Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS.
Tribune Company (the "Company") is an information and entertainment company. Through its subsidiaries, the Company is engaged in the publishing of newspapers, books and information in print and digital formats and the broadcasting, production and syndication of information and entertainment in metropolitan areas in the United States. The Company also has an ownership interest in a Canadian newsprint manufacturer. The Company was founded in 1847 and incorporated in Illinois in 1861. As a result of a corporate restructuring in 1968, the Company became a holding company incorporated in Delaware. References in this report to "Tribune Company" or "the Company" include Tribune Company and its subsidiaries, unless the context otherwise indicates. The information in this Item 1 should be read in conjunction with the information contained under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's 1994 Annual Report to Stockholders, which information is incorporated herein by reference.
BUSINESS SEGMENTS
The Company's operations are divided for reporting purposes into three industry segments: Publishing, Broadcasting and Entertainment, and New Media/Education. These segments operate in the United States. The New Media/education segment was established in 1994 and consists of three recently acquired businesses - Contemporary Books, Inc., Compton's NewMedia and The Wright Group. Until the fourth quarter of 1994, the new media/education segment's operating results were reported within the publishing segment. Prior to 1993 the Company also had a segment called Newsprint Operations which consisted entirely of QUNO Corporation ("QUNO") and which operated in Canada. As a result of an initial public offering completed by QUNO in February 1993, the Company's ownership interest in the newsprint operations segment was reduced from 100% to 59%, and its voting interest was reduced to 49%. On April 14, 1994 the Company reduced its ownership holdings in QUNO to 34% by selling 5.5 million shares of QUNO common stock. Newsprint operations is no longer reported as a business segment as the Company began accounting for its investment in QUNO using the equity method in 1993. On March 20, 1991, the Company sold its New York newspaper, the Daily News. The following table sets forth operating revenue and profit information regarding each segment of the Company (in millions).
- ---------- (1) Amounts have been restated to conform to the 1994 presentation. (2) 1990 includes revenues of $321.8 million and an operating loss of $114.5 million for the New York Daily News. (3) 1992 includes $12.3 million of Major League Baseball expansion fees. (4) Operating profit for each segment excludes interest income and expense, non-operating gains and losses, equity in QUNO net loss and income taxes. (5) 1992 includes a $15.3 million charge for the disposition of The Peninsula Times Tribune.
The following table sets forth asset information for each industry segment (in millions).
(1) Corporate assets include the investment in and advances to QUNO.
The Company's results of operations, when examined on a quarter-by-quarter basis, reflect the seasonality of advertising that affects both publishing and broadcasting operations. Second and fourth quarter advertising revenues are typically higher than first and third quarter revenues. Results for the second quarter usually reflect spring advertising, while the fourth quarter includes advertising related to the holiday season.
PUBLISHING
The publishing segment represented 60% of the Company's consolidated operating revenues for 1994. The combined average circulation of the Company's daily newspapers was approximately 1.4 million daily and 2.0 million Sunday, according to Audit Bureau of Circulation ("ABC") averages for the six-month period ended September 1994. The Company's primary newspapers are the Chicago Tribune, the Fort Lauderdale-based Sun-Sentinel and The Orlando Sentinel. In Virginia, the Company owns the Newport News Daily Press. In California, the Company owns two daily newspapers and a weekly newspaper located in suburban areas in the San Diego market. The Company also operated one daily newspaper and several weekly newspapers in Palo Alto, California, which ceased publication in March 1993. The Company recorded a $15.3 million pre-tax charge in 1992 for the closure of these Palo Alto-based papers. For 1994, the portion of total publishing operating revenues represented by each of the Company's principal newspapers was as follows: Chicago Tribune--54%; Sun-Sentinel--21%; The Orlando Sentinel--16%; and California and Virginia Newspapers--5%. In addition, the Company owns a newspaper syndication and media marketing company, direct mail operations and other publishing-related businesses.
Each of the Company's newspapers operates independently to most effectively meet the needs of the area it serves. Editorial policies are established by local management. The Company coordinates certain aspects of operations and resources in order to provide greater efficiency and economies of scale.
