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Tribue Re-Purchases $2 Billion in Stock
By Associated Press...
05/30/06, 09:23

The AP reported.....

Tribune Buys $ 2 billion in Stock Re Purchase

Media group Tribune Co. said Tuesday its board approved a more than $2 billion repurchase of up to 75 million shares that would reduce its number of shares outstanding by 25 percent.

The announcement sent its slumping stock up 8 percent, rising $2.24 to $30.13 in morning trading on the New York Stock Exchange.

Tribune, whose newspaper properties include the Chicago Tribune, Los Angeles Times and Baltimore Sun, said it will finance the moves using bank debt and bonds. The company expects its credit rating to be downgraded because of the higher debt load.

The board authorized first the purchase of up to 53 million shares in a modified Dutch auction starting Tuesday and lasting until June 26. A so-called Dutch auction lowers the sale price of an item until it meets the highest bid. Tribune said it will offer no more than $32.50 and no less than $28 per share.

Following the auction, Tribune is authorized to purchase another 10 million shares from its principal shareholder, McCormick Tribune Foundation and Cantigny Foundation, affiliated groups that hold about 13.6 percent of the stock. The company is also allowed to then buy another 12 million shares on the open market.

"The repurchase transactions are expected to be accretive to earnings per share and will lower Tribune's cost of capital," said Dennis FitzSimons, chairman, president and chief executive, in a statement. "They also allow us to optimize our capital structure while maintaining financial flexibility."

Tribune said it will maintain its dividend and continue to fund other investments.

John Morton, an independent newspaper analyst in Silver Spring, Md., said the move signals Tribune's confidence in the future of its businesses. But he sees another challenging year ahead for newspaper advertising and the business as a whole, although television should have better results because of the elections.

"Probably there's not going to be any tunraround until sometime next year, and even that will probably be modest," Morton said. "People don't realize, though, that newspapers themselves are getting a lot of growth out of their Internet sites, and those can be highly profitable. That really is what's going to start having an impact on the overall outlook for some of those companies."


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