Tribune CEO: Not Likely to Face a KR Situation, But Possible'

By Mark Fitzgerald

Published: May 02, 2006 3:15 PM ET
updated 7:00 PM ET

CHICAGO Speaking at Tribune Co.'s brisk annual meeting Tuesday, Chairman, President and CEO Dennis J. FitzSimons told anxious shareholders that the newspaper and broadcast giant will "win" eventually -- but he could not guarantee the company will not suffer the same fate as Knight Ridder Inc.

"As Knight Ridder found out, in this environment anything is possible," FitzSimons said in response to a question from an unidentified Tribune employee.

FitzSimons noted, however, that unlike Knight Ridder -- bought last month by The McClatchy Company in a $6 billion deal -- big blocks of Tribune stock is in friendly hands. The McCormick Tribune Foundation, for instance, owns a 14% stake, the Chandler Trusts own another 12%, and 9% is held by employees.

"That makes it a little less likely for us to face the situation that Knight Ridder did, but it is possible," FitzSimons said.

This year's bare-bones annual meeting represented a big break from recent decades in which the meetings have been high-tech, multi-media affairs held in posh local hotels with the proceedings broadcast by satellite to it properties around the nation.

Tuesday, shareholders met in a small auditorium in the company's Tribune Tower headquarters in Chicago. The 7th floor room held the TV studios of its WGN-TV station back in the 1950s, FitzSimons said. The satellite feed was replaced by a Web broadcast. The changes saved Tribune $200,000 on the cost of past annual meetings, FitzSimons said in a memo to employees last month, Crain's Chicago Business reported Monday.

Tribune stock has been hammered on Wall Street, like every other media company. It cut its workforce by 4% last year, 900 positions shed on top of the 600 jobs lopped off in 2004. Shareholders were meeting two weeks after Tribune announced that first-quarter 2006 revenues were down 1% from last year.

"As you can see, 2005 was clearly a difficult year for Tribune," FitzSimons said after CFO Donald C. Grenesko reviewed the bad financial news.

But Grenesko and FitzSimons said there was reason to be optimistic about the future. Grenesko noted that despite the huge tax bill from the ill-fated spin-off of the Matthew Bender book division it inherited from Times Mirror -- a bill Tribune paid off with bank borrowings -- the company's debt amounts to $2.8 billion, giving it a comfortable 2X debt-to-cash ratio.

FitzSimons said its free dailies were now attracting 3 million readers weekly, and had signed up 1,500 new print advertisers. The new union contracts at Newsday will save the paper $7 million this year, and $10 million annually for the next three years.

But FitzSimons made CareerBuilder.com exhibit number one in the case for optimism. He said the jobs site's monthly unique visitors now total 22 million--nearly double the 12 million visitors to Monster.com, the online pioneer in help-wanted. This year, CareerBuilder.com -- a partnership of Tribune, Knight Ridder and Gannett Co. -- will surpass Monster.com in revenue, he added.

"Everybody said we couldn't win with CareerBuilder -- and we did win," Fitzsimons says. "And we will win."

For all the grief Tribune has been getting from Wall Street analysts, this 40-minute annual meeting was as low-key as it was brief.

A shareholder proposal to elect all directors annually that was advanced by corporate gadfly Evelyn Y. Davis was, as expected, defeated. The peppery Davis herself was not present. In her place, Chicago businessman Martin Glotzer urged shareholders to follow the example of Chicago Tribune founder Joseph Medill.

"If Joseph Medill were here presiding over this meeting, we would have annual election of directors and we would have cumulative voting to give voice to minority stockholder interests," Glotzer said.

Four directors were re-elected at the meeting: FitzSimons; former Kraft President Betsy D. Holden; retired PepsiCo. North America Chairman Robert S. Morrison; and retired attorney William J. Stinehart Jr.

The margin of defeat, though, may have been closer than Tribune felt comfortable. A company spookesman said the margin was 53% against, 46% in favor, and 1% abstaining.

Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is a senior editor at E&P.