The Company's newspapers compete for readership and advertising in varying degrees with other metropolitan, suburban and national newspapers, as well as with television, radio and other media. Competition for newspaper advertising is based upon circulation levels, readership demographics, price, service and advertiser results, while competition for circulation is based upon the content of the newspaper, service and price.
The Company's newspapers are printed in Company-owned production facilities. The principal raw material is newsprint. In 1994, the Company's newspapers utilized approximately 408,000 metric tons of newsprint. Approximately 67% of the newspapers' supply was purchased from QUNO, with the remainder purchased from outside sources. The Company is party to a contract with QUNO expiring in 2007 to supply newsprint based on market prices. Under the contract, the Company has agreed to purchase specified minimum amounts of newsprint each year subject to certain limitations. The specified minimum annual volume is 250,000 metric tons in years 1995 to 1999, 225,000, 200,000 and 175,000 metric tons in years 2000 to 2002, respectively, and 150,000 metric tons in each of years 2003 to 2007. See "QUNO Corporation" for a discussion of the Company's investment in the newsprint manufacturing business.
The North American newsprint industry has begun to increase newsprint prices due to increased demand for newsprint in the U.S. and overseas. Price increases in 1994 and announced 1995 increases for March 1 and May 1 would result in an approximate 40% increase in average newsprint selling prices in 1995 over 1994. This will increase newsprint expense at the Company's newspapers in 1995 by approximately $70 million. The Company expects to offset the increase, at least in part, through cost controls and expected revenue increases. QUNO Corporation, a Canadian newsprint manufacturer in which the Company has a 34% equity investment, will benefit from the price increases in 1995.
The following table provides a breakdown of revenues for the publishing segment for the last five years, excluding revenues at the Daily News.
OPERATING REVENUES EXCLUDING DAILY NEWS (IN THOUSANDS)
(1) Amounts have been restated to conform to the 1994 presentation. (2) Primarily includes revenues from advertising placement services, the syndication of columns, features, information and comics to newspapers, commercial printing operations, direct mail operations and other publishing-related activities.
Total advertising revenues improved in 1994 due to linage increases in all categories and higher advertising rates. The increase in retail advertising reflects increases in the department store and food and drug categories at nearly all of the newspapers. General advertising revenues increased in 1994 due to higher advertising in the transportation and media categories. Classified advertising also increased in 1994 as help wanted, automotive and real estate advertising improved.
Chicago Tribune Company
Founded in 1847, the Chicago Tribune is published daily, including Sunday, and primarily serves an eight-county market in northern Illinois and Indiana. This market ranks third in the United States in number of households. For the six months ended September 1994, the Chicago Tribune ranked 8th in average daily circulation and 6th in average Sunday circulation in the nation, based on ABC averages. Approximately 72% and 52% of the Tribune's daily and Sunday circulation, respectively, is sold through home delivery, with the remainder primarily sold at newsstands and vending boxes. The daily edition's newsstand price increased by $.15 to $.50 and its home delivery price increased $.05 to $.40 effective September 27, 1992. The Sunday edition's newsstand price increased by $.25 to $1.50 effective April 8, 1990. The following tables set forth selected information for the Chicago Tribune daily newspaper and other related activities.
The 1994 improvement in advertising volume is due to increases in classified part run and preprinted inserts as additional targeted zoning options were offered to advertisers. The daily edition price increase on September 27, 1992 contributed to the decrease in circulation volume since 1992.
Based on ABC averages for the six months ended September 1994, the Chicago Tribune had a 31% lead in total daily paid circulation and a 117% lead in Sunday paid circulation over its principal competitor, the Chicago Sun-Times. The Chicago Tribune's total advertising volume and operating revenues are estimated to be substantially greater than those of the Sun-Times. The Chicago Tribune also competes with other city, suburban and national daily newspapers, direct mail operations and other media. In September 1993, the Chicago Tribune began publishing Exito!, a weekly newspaper targeted to Spanish-speaking households. The Chicago Tribune also operates Chicago Online, a local interactive computer service that offers news and entertainment information through a joint venture with America Online, and audiotex services and publications targeted to specific consumer market segments.
