T R I B U N E C O M P A N Y 2 0 01 A N N U A L R E P O R T

The Chicago Tribune’s Noreen
                                      Ahmed-Ullah (below) spent more
TRIBUNE COMPANY is a media industry leader with operations
in major markets throughout the United States, including 18 of ...
                                                                                   Tribune Interactive operate...
GREAT JOURNALISM has always been
Tribune Company’s foundation. Our success depends on it.
In 2001, we were reminded how mu...
    The work we do was never more important than in 2001, an extraordinary time in...
                            Chairman and Chief Executive Officer DENNIS J. FITZSIMO...
like “Friends,” captures excellent ratings in the important         OUTLOOK
    fringe periods that surround prime time.  ...
STRONG VALUES have been part of Tribune since
the company’s founding in 1847. These are the eight fundamental
principles t...
    Jeffrey Chandler                                                   Robert S. Morrison
Tribune Company and Subsidiaries

2001                           FINANCIAL HIGHLIGHTS
FOR THE YEAR (in thousands, excep...
Corporate Headquarters                                         Direct Stock Purchase Plan
Tribune ...

 tarting some 300 wretched miles to...
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tribune annual_01

  1. 1. JOURNALISM AT ITS BEST T R I B U N E C O M P A N Y 2 0 01 A N N U A L R E P O R T ANJUMAN PASS, Afghanistan–The Afghan pony’s hooves sank into the winter snows blanketing this strateg pass deep in the Hindu Kush, the a some mountain wall that blocks the anti-Taliban armies facing Kabul fro their vital supply lines to Tajikistan.
  2. 2. The Chicago Tribune’s Noreen Ahmed-Ullah (below) spent more than two months reporting from Afghanistan and Pakistan. Photo by John Lee, Chicago Tribune. Around-the-clock disaster coverage extended 72 hours on WPIX-TV, New York. Sukanya Krishnan reports from Lower Manhattan on the “WB11 Morning News.” Tribune Broadcasting’s Washington bureau pro- duced 815 live reports for Tribune stations nationwide over 10 days beginning September 11. Rosiland Boston’s WLVI-TV covered Jordan at The White House the local angle following for WGN-TV, Chicago. the terrorist attacks. Terrel Harris reports from Copley Square. The value of Tribune’s multimedia network has never been greater. Here, Los Angeles Times foreign correspondent Paul Watson files a live report on KTLA-TV. On September 12, single-copy sales increased by more than 1 million across the Tribune newspaper group. At left, Michael Breaking news drove record traffic Schroeder proofs Newsday's on Tribune's Web sites on September 11 Extra cover on September 11. and the days that followed. Disaster and The special edition was on the war-related photo areas, such as those streets that day by 3:00 p.m. managed by’s Jerome Photo by Joe Farriella, Newsday. Adamstein (above) still attract visitors online. Photo by Alan Braus. On the cover: Chicago Tribune foreign correspondent Paul Salopek on assignment in Afghanistan last November. Paul won a Pulitzer Prize in 2001, his second, for international reporting. Photo by Pete Souza, Chicago Tribune.
