try to speed up our action on the cost side has to do with our Chicago Tribune results in the first half of the year, which were well weaker than we had planned," Hiller said in an interview. "The cost savings as part of the $200 million that were planned over time, what we're doing is accelerating some of that ... accelerating cost reductions that otherwise would have been next year."

rest of story..

However, Hiller said, the newspaper will be investing where it sees growth potential, including Internet operations and its free paper, Red Eye. He cited a $75 million upgrade at the paper's Freedom Center printing facility, which he said will enable the Tempo feature section to print the night before delivery starting this fall rather than a day in advance, as it now is.

"That will be great for readers, but it costs money," Hiller said.

Hiller acknowledged "these things are hard and painful" for employees, "but we're not facing anything that anybody in the rest of the media industry or, frankly, the rest of American industry, isn't."

philrosenthal@tribune.com

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Tribune Sees Weak Ad Market, Earnings Plummet In Q2
by Wayne Friedman, Friday, Jul 14, 2006 9:20 AM ET
TRIBUNE BROADCASTING'S STATIONS, THE CORE group of the new CW network, has been having a rough time in the first months of 2006 with weak advertising sales. Conditions will only get worse, it says, before getting better. The station group says advertising in the second quarter dropped 1%, and the third quarter will also dip into the low single percentage digits. Tribune says there still exists a weak overall advertising market. But it's not just advertising that is affected. Tribune Company's CEO Dennis FitzSimons says few advertisers are interested in Tribune's prime-time lineup due to the "lame duck status" of The WB, the network that runs on its stations.

This is something analysts warned about at the beginning of the year when the primary owners of The WB and UPN, Warner Bros. and CBS Corp. respectively, decided to merge their networks. Since then, WB's ratings have sunk to big-time lows. But Tribune predicts a turnaround this fall, anticipating that the new CW network will post ratings increases 25% above what the WB posted.

Tribune says advertising categories such as automotive, the biggest TV advertising group, is down. So is another big category: retail advertisers. On the positive side, the movie and the telecommunications businesses are up in TV advertising spending.

All this was part of Tribune's earning release, which reported the media company fell 63% or $85.7 million to $231.3 million in the second quarter. FitzSimons says TV wasn't the only business hurt from a weak ad market-newspaper ads were hit, too. The earnings dive comes amid pressure from Tribune major shareholders to break up its businesses for sale.

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Web Ads May Help Papers Face Woes

Published: July 14, 2006 4:50 PM ET

NEW YORK Second-quarter results this week from several newspaper companies included a now-common litany of woes -- sluggish advertising, declining circulation and rising newsprint costs. But a small ray of hope emerged as growth in online advertising, while still a small portion of revenues, looks to be picking up speed.

For one publisher in particular -- Chicago-based Tribune Co. -- the prospect of increased Web-related sales couldn't come at a better time. Its declining profits and revenues could provide more ammunition to the restless Chandler family, the former owners of the Los Angeles Times and now the company's largest shareholder.

Following the forced sale of Knight Ridder Inc. to McClatchy Co. earlier this year under shareholder pressure, the Chandlers have been pressing for radical action such as a breakup to boost Tribune's long-lagging share price.

With a contested share buyback plan now complete, the pressure is on Tribune, the nation's No. 3 newspaper company by circulation, to continue with measures it promised to revamp its businesses, including selling some $500 million in noncore assets and cutting $200 million in costs within two years.

The latest indication of those cost cuts came Friday as Tribune's flagship paper, the Chicago Tribune, confirmed that it would eliminate about 120 jobs, or about 4 percent of its work force, by the end of the year. The cuts were reported in Friday editions of the newspaper.

So far, investors have been backing Tribune's board and management, but they have made clear that they want to see more action to lift the stock, which now trades about 40 percent below where it was early in 2004. John P. Miller, portfolio manager with Ariel Capital Management LLC, a Tribune shareholder, said he hoped to see more results within the next six months or so.

While Miller, the Chandlers and others say the sum of Tribune's parts is worth more than the current value of the whole, some disagree, pointing to declining valuations for both newspapers and broadcasting properties.

Deutsche Bank analyst Paul Ginocchio said in a note to investors that most breakup or buyout scenarios would value the company between $25 and $32 a share -- below where Tribune's shares have been trading recently. On Friday, the shares fell 40 cents to $31.10 on the New York Stock Exchange.

Tribune said its online revenue grew 27 percent in the second quarter, and CEO Dennis FitzSimons told an investor conference last month that Tribune hopes to see online advertising make up between 12 and 15 percent of newspaper revenues by 2010, up from about 6 percent this year.

Other major newspaper publishers reporting this week, including Gannett Co. and McClatchy, experienced similarly fast growth in online revenues. But many analysts remain skeptical about whether that growth will outpace the advertising lost to Internet-only destinations such as Yahoo and Craigslist, which get far more traffic than most newspaper sites.

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