Sun-Sentinel Company
The Sun-Sentinel is published daily, including Sunday, and leads the Fort Lauderdale market in circulation. Approximately 66% and 64% of the Sun- Sentinel's daily and Sunday circulation, respectively, is sold through home delivery, with the remainder sold at newsstands and vending boxes. The paper's principal competition comes from the Miami Herald and national and local publications, as well as other media. The Miami/Fort Lauderdale market ranks 16th in the nation in terms of households. The newsstand price of all Sunday editions was increased by $.25 to $1.00 on November 20, 1989. In January 1992, the newsstand price of the Palm Beach Sunday edition increased by $.25 to $1.25. Prior to March 27, 1992, the News and the Sun-Sentinel, based in Fort Lauderdale, Florida, were published in the afternoon and morning, respectively. The paper was combined for Saturday and Sunday editions as the Fort Lauderdale Sun-Sentinel. The News, which accounted for approximately 3% of 1991 circulation, discontinued publication after the March 27, 1992 edition. The following tables set forth selected information for the Sun-Sentinel daily newspaper and other related activities.
(1) Excludes inches for Gold Coast Publications.
The 1994 improvement in advertising volume is primarily due to increased help wanted, real estate and department store advertising. The 1991 reduction in advertising volume is attributable primarily to a slowdown in the south Florida economy.
The Sun-Sentinel Company also owns Gold Coast, a shopper publication located in Fort Lauderdale. During 1990, 13 other shoppers and weekly publications located on Florida's Gulf Coast were sold. The Sun-Sentinel also has a commercial printing operation. In 1991, two weekly publications, XS and Exito!, targeted to young adults and Spanish-speaking households, respectively, were launched and have continued to expand readership. Like the Chicago Tribune, the Sun-Sentinel also operates audiotex services and publications targeted to specific consumer market segments.
Sentinel Communications Company (Orlando)
The Orlando Sentinel is published daily, including Sunday, and serves primarily a five-county area in central Florida. It is the only major daily newspaper in the Orlando market, although it competes with other Florida and national newspapers as well as other media. Approximately 74% of the paper's daily and 67% of its Sunday circulation is sold on a home delivery basis, with the remainder sold at newsstands and vending boxes. On October 12, 1992, the weekly home delivery price was increased by $.50 to $3.75. On March 30, 1992, the newsstand price of the daily edition increased $.15 to $.50, except for most Thursday editions, which had been priced at $.50 since February 1991. The newsstand price of the Sunday edition was increased to $1.50 from $1.25 at the end of 1990. The Orlando/Daytona Beach/Melbourne market ranks 22nd among U.S. markets in terms of households. The following tables set forth selected information for The Orlando Sentinel daily newspaper and other related activities.
The central Florida economy continued to strengthen in 1994. Advertising volume was up overall due to improved help wanted, automotive and food and drug advertising and increased preprint volume from increased zoning. The 1991 reduction in advertising volume is attributable primarily to a slowdown in the central Florida economy.
In 1990, The Orlando Sentinel launched US Express, a free weekly entertainment publication that is used to distribute advertising to non-subscribers. US Express is syndicated nationally.
California and Virginia Newspapers
The Times Advocate, located in Escondido, California, serves the northern portion of San Diego County. The Times Advocate was published weekday afternoons and Saturday and Sunday mornings until April 1992, when the weekday afternoon edition was converted to a morning edition. In 1988, the Times Advocate acquired two weekly newspaper publications, which complement the paper's daily coverage with more local news and advertising. In June 1990, one of these weekly publications, The Californian, began publishing six days a week. The Palo Alto-based Times Tribune ceased publication in March 1993.
In 1986, the Company purchased the Daily Press/The Times-Herald in Newport News, Virginia. The Daily Press is published every morning including Sunday. The Times-Herald was published each weekday afternoon until September 1, 1991, when this edition was discontinued. The Daily Press constitutes the only major daily newspaper in the market, although it competes with other regional and national newspapers, as well as other media. In addition to Newport News, the Daily Press market includes Hampton, Williamsburg and eight other cities and counties in Virginia. This market area is commonly called the Virginia Peninsula and, together with Norfolk, Portsmouth and Virginia Beach, is the 40th largest U.S. market in terms of households. The weekly home delivery price was increased by $.30 to $2.75 in September 1992. The newsstand price of the daily edition increased by $.10 to $.35, and the Sunday edition newsstand price was increased to $1.25 from $1.00, both effective October 1, 1990. Approximately 78% of the paper's daily and 77% of its Sunday circulation is sold on a home delivery basis, with the remainder sold at newsstands and vending boxes.