  3. 3. TRIBUNE COMPANY is a media industry leader with operations in major markets throughout the United States, including 18 of the top 30. Through television, radio, newspapers and the Internet, we reach more than 80 percent of U.S. households. Revenues in 2001 totaled $5.3 billion. We are headquartered in Chicago and employ more than 21,000 people nationwide. at a glance BROADCASTING KTWB (WB22) TELEVISION WNOL (WB38) Seattle New Orleans WPIX (WB11) New York WBZL (WB39) WPMT (FOX43) Miami Harrisburg, Pa. KTLA (WB5) Los Angeles KWGN (WB2) WEWB (WB45) Denver Albany, N.Y. WGN (WB9) Chicago KTXL (FOX40) CABLE TELEVISION Sacramento, Calif. WPHL (WB17) WGN Superstation Philadelphia WXIN (FOX59) Indianapolis WLVI (WB56) RADIO Boston WGN (720 AM) KSWB (WB69) Chicago San Diego KDAF (WB33) Dallas WTIC (FOX61) TELEVISION Hartford, Conn. PROGRAMMING WBDC (WB50) Washington Tribune WTXX (WB20) Entertainment Co. Hartford, Conn. Los Angeles WATL (WB36) Atlanta WXMI (FOX17) BASEBALL Grand Rapids, Mich. KHWB (WB39) Chicago Cubs Houston Chicago WGNO (ABC26) New Orleans KCPQ (FOX13) Seattle
  4. 4. INTERACTIVE Tribune Interactive operates more than 50 Web sites attracting a combined Tribune media are concentrated in the nation’s major markets. 7 million unique visitors per month. It ranks among the top 20 online news and information networks in the country. The group manages all aspects of the PUBLISHING company’s newspaper and television sites, plus specialty sites including Daily Press ENTERTAINMENT DAILY NEWSPAPERS Newport News, Va. LISTINGS, Los Angeles Times AND CONTENT Los Angeles and many that feature local dining SYNDICATION The Advocate and entertainment options. Affiliated Stamford, Conn. Tribune Media Services Chicago Tribune national-brand classified advertising Chicago sites include, Greenwich Time CABLE PROGRAMMING Greenwich, Conn. and Newsday CLTV Melville, N.Y. Chicago HISPANIC-MARKET NEWSPAPERS The Baltimore Sun Central Florida News 13 Baltimore Hoy Orlando, Fla. New York (partnership) South Florida Sun-Sentinel Fort Lauderdale, Fla. La Opinión Los Angeles (partnership) Orlando Sentinel Orlando, Fla. ¡Exito! Chicago The Hartford Courant Hartford, Conn. El Sentinel Orlando, Fla. The Morning Call Allentown, Pa.
  5. 5. GREAT JOURNALISM has always been Tribune Company’s foundation. Our success depends on it. In 2001, we were reminded how much the American people depend on it, too. When tragedy struck on September 11, people turned to newspapers, television, radio and the Internet. They turned to trusted voices and trusted brands to give them both the facts and a sense of perspective. Millions turned to Tribune media. An extraordinary story demands extraordinary coverage. Tribune responded with speed, accuracy and compassion, keeping audiences well-informed on September 11 and throughout the confusing, emotional days that followed. We kept that commitment when the story moved overseas and it continues today — in print, on air and online. Our dedication to outstanding journalism delivered through multiple media channels never wavers, no matter what the economic climate. We operate one of the industry's finest news organizations, staffed by 4,500 journalists worldwide who care deeply about their craft. In 2001, Tribune earned four Pulitzer Prizes, the most by any media company. Our newspapers now hold 83 Pulitzers. Whether the story is across town or around the world, Tribune has the talent and the resources to cover it well. Our audiences deserve nothing less.
