After Time Warner, Viacom, Vivendi, and Disney, it is now the turn of the Tribune, one of the premier media groups in the US, to feel the heat as it struggles to cope with the task of restructuring itself amidst the changing industry dynamics; even though problems facing Tribune are more internal than external. Like many of its traditional media industry peers, the Tribune group, which owns 11 dailies, including the Los Angeles Times (LA Times) and the Chicago Tribune, along with a host of other properties that include 26 television stations, cable and radio businesses, too is feeling increasingly threatened as readers shift to online sites. The media group has seen its newspapers circulation numbers fall drastically in recent times.For instance, the Los Angeles Times,
America's fourth-biggest newspaper, witnessed a 5.4% drop in circulation last
year as it fell sharply from a high of 1.2 million in 1990 to approximately 851,500
now. This, in turn, has caused its advertising revenues to come down. Annoyed
by the media giant's continued poor run (the company announced that its July 2006
revenues were down by 1.4%), the Chandler family, which owns 12% stake in the
group, and also the former owners of the LA Times, recently demanded that
the group should either put itself up for sale or break itself up. The Chandlers,
who were not happy with the company's recent buyback program of shares, wrote
a letter to its board demanding withdrawal of the buyback scheme; this might remind
one of the new wave of shareholder activism in corporate America, which hit companies
like General Motors and Time Warner.
However,
Tribune's present predicament is not an isolated example, as the entire media
industry, the newspaper industry in particular, is reeling under the threat from
the Internet as more and more publishers find that Web advertising firms are increasingly
making a dent in their print advertising revenues. However, some of Tribune's
miseries are self- inflicted and surprisingly owed to Chandler family's own wrongdoings.
For
instance, some of the problems at the Tribune group stem from its $8 bn purchase
of Times Mirror Co., operator of the Los Angeles Times and other papers,
in 2000. The merger was marred by the controversy related to fraudulently inflated
circulation figures of Newsday, another of the group's newspapers. As a
result, Tribune had to reimburse advertisers and face a $1-bn tax penalty involving
a Times-Mirror transaction. And if this was not enough, the poor performance of
the Los Angeles Times in the post-acquisition period only added to the
group's sufferings.
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