The following tables set forth selected combined information for the California and Virginia daily newspapers and other related activities.
(1) The Peninsula Times Tribune was closed on March 12, 1993. Circulation and inches relating to the Times Tribune have been excluded from all years presented. (2) The Times-Herald (afternoon edition) was discontinued on September 1, 1991. Inches relating to this edition have been excluded from all years presented. (3) Includes related weekly publications.
The increased inches in 1994 reflect the improving economies of both Virginia and California.
Related Businesses
The Company is also involved in syndication activities, primarily through Tribune Media Services, Inc. ("TMS"), involving the marketing of columns, features, information and comic strips to newspapers; direct mail operations through AmeriComm/Illinois, acquired in 1991, and other publishing-related activities. TMS is also engaged in advertising placement services for television listings in newspapers and the development of news products and services for electronic and print media. Total operating revenues for these related businesses are shown below, net of intercompany revenues. Amounts have been restated to conform to the 1994 presentation.
Sale of the New York Daily News
On March 20, 1991 the Company sold the New York Daily News to Maxwell Newspapers, Inc. ("Maxwell"). Daily News operating losses for 1991 through the date of sale were recorded in the Company's 1990 financial statements. The following table sets forth selected historical information for the New York Daily News included as part of the publishing segment in 1990 (in thousands):
BROADCASTING AND ENTERTAINMENT
The broadcasting and entertainment segment represented 35% of the Company's consolidated operating revenues for 1994. The segment currently includes independent VHF television stations located in New York, Los Angeles, Chicago and Denver, independent UHF television stations located in Philadelphia, Boston and New Orleans, a CBS television affiliate (effective December 1994) in Atlanta, and six radio stations in New York, Chicago, Denver (2 stations) and Sacramento (2 stations). The Company acquired independent television station WLVI-Boston in April 1994, for approximately $25 million in cash. In June 1994 the Company acquired Farm Journal Inc., publisher of The Farm Journal, the nation's leading farm magazine, for approximately $17.5 million in cash. Farm Journal results are reported in radio. In January 1993, the Company acquired its two Denver radio stations, KOSI-FM and KEZW-AM, for $19.9 million in cash. These acquisitions were accounted for as purchases. In June 1992, the Company exercised its warrant to acquire a controlling common equity interest in
WPHL-TV, Inc., in Philadelphia. This warrant was acquired by the Company in 1991 for $19 million in cash. The exercise of the warrant was accounted for as a purchase and the results of WPHL are included in the Company's consolidated statements of income since June 1992. In entertainment/Chicago Cubs, the Company owns the Chicago Cubs baseball team and produces and syndicates television programming. Cable programming/development includes CLTV News, a Chicago area news cable channel, and the Company's equity losses in TV Food Network, a basic cable channel specializing in nutrition and fitness programming. The following table shows sources of revenue for the broadcasting and entertainment segment for the last five years.
(1) Includes WLVI-Boston and WPHL-Philadelphia since their acquisition on April 4, 1994 and June 5, 1992, respectively. (2) Includes Farm Journal Inc., and KOSI/KEZW-Denver since their acquisition on June 30, 1994 and January 6, 1993, respectively. (3) 1992 includes $12.3 million of Major League Baseball expansion fees. (4) 1994 reflects the impact of the Major League baseball strike which began August 10, 1994.
Television
In 1994, television contributed 78% of broadcasting and entertainment operating revenues. The Company's television stations compete for audience and advertising with other television and radio stations, cable television and other media serving the same markets. Competition for audience and advertising is based upon various interrelated factors including programming content, audience acceptance and price. Selected data for the Company's television stations is shown in the following table.
