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Tribune Co. reports final losses on N.Y. Daily News.

Tribune Co. reports final losses on N.Y. Daily News

In its turbulent and final 15 months owning the New York Daily News, Tribune Co. of Chicago lost $409 million on the troubled tabloid.

Tribune Co. reported its final bill to get rid of the paper came to $295 million. That includes $60 million paid to Robert Maxwell for taking the paper and cutting staff, $86 million for accrued employee compensation, $57 million in 1991 operating losses, and a $92 million non-cash charge to write down the value of Daily News assets.

In addition, the Daily News lost $114 million in 1990, Tribune Co.'s last full year of stewardship over the tabloid it founded 71 years ago and built into the nation's biggest newspaper--before a post-World War II decline eroded circulation and profits.

Fourth-quarter 1990 losses surged to $69 million as a strike by nine unions representing 2,300 workers began Oct. 25 and forced the company to turn the paper over on March 21 to Maxwell Newspapers Inc.

The report finalized earlier preliminary results and concluded all Tribune co. financial ties to the Daily News in the last quarter of 1990.

The year-end losses and costs of divesting the Daily News came on top of $115 million that the Tribune Co. said the paper had lost between 1980 and 1990. Management blamed high labor costs and sought to harness the unions, but the confrontation ended in a bitter and violent strike.

Daily News losses forced Tribune Co. to report consolidated losses for the fourth quarter and for all of 1990.

Including the one-time charge of $295 million ($185 million after taxes) from the Daily News, Tribune Co. reported a fourth-quarter net loss of $191 million, or $3.05 a share, compared with 1989 fourth-quarter net income of $68 million, or 90 [cents] a share.

Tribune Co. reported a loss of $64 million, or $1.22 a share, in 1990, compared with 1989 net income of $242 million, or $3.17 a share.

As reported earlier, fourth-quarter 1990 operating profit fell 99% to $1.2 million, compared with a year earlier.

Not counting the Daily News, Tribune Co. net income from other newspapers, broadcasters, entertainment properties and newsprint mills fell 21% in 1990, to $191 million.

The final report showed how the strike crippled the Daily News. The paper's fourth-quarter revenues fell 67% to $38 million, from $115 million a year before. Its fourth-quarter operating loss of $69 million compared with a quarterly operating profit of over $5 million a year earlier.

Despite revenues of $422 million, the Daily News lost more than $2 million in 1989.

Newspaper stock analyst Eric Philo of Goldman Sachs in New York said the total losses were more than expected, but the net effect on Tribune Co.'s cash was "almost zero."

"They gambled, they went for broke and they lost," Philo said of the Tribune Co.'s bid to clamp down on the Daily News' unions. "They put it behind them. Now it's complete. It's been a millstone around their neck for a long time . . . . It's a relief.

"It was a very costly and ugly and unfortunate course of events. It's clear it wasn't perfectly handled."

Philo expects more cost cutting under Maxwell, and gives the Daily News a good chance of regaining circulation and advertising--at the expense of New York Newsday and the New York Post--which both gained considerably during the strike.
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Author:Garneau, George
Publication:Editor & Publisher
Date:Apr 6, 1991
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