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Tribune Share Price Ruined by Poor Financial Performance

It is not the fight between Tribune Publishing Co. (NYSE: TPUB) and interests that want its flagship Los Angeles Times to be independent that has taken down the company’s shares. It is ongoing disappointment with the inability of the company to post anything other than terrible financial results. The stock fell again recently as Tribune Publishing issued a warning about future performance numbers.

The share price of Tribune Publishing breached its 52-week low on the downside as management cut forecasts, dropping to $10.19 after hours when the figures were announced. The company’s 52-week low is $10.50, against a 52-week high of $23.73. Management’s comment about its new struggle read:

Tribune Publishing Company today announced that based on preliminary results through the end of August and the Company’s outlook for the balance of the year, the Company now expects the following full year 2015 results:

  • Total Revenues of $1.645 billion to $1.675 billion, compared to prior estimates of $1.67 billion to $1.70 billion
  • Adjusted EBITDA of $145 million to $160 million, compared to prior estimates of $165 million to $175 million

Tribune Publishing’s Chief Financial Officer Sandra J. Martin said, “Revised guidance reflects lower forecasted revenue estimates for the year, concentrated in Southern California. Expense mitigation efforts partially offset this decline, but are expected to be unfavorably impacted by the delay of implementation of these efforts, principally in Southern California.”

Tribune Publishing’s Chief Executive Officer Jack Griffin said, “Our Board of Directors and management are fully committed to executing the five-point transformation plan that we launched last year when Tribune Publishing became a publicly traded company. We have made substantial progress, and continue to believe that it well-positions our Company to create value for our shareholders while continuing to produce editorially excellent publications that serve our readers and their communities with distinction.”

From a profit and loss standpoint, the “five-point” plan is not working.

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The statement is not much different from others made by large newspapers chains, but it does indicate that efforts to improve Tribune Publishing’s future have failed. Digital revenue growth efforts, which are supposed to fill in the hole left by drops in print circulation revenue and print advertising, have not been successful.

In the second quarter of this year, total company revenue dropped from $430 million in the quarter a year ago to $410 million. Net income fell from $15 million to $3 million. The company is barely breaking even. The most troubling part of the earnings was the size of and very modest improvement in digital numbers in the quarter:

  • Q2 Total Digital Revenues of $52 million, up 3.7% from prior-year quarter adjusted for prior-year impact of modified affiliate agreements
    • Q2 Digital Marketing Services Revenues of $7.3 million, up 14.8% from prior year
    • Total Digital subscribers were 678,000 at the end of Q2; Digital-only subscribers were 70,000 at end of Q2 2015

Digital revenue is so small compared to total revenue that there is no chance for it to make up the rapidly deteriorating fare of the traditional business.

The recent explosion of news about the future of the Los Angeles Times has overwhelmed the fact that Tribune Publishing does not have much of a future.

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By Douglas A. McIntyre