Correct: Fitch Downgrades Tribune to 'CCC'; Outlook Negative.

CHICAGO -- (This is an amended version of a press release originally issued on Aug. 22. Both the senior guaranteed revolving credit facility and the senior guaranteed term loan are downgraded to 'CCC+/RR3', not 'CCC/RR4'. Recovery ratings of RR3 indicate that 51-70% recovery is reasonable)

Fitch Ratings has downgraded the following ratings on Tribune Company (TRB):

--Issuer Default Rating (IDR) to 'CCC' from 'B-';

--Senior guaranteed revolving credit facility to 'CCC+/RR3' from 'B/RR3';

--Senior guaranteed term loan to 'CCC+/RR3' from 'B/RR3';

--Senior unsecured bridge loan to 'CC/RR6' from 'CCC/RR6';

--Senior unsecured notes to 'CC/RR6' from 'CCC/RR6';

--Subordinated exchangeable debentures due 2029 to 'CC/RR6' from 'CCC-/RR6'.

Approximately $13.4 billion of debt is affected by this action. The Rating Outlook is Negative.

The downgrade and Negative Outlook reflect the following considerations:

--Given the acceleration of declines in newspaper advertising revenue and cash flow at Tribune and no evidence from any participants in the industry regarding the prospects for current pressure relenting, Fitch believes Tribune's credit profile is consistent with a 'CCC' rating. For issuers in the 'CCC' rating category, default is a real possibility and the capacity to meet financial commitments is vulnerable to deterioration in business and economic conditions. Fitch notes business and economic conditions have been rapidly deteriorating for newspaper companies over the past 12 months.

--On August 13, TRB announced continued weak operating and financial results. On a comparable basis, in the second quarter of 2008, publishing revenue was down 11%, costs were down 4% and operating EBITDA was off 38%, reflecting the significant operating leverage in the business as cost cuts have not been able to compensate for the revenue deterioration. Advertising revenue has been under pressure across advertising categories with classifieds continuing to post double-digit declines (over 40% for real estate classifieds). Interactive revenue was also down 4%. On the broadcasting side, revenue has been up modestly while costs were also up (7.5%) and operating EBITDA decreased 3%.

--Fitch is aware that there is limited visibility regarding the likelihood, timeframe and magnitude of a potential reversal of these negative trends.

--Over the longer term Fitch continues to anticipate that the company will be challenged to generate meaningful and consistent revenue growth, and remains cautious regarding newspaper companies' prospects for capturing and monetizing the significant volume of advertising dollars that are migrating toward the internet. While the second half of 2008 should be favorable for the broadcasting division, Fitch expects 2009 to be a weak year for TV broadcasting stations, particularly those affiliated with lower rated networks (e.g. The CW Network).

--Cost cuts announced and implemented in the first half of 2008 should help in the intermediate term, but Fitch notes that even more action may be necessary to offset the rapid erosion of advertising dollars. Newsprint prices have been escalating but have largely been offset by reduced consumption through web width reductions, fewer pages (lower advertising, less editorial, and actions such as elimination of stock charts) and discontinuation of low-value circulation.

--Fitch expects TRB to continue to pursue asset sales (namely the sale of the Chicago Cubs franchise and the company's 25% stake in Comcast SportsNet Chicago) to enable it to address principal amortization ($593 million) on the tranche X of its term loan facility in June of 2009. However, further asset monetization may be necessary. In the long run, Fitch is concerned about the company's ability to generate cash to meet its interest payments, principal amortization and maturities under its debt obligations in a timely manner. In the near term, Fitch believes the company can meet its obligations for several quarters, but has grown more concerned regarding the room the company has around its covenants given the pressured EBITDA generation.

--TRB has limited flexibility around its 9 times (x) guaranteed leverage covenant. Fitch calculates the ratio to be in the low-to-mid 8x range at June 30, 2008. If the company were to experience similar declines in the second half of the year as experienced in the first half, and sells the Cubs and SportsNet stakes before year-end for net proceeds of more than $675 million (which appears realistic), it could be under the 9x leverage covenant.

