Sun-Times, Trib see ad revenue drop

May 9, 2008

BY DAVID ROEDER droeder@suntimes.com

Parent companies of the Chicago Sun-Times and Chicago Tribune reported losses from ongoing operations Thursday and provided fresh evidence of declines in advertising revenue.

Sun-Times Media Group Inc. said it lost $35.8 million, or 44 cents a share, during the first quarter. The company is up for sale, and Chief Executive Cyrus Freidheim Jr. said its books have been sent to "a large number of parties" interested in buying at least some of its Chicago area newspapers.

Tribune Co. reported a $1.82 billion profit in the first quarter due entirely to its conversion into a federally tax-free operation. Owned by its employees but controlled by investor Sam Zell, Tribune said it lost $30 million from continuing operations during the quarter, compared with a $31 million profit in the same period last year.

Revenue at Tribune was down 8 percent to $1.1 billion. The company, owner of major newspapers and broadcast stations around the United States, said its payments from classified advertising were down 27 percent, led by a 41 percent drop in real estate ad revenue.

For Sun-Times, first-quarter revenue was off about 12 percent to $81 million. The net loss compared with a loss of $4.8 million in the first quarter of 2007, when the company booked revenue from a legal settlement with former Sun-Times Publisher F. David Radler, later convicted of corporate theft.

"Classified and retail advertising were especially weak during the quarter," Freidheim said. "Nevertheless, Sun-Times Media Group has made significant progress toward aligning costs with advertising revenue trends in the industry."

He said the company expects to realize its goal of reducing expenses by $50 million this year.

Zell said results from Tribune's TV and radio stations are stable but that the company faces challenges on the print side. The revenue losses are pressuring Zell to sell assets, such as the Chicago Cubs, Wrigley Field and Long Island's Newsday newspaper, so he can make debt payments that resulted from the Tribune takeover.