DBRS Downgrades Tribune Company to A (low)

Dominion Bond Rating Service (“DBRS”) has today downgraded the ratings of Tribune Company (“Tribune” or the “Company”) as noted above.

DBRS is downgrading Tribune as it has indicated it will primarily use its free cash flow to return funds to shareholders as opposed to reducing the recent substantial increase in debt, which has weakened its financial profile. This action follows DBRS’s recent action of placing the rating “Under Review with Negative Implications” following the US$1 billion tax ruling against the Company, which was financed with commercial paper. The Company’s strong financial profile became more important in underpinning its “A” rating, given depressed market conditions. With a difficult business environment, the Company will need to be disciplined about its financial position in order to preserve its strong credit profile.

The prevailing challenges are as follows: (1) Advertisers’ and consumers’ interest in non-traditional media continues to expand. This has resulted in Tribune’s eroding newspaper circulation and linage, particularly at the Los Angeles Times. For example, the Internet has become a major source for information, especially for younger audiences. Print information is constrained from a functionality standpoint. Consumers increasingly want more dynamic information sources, which include interactive options, depth, flexibility, and control. Furthermore, online advertising has the capability to measure audiences, a point of contention between advertisers and media companies. (2) Retailer consolidation is contracting Tribune’s customer base.

Despite this, EBITDA and margins increased moderately in the recent 12 months over 2004. Tempering the adverse trends are Tribune’s diversified business platform and higher margin broadcasting assets. Tribune’s leading newspaper franchises – the Los Angeles Times and Chicago Tribune – still offer some of the most effective mass media and are among the most respected and influential newspapers in the U.S. In addition, the Company has experienced rapid online advertising growth.