With its television revenues lagging, Tribune Co. late Friday announced the resignation of Patrick J. Mullen, president of Tribune Broadcasting since January 2003.
Neither Mullen nor Dennis FitzSimons, Tribune Co. chairman, president and chief executive officer, returned calls for comment, but a Tribune spokesman told Dow Jones Newswires that both men “agreed a change was necessary.”
Television group vice presidents John Reardon and John Vitanovec were named to oversee broadcast operations of the company’s 26 TV stations until a successor to Mullen is selected.
Tribune’s broadcasting operation, like other media companies, has been struggling with a soft advertising environment as well as dealing with long-term negative industry trends. They include the Internet’s increasing claim on young viewers’ free time and the erosion of broadcast viewership caused by the continued growth of cable TV’s audience share.
Tribune newspapers, which include the Chicago Tribune and Los Angeles Times, account for far more revenue than its television holdings. But while the stations account for 28 percent of the company’s revenue, they account for 45 percent of its profits.
Mullen’s departure comes at a time of setbacks for Tribune Co. The company’s share price is down 21 percent this year amid long-standing worries over the erosion of newspaper readership.
Last week, Tribune paid off the $880 million federal portion of a $1 billion tax bill it inherited with its 2000 purchase of Times Mirror, following a U.S. Tax Court ruling it plans to appeal.
Also hanging over the company and its television group are delays in the proposed loosening of the government’s media regulations that restrict ownership of a TV station and newspaper in a single market. If such a change doesn’t come, Tribune might be forced to divest itself of assets.
On Friday, separate from Mullen’s departure, Fitch Ratings downgraded Tribune’s debt rating to “A-” from A with a negative outlook, citing increased debt from the tax settlement and weakened operating performance.
Mullen’s departure comes less than two weeks before a Tribune board meeting, scheduled for Oct. 19. It was a rare shakeup for a company known for its stability at the top.
Tribune saved news of Mullen’s exit until after the close of regular New York Stock Exchange trading for the week, with shares closing Friday up a penny at $33.44.
Mullen, 50, joined Tribune with its 1998 purchase of WXMI-TV in Grand Rapids, Mich., where he was vice president and general manager. Last year, according to regulatory filings, Mullen was paid a salary of $515,615 and received a bonus of $175,000.
“Pat has made many contributions to our organization,” FitzSimons said in a brief news release that gave no explanation for his departure. “We thank him for his efforts on behalf of the company and the television industry, and wish him well in the future.”
In 2003, the year Mullen was named by FitzSimons to take over Tribune Broadcasting, the addition of two TV stations helped Tribune’s television revenues rise 8.3 percent, to $1.32 billion. The TV segment’s operating profit for the year rose 12 percent to $507.3 million.
But in 2004, Tribune’s TV revenues rose 2.3 percent to $1.35 billion, and operating profit rose a relatively paltry 3.6 percent, to $525.7 million.
Through the first six months of 2005, Tribune’s TV revenues dropped 7.4 percent, to $624.6 million, and operating profit showed a painful 19 percent decline, to $208.5 million.
Television revenues, the company said when it released second-quarter results in mid-July, “were affected by a continuing uneven advertising environment, particularly in major markets, as well as softness in the automobile, movie and telecom categories.”
In addition, Tribune said, its stations in New York, Los Angeles, Chicago and Boston “continue to be impacted by Local People Meters,” a new method Nielsen Media Research is using to measure viewership.
On behalf of Tribune, Mullen was a vocal opponent of the new ratings system, pushing for congressional legislation that would establish a third-party group of research experts to verify the accuracy of Nielsen data.
Tribune also faces difficulty with the slumping WB Network, which runs on 19 Tribune stations–including Chicago’s WGN-Ch. 9, New York’s WPIX-TV and Los Angeles’ KTLA-Ch. 5–and in which Tribune has a 22 percent stake. The network has had a dearth of hit shows in recent years.
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philrosenthal@tribune.com
