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Sep. 16--Tribune Co. yesterday lowered profit estimates for the quarter ending this month after sluggish advertising sales at its television stations and newspapers, including the Los Angeles Times and Newsday.
The company said earnings for the July-September period would fall between 49 cents and 51 cents per share. The new estimate excludes an additional special charge of as much as $60 million to pay rebates to advertisers harmed by inflated circulation at Newsday and the Spanish-language Hoy.
Stock analysts had expected third-quarter profits to equal 54 cents, according to a survey by Thomson Financial.
The announcement came as Chicago-based Tribune reported smaller than expected gains in revenue from its 14 papers last month, and a 4.2 percent drop in sales at its 26 TV stations, which suffered because rivals carried the Olympics. In addition, most Tribune stations are WB affiliates and that network is mired in a ratings slump.
The August report also showed the first advertising decline for Newsday since its June 17 disclosure of fraudulent circulation figures. The number of ads published in the paper's three editions fell 3 percent last month compared with a year ago; there were gains in distribution of circulars and ads that appeared in selected editions.
"The 3-percent decline is not really attributable to anything with regard to the circulation issues," said Tribune spokesman Gary Weitman, blaming the reduction on the ad-intensive Labor Day holiday occurring later this year than in 2003.
On Wall Street, Tribune shares fell 10 cents yesterday to close at $40.25 in trading on the New York Stock Exchange.
Rick Plummer, an analyst for the Value Line Investment Survey, said, "Political advertising is proving to be less helpful than expected, as spending on such advertisements is being focused on swing states, as opposed to the more broad-based distribution of ad dollars that Tribune anticipated."
Another analyst, Peter Appert of Goldman Sachs, downgraded the company's shares to "in-line" from "outperform" on Tuesday because of the weak ad sales and circulation scandals.
In a note to investors, Appert labeled as a "black eye" the circulation problems, saying "advertisers will likely take a hard line when negotiating contracts and rates not just at Newsday, but at all of the company's properties, adding to the pressure on revenue growth and profitability."
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