Tribune Company Eats Its Own Cooking TRB
Tribune Company today announced that it would buy back 25% of its shares for $2 billion. Shares can be tendered for not less than $28.00 and not more than $32.50. The offer begins immediately.
Tribune has been trading near its lows, with a 52-week nadir of $29.07 against a high of $39.56. The stock rose 7.6% to $30 on the news.
The tick up is not nearly enough under the circumstances.
Tribune's revenue has been fairly flat over the last three years. In 2003, revenue was $5.595 billion, then $5.26 billion in 2004, and $5.596 billion in 2005. Operating income dropped from $1.36 billion in 2003 to $1.147 in 2005.
But the company's interactive properties have been doing unusually well. In April, Netratings says that company's 50 sites drew 14.8 million average unique users per month. This is up 32% from the same period a year ago.
In the first quarter of the year ending March 31, revenue dropped 1% to $1.299 billion. Operating profit dropped 12% to $222.9 million. The company insists that due to staff and other cost cuts that overall expenses are trending down. Tribune says it is committed to reducing costs another $200 million over the next two years.
Because the company has several very large newspapers, it has the opportunity to drive traffic to its online properties in a way that public newspaper companies in smaller markets do not. Tribune owns the LA Times, the Chicago Tribune and Newsday. Tribune's websites also tend to be large and in profitable internet niches. These include careerbuilder.com, cars.com and apartments.com. All fit well with the newspaper classified business which is migrating online.
Given the share drop in the number of Tribune shares, the online progress the company is making and expense reductions, the company should trade much closer to its 52-week high.
Douglas A. McIntyre
Tribune has been trading near its lows, with a 52-week nadir of $29.07 against a high of $39.56. The stock rose 7.6% to $30 on the news.
The tick up is not nearly enough under the circumstances.
Tribune's revenue has been fairly flat over the last three years. In 2003, revenue was $5.595 billion, then $5.26 billion in 2004, and $5.596 billion in 2005. Operating income dropped from $1.36 billion in 2003 to $1.147 in 2005.
But the company's interactive properties have been doing unusually well. In April, Netratings says that company's 50 sites drew 14.8 million average unique users per month. This is up 32% from the same period a year ago.
In the first quarter of the year ending March 31, revenue dropped 1% to $1.299 billion. Operating profit dropped 12% to $222.9 million. The company insists that due to staff and other cost cuts that overall expenses are trending down. Tribune says it is committed to reducing costs another $200 million over the next two years.
Because the company has several very large newspapers, it has the opportunity to drive traffic to its online properties in a way that public newspaper companies in smaller markets do not. Tribune owns the LA Times, the Chicago Tribune and Newsday. Tribune's websites also tend to be large and in profitable internet niches. These include careerbuilder.com, cars.com and apartments.com. All fit well with the newspaper classified business which is migrating online.
Given the share drop in the number of Tribune shares, the online progress the company is making and expense reductions, the company should trade much closer to its 52-week high.
Douglas A. McIntyre
posted by douglas mcintyre at 9:55 AM
Subscribe
<< Home