  6. 6. TO OUR SHAREHOLDERS AND EMPLOYEE OWNERS The work we do was never more important than in 2001, an extraordinary time in American history and a year unlike any other in many respects. The value of Tribune’s multimedia strategy was affirmed as our print, broadcast and online news teams worked together to deliver news and information when people needed it most. The year began optimistically, despite a sluggish economy. Communications Commission to reconsider the rule that Even after the recession started in March, hopes for a rebound prevents companies from owning television stations with a remained high; in late summer there was talk of “hitting combined reach exceeding 35 percent of U.S. households. bottom.” But following September 11, the economy slowed These are encouraging developments in light of our further and the media industry found itself in the most dif- long-standing opposition to the newspaper/television cross- ficult advertising environment since the Great Depression. ownership rule, which generally prohibits companies from Still, Tribune generated $1.24 billion in operating cash flow operating a newspaper and television station in the same for the year, due in large part to aggressive cost containment. market. The FCC is currently reviewing this element of the Our tight focus on expense control somewhat offset lower cross-ownership regulations and a ruling is likely by year-end. 2 ad revenues, but the severity of the recession caused earnings CAREERBUILDER LEADS CLASSIFIED STRATEGY to decline. This affected our stock price; the total return on Tribune common stock was a negative 10.4 percent in Classified advertising accounts for more than a quarter of 2001— slightly better than the Standard & Poor’s 500 Index, publishing revenues and three-fourths of interactive revenues. which declined 11.9 percent. Our objective is to “win in classifieds” by maximizing consumer Tribune shares continue to reward long-term investors. reach with aggressive, integrated print and online strategies For the five years ending December 31, 2001, annualized total in each of the major ad categories — help-wanted, automotive return on our stock was 15 percent, compared with 11 percent and real estate. for the S&P 500. Financial results are summarized on page 7 As the largest classified category, help-wanted is our pri- and detailed in the 10-K report. mary focus. CareerBuilder, the online recruitment company The recession did not diminish our fundamental strengths, we operate in partnership with Knight Ridder, gained including a solid balance sheet. We have the means to grow valuable scale in 2001 by acquiring a key competitor, by investing in our existing businesses and by making timely The transaction more than doubled acquisitions. We also have some of the best local media CareerBuilder’s revenue, reach and employer customer base. properties in the country. And as the only company with Our next goal is to gain significant market share from newspapers, television stations and Web sites in the nation’s Monster, the category leader. top three markets, we’re sharing content, cross-promoting CareerBuilder’s key advantage is the local promotional our brands and cross-selling advertising in a way that few strength of Tribune and Knight Ridder newspapers nation- other companies can. wide. Most job seekers start their search locally, with newspapers as their primary resource. That’s why we rebranded our ENCOURAGING REGULATORY CLIMATE Sunday edition employment sections with the CareerBuilder Last month, a federal court struck down the rule barring name — a move worth an estimated $50 million in cross- companies from owning television stations and cable systems promotional value. We’re using Tribune television stations in the same market. The court also ordered the Federal and Web sites to promote the brand, as well.
  7. 7. PHOTO BY CHRIS WALKER, CHICAGO TRIBUNE Chairman and Chief Executive Officer DENNIS J. FITZSIMONS President and Chief Operating Officer JOHN W. MADIGAN Even with the expenses associated with CareerBuilder, benefits will be gained from a major expansion project 3 Tribune Interactive should be cash flow break-even by the nearing completion in Chicago. Soon, Chicago Tribune insert end of 2002, due to aggressive cost-control initiatives. Plus, advertisers will have twice as many distribution zones available with the group’s new standardized technology platform, we for reaching their targets. The new facilities in Los Angeles can now easily share content across all Tribune Web sites and Chicago will grow our market share in the high-margin and offer consistent ad placement for national advertisers preprint segment and contribute an additional $75 million who buy space on multiple sites. in revenue over the next several years. OTHER REVENUE DRIVERS TV: READY TO GROW Increasing our share of national advertising dollars is the In television, our opportunity is to continue Tribune’s role primary mission of Tribune Media Net. In 2001, the group as an industry consolidator. Greater scale means greater produced