A Sunday piece by Chicago Tribune business writer James P. Miller summarizes the parent company's weakened financial status and points to the "still controversial" 2000 acquisition of the L.A. Times and other Times Mirror properties as a big contributor. Tribune Co. chairman Dennis FitzSimons tells analysts he is looking to "eliminate the areas of uncertainty," whatever that ends up meaning. Cherry-picking from the story:

Ad revenue at Tribune's biggest paper, the Los Angeles Times, have been disappointing for more than a year; that problem has been aggravated in recent months by an unexpectedly sharp slide in the Times' circulation....

Tribune's $8 billion purchase of Los Angeles Times parent Times Mirror Co. in 2000 was, to a large extent, a gamble that the government would loosen the regulatory bar that prohibits cross-ownership of a TV station and a newspaper in the same market. But that hope for regulatory relief has been thwarted, at least in the near term, and Tribune may have to shed some desirable assets in future years....

Still others [difficulties] can be traced back to the company's still-controversial Times Mirror acquisition. That ambitious deal, announced five years ago this month, was intended to create profit-boosting synergies that leveraged Tribune's strengths. But to date, the watershed combination hasn't yielded the benefits Tribune was hoping for.

The problems have been a drain on the Tribune's stock price and have raised questions about whether its strategy of offering advertisers a mix of newspaper and TV outlets in top markets around the country remains viable....

These days, the troubles at the Los Angeles Times appear to be high on FitzSimons' list of things that need fixing. Since the Times Mirror deal closed, the Los Angeles Times has been Tribune's biggest-circulation paper. But even though Tribune has squeezed $130 million in annual costs out of the Times, the crown jewel of the Times Mirror empire hasn't lived up to expectations.

The paper's advertising revenue has been about flat since the takeover, and last year the troubles deepened when the paper suffered a surprisingly sharp 5.6 percent falloff in circulation, to a 902,164 weekday average.

"Re-establishing financial momentum on the West Coast is critical," said FitzSimons. To that end, he's been shaking things up at the Times.

In October, Tribune brought in a new advertising boss at the Times. It also has spent $96 million to expand the paper's color-printing capacity and its ability to print high-profit-margin preprint advertising. And last week, the publisher of the Times, the executive who Tribune had installed after it took control in 2000, unexpectedly stepped down, to be succeeded by his lieutenant.

Tribune Co.'s fix-up efforts at the Times underscore the extent to which the Times Mirror transaction has fundamentally altered the Chicago company....

Many investors, who had liked the company precisely because it had turned its focus away from the mature publishing sector in favor of the faster-growing broadcast business, were unhappy to see it reverse course to buy a chain of old-fashioned newspapers.

The story says Tribune is betting that it will be some years after 2007, if at all, that it would be forced to choose between selling the Times or KTLA here, and divesting its other cross-ownerships.

(Via Romenesko)

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