CHICAGO -- Media group Tribune Co. took action yesterday to boost its slumping stock price, disclosing plans to buy back a quarter of its outstanding shares for more than $2 billion and pledging to sell at least $500 million in noncore assets. Its shares made their biggest jump in more than six years.
The newspaper publisher and TV-station owner said it intends to finance the repurchase with bank debt and bonds -- a move underscoring the pressure it faces to reverse a decline that has cut the value of its stock nearly in half since early 2004. It also targeted an additional $200 million in cost savings from existing operations over the next two years.
Wall Street welcomed the declaration, pushing Tribune's stock price up to its largest one-day increase since March 14, 2000.
But the company had its credit rating downgraded because of the higher debt load.
Tribune, whose newspaper properties include the Chicago Tribune, Los Angeles Times, and Baltimore Sun, said its board approved the repurchase of up to 75 million shares .
Newspaper companies have been in a tailspin due to declining circulation and pressures on advertising revenue as business migrates online .
Tribune will be the third-largest US newspaper publisher by overall circulation, behind Gannett Co. and McClatchy Co., once McClatchy closes its deal for Knight Ridder Inc. It also owns 26 TV stations and the Chicago Cubs .