nearly $34 million in incremental revenue from efficiency in programming, newsgathering and other areas. the sale of cross-media and cross-market ad packages — great The sale of our three Denver radio stations will provide $180 results in a very tough economy. More and more national million for potential television acquisitions; our goal is to marketers are finding that Tribune newspapers, television use a tax-efficient swap to complete the transaction. Stations stations and Web sites — alone or in combination — can help in the top 30 markets — especially WB Network affiliates — them succeed in the country’s largest, most valuable markets, are Tribune Television’s primary interest. Sixteen of our quickly and cost-effectively. Tribune Media Net began 2002 current 23 stations are WB affiliates, including the eight on a high note by forming a multimedia partnership with stations we operate in the nation’s top 10 markets. General Motors. Tribune and The WB Network continues to be an excellent Another key opportunity for revenue growth is preprinted partnership. The network, now in its eighth year, attracts the insert advertising. The Los Angeles Times recently opened a teenage and young adult viewers that advertisers are so eager state-of-the-art insertion facility that provides exactly what to reach. Programs we buy in the syndication market also advertisers have been asking for — greater zoning capability, contribute to our success. The hit sitcom “Everybody Loves later deadlines and faster delivery to subscribers. Similar Raymond” debuted on most Tribune stations last fall and,
  8. 8. like “Friends,” captures excellent ratings in the important OUTLOOK fringe periods that surround prime time. We’ve made excellent progress in an extremely challenging Another priority in 2002 is to further build the distribution environment, positioning Tribune for accelerated growth and revenues of WGN Superstation, which now reaches more when market conditions improve. Our major markets under- than 56 million cable and satellite homes. As the center- performed in this recession, but they will likely rebound piece of Tribune Cable, the Superstation delivers an attractive faster during an economic upturn. As this report goes to press, audience for advertisers and offers enormous opportunity news that the nation’s leading economic indicators rose in for subscriber growth and high-margin incremental revenue. January for the fourth straight month may be a sign that the Tribune Entertainment Company, based in Hollywood, is recession has run its course. another important piece of our broadcasting strategy. It is the We expect that our businesses will gather earnings industry’s largest source of syndicated weekly “action hour” momentum as the year progresses. However, even if revenues programming and is a significant program supplier to for the full year are flat, cash flow and earnings should grow our station group. “Mutant X,” which premiered success- in the low-single digits due to reduced cash expenses in fully in the fall, and “Gene Roddenberry’s Andromeda,” 2002. If the economy recovers more quickly, earnings could are currently the highest-rated weekly hours in first-run improve even more. Longer term, our goal is to grow television syndication. operating cash flow in the 10 percent to 12 percent range and earnings per share at a slightly faster rate. LEADERSHIP CHANGES We continue to manage Tribune for long-term success. Dennis FitzSimons, who had been executive vice president, Our strong cash flow allows us to take advantage of promising was named Tribune Company president and chief operating growth opportunities when they arise. And financial strength 4 officer in July 2001. He has played a key role in leading Tribune is just one advantage. Tribune is an industry leader thanks through a period of tremendous growth and success. to talented people, outstanding journalism and great media Since our last annual report, the Tribune board of directors properties in the nation’s best markets. We have everything added three new members: Jack Fuller, Robert Morrison needed to grow and succeed, and we will. and William Osborn. Jack is president of Tribune Publishing and has been with Tribune for almost 30 years. Bob Morrison On behalf of all Tribune employees, is vice chairman of PepsiCo, Inc., and chairman, president and chief executive officer of The Quaker Oats Company. Bill Osborn is chairman and chief executive officer of John W. Madigan Northern Trust Corporation and its principal subsidiary, Chairman and Chief Executive Officer The Northern Trust Company. We are fortunate to have March 1, 2002 each of these highly qualified executives serving Tribune shareholders. Two of our long-time directors, Andrew McKenna and Arnold Weber, will retire from board service in May. They have collectively served Tribune shareholders for more than 33 years, making sizeable contributions to the company. Andy chaired the board’s Governance and Compensation Committee and Arnie chaired the Audit Committee. We greatly appreciate their efforts.
