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Tuesday, June 20, 2006

Newspaper woes persist

By Aimee Picchi
Bloomberg News
Posted June 21 2006

Tribune Co., Belo Corp. and Journal Register Co. said advertising sales continue to slump, signaling the newspaper industry's woes may extend this year.

Advertising sales in June "are soft and we expect first-half advertising to be flat," Donald Grenesko, chief financial officer of Chicago-based Tribune, the second biggest U.S. newspaper publisher in revenue and owner of the South Florida Sun-Sentinel, said Tuesday at the Newspaper Association of America's Mid-Year Media Review in New York. He declined to forecast ad sales for the second half of 2006.

A protracted slowdown may mean increased investor pressure on publishers including Tribune, which is fending off calls from its second largest shareholder to break apart the business. At Belo, second-quarter newspaper advertising will decrease 1 percent from a year earlier, Chief Financial Officer Dennis Williamson said at the event. Newspapers including Tribune are cutting jobs and expanding on the Web, where ad sales are rising.

"Things remain very challenging," said Peter Appert, a publishing-industry analyst at Goldman, Sachs & Co., in an interview at the conference. "If you are struggling to do zero to 2 percent advertising growth during a period of top economic growth, it does not bode well."

Advertising demand "remains very uneven," said Journal Register Chairman Robert Jelenic at the conference, where the Trenton, N.J.-based company is one of 10 newspaper publishers presenting Tuesday and today.

Tribune, publisher of the Los Angeles Times and the Chicago Tribune, and Journal Register both said they are coping with the ad slump partly by cutting expenses, including staff reductions.

Chief Executive Officer Dennis FitzSimons said Tribune will stick with a plan to reduce costs and shed assets to drive up the stock price. The plan is opposed by the Chandler family, Tribune's second biggest shareholder, which has demanded the separation of television stations from the newspaper business.

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