Tribune's Lalapalooza of a Loss

Sit down, folks. Tribune just reported a second-quarter loss from continuing operations of nearly $4 billion. I hardly know where to begin.

The loss itself is not a surprise, but the size of it is postively staggering. Remember, the figures represent only a three-month period. The loss stems largely from a writedown of newspaper assets. That's a fancy way of saying the newspapers that Sam Zell bought are not worth what they once were. So he's "slashing" their paper value.

But that's not all, losses from discontinued operations totaled $705 million from the sale of Newsday. The charge for severance pay and termination benefits was $15 million, lower than I expected, compared with $27 million in last year's second quarter.

As expected, revenue fell 6 percent to $1.1 billion. And a lot of that is blamed on lower publishing advertising revenue (down 15 percent) and lower classified ad revenue (down 26 percent). When Florida newspapers such as the Tampa Tribune and the Miami Herald earlier reported precipitous drops in revenue and profits, you knew Tribune could be far worse. After all, it has newspapers in two sagging markets: Florida and California. But circulation revenues increased in Fort Lauderdale and Orlando, although daily and Sunday circulation were down for the entire publishing unit.

The Newsday sale sure came in handy. It allowed Zell to pay $807 million in debt ahead of a December bank deadline. Booey for him. Watch your back, though. There's another $600 million payment due next June. Cash on hand plummeted nearly 40 percent to $161 million from $262 million last year. Online revenue is down. And there's still a mountain of debt ($12.5 billion).

I know this may be heresy to some ears, but I actually feel bad for Zell. He bought a bill of goods.
The properties are not worth jack. Consider that $4 billion is half the price that Zell paid for the Tribune Co. Zell's been had but the likes of the old Dennis Fitzsimmons gang at Tribune Tower a well as a sucky newspaper market. Unbelievable.

A man like Zell is not accustomed to losing that kind of money. His language must be getting saltier and saltier.