  9. 9. STRONG VALUES have been part of Tribune since the company’s founding in 1847. These are the eight fundamental principles that guide our actions every day: CITIZENSHIP CUSTOMER SATISFACTION DIVERSITY s s EMPLOYEE INVOLVEMENT FINANCIAL STRENGTH s INNOVATION INTEGRITY TEAMWORK s s Citizenship is about giving back to the communities in which we do business. We did that in a big way last year with our many successful United Way campaigns and, most notably, through the McCormick Tribune Foundation's Disaster Relief Fund. The nationwide effort raised $22.4 million for non-profit organizations providing 5 relief to those affected by the events of September 11. Response to the fund far exceeded our expectations. Two days after the terrorist attacks, Tribune newspapers, broadcast stations and Web sites began locally branded collection efforts for the fund. The Foundation's partners — Tribune business units and a number of non-Tribune businesses, as well — raised $19.9 million from the general public. The Foundation added $2.5 million in matching funds and shared all administrative costs of the campaign with its partners, enabling 100 percent of every donation to be used on behalf of victims. A complete list of grants made to date is available on the Foundation's Web site, Integrity is another fundamental Tribune value. Given the increased concern for proper disclosure of events and in financial reporting, it's important to note that Tribune is not engaged in the types of practices that contributed to Enron Corp.'s failure. Our company has strong internal controls, conservative accounting practices and sound financial systems. We also provide full and fair financial statements. Strong values make a strong company. We believe they are essential for achieving success on every level — in our communities, and in our relationships with customers, employees and shareholders.
  10. 10. BOARD OF DIRECTORS Jeffrey Chandler Robert S. Morrison President and Chief Executive Officer of Chandler Ranch Co., Vice Chairman of PepsiCo, Inc. and Chairman, President an avocado producer. and Chief Executive Officer of The Quaker Oats Company. Dennis J. FitzSimons James J. O'Connor President and Chief Operating Officer of Tribune Company Retired Chairman and Chief Executive Officer of Unicom and President of Tribune Broadcasting Company. Corporation, a holding company, and Commonwealth Edison Company, an electric utility. Jack Fuller President of Tribune Publishing Company. William A. Osborn Chairman and Chief Executive Officer of Northern Trust Roger Goodan Corporation, a multibank holding company, and its principal Consultant to Schlumberger Limited, a global technology subsidiary, The Northern Trust Company. services company. Patrick G. Ryan Enrique Hernandez, Jr. Chairman and Chief Executive Officer of Aon Corporation. Chairman and Chief Executive Officer of Inter-Con Security Systems, Inc., an international security services firm. William Stinehart, Jr. Partner in Gibson, Dunn & Crutcher LLP, a law firm. John W. Madigan Chairman and Chief Executive Officer of Tribune Company. Dudley S. Taft President and Director of Taft Broadcasting Company, Nancy Hicks Maynard an investor in media and entertainment companies. President of Maynard Partners Incorporated, consultants in news media economics. Arnold R. Weber President-Emeritus, Northwestern University. Andrew J. McKenna 6 Chairman and Chief Executive Officer of Schwarz, a distributor of paper packaging and related products, and a printer, producer and converter. CORPORATE MANAGEMENT John W. Madigan Luis E. Lewin R. Mark Mallory Chairman and Chief Executive Officer Senior Vice President, Human Resources Vice President and Controller Dennis J. FitzSimons Andrew J. Oleszczuk Susan M. Mitchell President and Chief Operating Officer Senior Vice President, Development Vice President, Human Resources Service Center Jack Fuller Jeff R. Scherb President, Tribune Publishing Senior Vice President and Ruthellyn Musil Chief Technology Officer Vice President, Corporate Relations David D. Hiller President, Tribune Interactive Irene M. Freutel Patrick M. Shanahan Vice President, Compensation Vice President, Tax Patrick J. Mullen and Benefits President, Tribune Television Shaun Sheehan David J. Granat Vice President, Washington Affairs Donald C. Grenesko Vice President and Treasurer Senior Vice President, David L. Underhill Finance and Administration Mark W. Hianik Vice President, Intergroup Vice President, Assistant General Development Crane H. Kenney Counsel and Assistant Secretary Senior Vice President, Gary Weitman General Counsel and Secretary Steve Howell Vice President, Communications Vice President, Safety and Security Services
