Tribune Media Net slow, but on track

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One of Tribune Co.'s prized initiatives in the wake of its $8 billion deal last year for Times Mirror was the creation of its Tribune Media Net unit, which sells national advertising across its portfolio. But, like so much else in media advertising this year, it's off to a slow start.

The company has maintained it expects to net between $40 million and $50 million this year via Media Net initiatives in 2001. Thus far, though, stung by the sagging economy, Tribune Media Net President Dave Murphy said the unit is performing "below plan" for the full year, though he added, "we're tracking pretty close to where we wanted to be."

First-quarter revenue related to Media Net, said Tribune Publishing Chief Financial Officer Jerry Agema in an April 18 conference call with analysts, was $9 million, $8 million of which came in the first two months.

Tribune's first-quarter earnings, announced April 18, achieved the reduced earnings-per-share estimates the company had guided analysts toward, but nonetheless declined 21% from last year. Also, the company lowered second-quarter estimates to 30 cents per share, where analysts had expected 40 cents.

In the conference call, the company warned it would look "very aggressively" at reducing headcount throughout the year. Last week, Newsday publisher Raymond Jansen alerted staffers that 30 to 50 positions could be eliminated. Staffers at the Los Angeles Times, long abuzz with rumors of cutbacks, were likely not reassured upon hearing a Tribune executive tell analysts in the conference call that Tribune "saw further [headcount] reductions" there, "through a number of actions."

Mr. Murphy backed off quantifying what Tribune Media Net would mean to the company. "I'm fixated on year one," he said. In March, Business Week reported Tribune CEO John Madigan's "expectations" for additional incremental revenue via Tribune Media Net would hit $200 million by 2005.

Tribune Publishing President Jack Fuller tempered expectations as well. "Recognize those [revenue expectations] are modeled not in an economic slowdown period, but for a more normal" time, he said.

Media Net is not without successes. Mr. Murphy cited one package in Los Angeles created around the Oscar ceremonies between the Los Angeles Times and Tribune's local TV affiliate KTLA that generated about $150,000. And an Air Jamaica package resulted in the airline running ads on KTLA for the first time. Overall, the Los Angeles Times alone took in about $2 million in cross-media sales through February.

But some insist the Media Net strategy is incomplete without a larger New York metro presence.

"They don't have a newspaper that really sells in Manhattan," said David Cole, editor and publisher of trade newsletter News Inc. "I think they have to, to make the strategy work."

Newsday has bulked up its Queens presence. But, said Mr. Fuller, "we are duly wary about attempting to march back into Manhattan. Newsday tried that once. We've been there with the Daily News."

Tribune grew so desperate to leave New York that it essentially paid British media baron Robert Maxwell to take the Daily News off its hands in 1991. New York Newsday, launched in 1985 and closed in 1995, was never profitable and lost an estimated $100 million.

Tribune has made an alliance with the Daily News for potential inclusion in some national ad packages-ironic in that the News will be Newsday's toughest foe in Queens-a subject on which Tribune executives are mum.

"You've got to be patient with Media Net," said Kevin Gruneich, an analyst with Bear Stearns, New York. "It's being launched at a difficult time. ... Hopefully it will develop some muscle that will come in handy when the ad market turns up."

Still, some advertisers say they've yet to hear much from Tribune Media Net. "They have to raise their tempo," said Steve Greenberger, exec VP, Interpublic Group of Cos.' Initiative Media, Los Angeles.

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