However, if negative trends accelerate or if the Cubs/SportsNet deal is not completed the company could be at risk of breaching the threshold. Also, Fitch recognizes that even with the Cubs sale, the company faces a material risk of breaching the covenant threshold when it steps down in first-quarter 2009 to 8.75x. While the company could receive an amendment or waiver from the banks if it breaches a covenant, in this credit environment Fitch is uncertain and cautious regarding the terms of such a potential negotiation for such a highly leveraged entity with deteriorating prospects. In this scenario, the receipt of a waiver or amendment without an upturn in business prospects is not likely to have a positive impact on the rating. However, failure to receive covenant relief could result in a restructuring (not necessarily bankruptcy) that would likely further pressure ratings.

--Tribune management has met or exceeded Fitch's expectations on the elements of its business over which it has more explicit control: expense containment, asset sales and exclusive dedication of cash flow toward debt repayment. Fitch believes TRB management has distinguished itself from other newspaper management teams by taking aggressive actions across various areas of the company to attempt to preserve the longer term health of the company: bringing in new leadership from outside the industry, communicating directly with staff about the challenges facing the industry, reducing headcount, re-tooling incentive compensation for sales teams, redesigning the product, exploring asset monetization/utilization opportunities, and experimenting with new revenue streams. While these actions appear prudent in the intermediate- to long-term, they are less quantifiable in the near term and they may not produce results that address the company's currently strained financial flexibility. The downgrade primarily reflects weakness stemming from elements of the business that the company has less control over, namely areas that Fitch understood were highly volatile, such as classified advertising.

--The 'CCC+/RR3' rating for Tribune's secured bank credit facility and term loans B and X reflects Fitch's belief that 51%-70% recovery is reasonable in distress given that it benefits from a first-priority guarantee from direct and indirectly owned U.S. subsidiaries (providing it priority over other claims under a default scenario). The 'CC/RR6' Recovery Rating on the bridge loan ($1.6 billion), the unsecured notes and the subordinated exchangeable debentures (PHONES) reflects Fitch's estimate that 0% recovery is realistic in a distress scenario. (Although not reflected in notching due to the expectation of 0% recovery, Fitch notes there are differences in priority among the 'CC/RR6' rated securities.)

Fitch's ratings reflect TRB's significant debt burden, as well as the decline in its revenue and cash flow. Fitch believes newspapers and broadcast affiliates (particularly in large markets where there is more competition for advertising dollars) face meaningful secular headwinds that could lead to more cash flow pressure in the future. In addition, the ratings continue to reflect volatile newsprint prices and the threat of emerging technologies on the economics of the pure-play broadcasting affiliate business. TRB's businesses face the risk of margin compression as revenue pressures are coupled with cost structures that are fixed or contain elements that are largely outside of management's control. The margin of safety to endure these threats in a cyclical downturn has largely been exhausted. These concerns are balanced somewhat by the geographic diversity of the company's assets as well as the success of several of the company's on-line investments. Also, TRB owns some valuable assets (L.A. Times, Chicago Cubs, Food Network stake, CareerBuilder stake, etc.) that are separable from the company. Fitch estimates that cash proceeds from core divestitures would not likely de-leverage the company but could provide some capacity to enhance liquidity (non-core asset sales would be deleveraging, particularly the Cubs).

Liquidity is supported by availability under its $750 million revolving bank credit facility which is fully available (with the exception of $95 million in letters of credit) and $75 million available under a $300 million Trade Receivable Securitization Facility (entered into on July 1, 2008). In addition, the company has available a delayed draw on the Term Loan B facility which should permit the company to fund the $238 million medium-term note coming due in October 2008 (which will slightly increase the numerator of the guaranteed leverage test).

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.