  11. 11. Tribune Company and Subsidiaries 2001 FINANCIAL HIGHLIGHTS FOR THE YEAR (in thousands, except per share data) 2000 change 2001 Operating revenues $ 4,950,830 + 6% $ 5,253,366 Operating profit before restructuring charges $ 1,033,011 – 22% $ 802,229 Restructuring charges – * 151,892 Operating profit including restructuring charges $ 1,033,011 – 37% $ 650,337 Net income Continuing operations before restructuring charges and non-operating items $ 403,519 – 38% $ 249,460 Continuing operations including restructuring charges and non-operating items 310,401 – 64% 111,136 Discontinued operations – (86,015) 100% Total $ 224,386 – 50% $ 111,136 Diluted Continuing operations before restructuring earnings charges and non-operating items $ 1.30 – 45% $ .72 per share Continuing operations including restructuring charges and non-operating items .99 – 72% .28 Discontinued operations – (.29) 100% Total $ .70 – 60% $ .28 7 + 10% Common dividends per share $ .40 $ .44 Common stock high $ 55.69 $ 45.90 price per share low $ 27.88 $ 29.71 $ 42.25 37.74 close $ AT YEAR END Dec. 31, 2000 change Dec. 30, 2001 Total assets $ 14,668,712 – 1% $14,504,696 Total debt (excluding PHONES) $ 3,448,445 – 1% $ 3,411,582 Shareholders’ equity $ 5,885,916 – 4% $ 5,651,168 Common shares outstanding 299,518 – 1% 298,003 * Not meaningful
  12. 12. SHAREHOLDER INFORMATION Corporate Headquarters Direct Stock Purchase Plan Tribune Company Tribune’s DirectSERVICE Investment Program 435 N. Michigan Avenue enables both registered shareholders and new investors Chicago, Illinois 60611 to buy and sell shares of Tribune common stock directly through EquiServe. Please contact EquiServe 312/222-9100 for more information. Investor Information Annual Meeting Current and prospective Tribune investors can receive Tribune’s Annual Meeting of Shareholders will be the annual report, proxy statement, 10-K, earnings held in Chicago on May 7, 2002, 11 a.m. Central Time, announcements and other reports and publications at at the Hyatt Regency Chicago, 151 East Wacker Drive. no cost by calling 800/757-1694. The annual report A live Webcast of the meeting will be available at and related financial information also are available on Tribune’s Web site. Equal Employment Opportunity The contact for securities analysts, portfolio managers and individual investors is Ruthellyn Musil, Vice President/ Tribune believes in equal employment opportunity. Corporate Relations. Call 312/222-3787, or send e-mail Tribune’s policy is to hire and promote the most to qualified applicants and to comply with all federal, state and local equal employment opportunity laws. Stock Information Forward-Looking Statements Tribune common stock is listed on the New York, Chicago and Pacific stock exchanges under the ticker This report contains comments and forward-looking symbol TRB. The current dividend rate is $.11 per statements that are based largely on Tribune’s current share per quarter. expectations and are subject to certain risks, trends and uncertainties. Such comments and statements should Independent Accountants be understood in the context of Tribune’s publicly PricewaterhouseCoopers LLP, Chicago available reports filed with the Securities and Exchange Commission, including the most recent 10-K and Transfer Agent and Registrar 10-Q, which discuss various factors that may affect the EquiServe Trust Company, N.A. maintains company’s business. These factors could cause actual shareholder records. For assistance on matters future performance to differ materially from current such as lost shares, name changes on shares or expectations. Tribune is not responsible for updating transfers of ownership, please contact: the information contained in this report. EquiServe Trust Company Shareholder Services P.O. Box 2500 Jersey City, New Jersey 07303-2500 800/446-2617
  13. 13. TRIBUNE COMPANY 435 NORTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60611 WWW.TRIBUNE.COM tarting some 300 wretched miles to the no ajikistan border, every bullet and bag of flo rucked to the Panjshir Valley and the Kabu raverses a wild, medieval world of mud-grea illage alleys, icy rivers churned by ancient w heels, dozens of handmade log bridges, an pectacular cliffside roads so narrow that tru