- ----------- (1) Source: Nielsen Station Index, September 1994. Ranking of markets is based on number of television households in DMA (Designated Market Area). (2) Source: 1994 Television & Cable Fact Book (3) See "Governmental Regulation." (4) Expired on June 1, 1994. Renewal application filed on February 1, 1994 is pending. (5) Expired on December 1, 1993. Renewal application filed on August 2, 1993 is pending. (6) Expired on August 1, 1994. Renewal application filed on April 1, 1994 is pending.
Programming emphasis at the Company's stations is placed on syndicated series, feature motion pictures, local and regional sports coverage, news and children's programs. The stations acquire most of their programming from outside sources, although a significant amount is produced locally or supplied by Tribune Entertainment (see "Entertainment"). Contracts for purchased programming generally cover a period of one to seven years, with payment also typically made over several years. The expense for amortization of television broadcast rights in 1994 was approximately $223 million, which represents approximately 37% of total television operating revenues. In December 1994, WGNX-Atlanta became a CBS network affiliate. In January 1995, the Company's other television stations began broadcasting WB Network programming two hours a week.
The Company has entered into an agreement to make a less than 50% equity investment in Qwest Broadcasting, L.L.C., a new company formed to acquire and operate television and radio stations. In November 1994, Qwest agreed to acquire television stations in Atlanta (WATL) and New Orleans (WNOL) for approximately $167 million in the aggregate. These acquisitions are pending approvals of the Federal Communications Commission and other regulatory agencies and are expected to close in 1995. The Company will provide certain services to each of the stations under a cost-sharing agreement with Qwest. As part of this transaction, Qwest has agreed to pay $150 million to WATL's current owner on December 14, 1995 even if regulatory approvals have not been received. The Company has guaranteed this payment.
Average audience share information for the Company's television stations for the past five years is shown in the following table.
- ----------- (1) Represents the estimated number of television households tuned to a specific station as a percent of total viewing households in a defined area. The percentages shown reflect the average Nielsen ratings shares for the February, May, July and November measurement periods for 7 a.m. to 1 a.m. daily. (2) Acquired June 5, 1992. (3) Acquired April 4, 1994.
Radio
In 1994, the Company's radio operations contributed 9% of broadcasting and entertainment operating revenues. The largest radio station owned by the Company, measured in terms of operating revenues, is WGN. Radio operations include Tribune Radio Networks, which produces and distributes farm and sports programming to radio stations, primarily in the Midwest, and Farm Journal Inc., which was acquired June 30, 1994. Selected information for the Company's radio operations is shown in the following table.
- ----------- (1) Source: Radio markets ranked by Arbitron Metro Survey Area, Arbitron Company 1994. (2) Source: Arbitron Company 1994. (3) Source: Average of Winter, Spring, Summer and Fall 1994 Arbitron shares for persons 12 years old and over, 6 a.m. to midnight daily during the period measured. (4) Acquired January 1993.
Entertainment/Chicago Cubs
In 1994, entertainment/Chicago Cubs contributed 12% of the segment's operating revenues. This portion of the broadcasting and entertainment segment includes Tribune Entertainment Company, the Chicago Cubs baseball team and two minor league baseball teams. The Major League Baseball players' contract expired on December 31, 1993. The Major League Baseball Players Association initiated a strike on August 12, 1994, and on August 28, 1994, the owners cancelled the remainder of the Major League Baseball season. Negotiations to settle the strike are continuing. The strike impacted the Company's Chicago Cubs baseball operations, and, to a lesser extent, television and radio operations. In total, the baseball strike negatively impacted the Company's primary earnings per share by approximately $.10. The Company cannot predict the ultimate outcome of the negotiations.
Tribune Entertainment Company was formed in 1982 to acquire and develop programming for Company television stations and for syndication. Tribune Entertainment participates in the production or distribution of first-run programming, including two daily talk shows, music and variety shows, television movies and specials. Tribune Entertainment's most popular program is "Geraldo," a one-hour, daily talk show which is aired on 152 stations that cover 91% of U.S. television households and is sold internationally to many cities in Canada, as well as to several countries in Latin America and Europe. During the 1994- 1995 television season, Tribune Entertainment originated approximately 13.5 hours of first-run programs per week. On average, the Company's eight television stations utilize over nine hours per week of programming furnished by Tribune Entertainment.
The Company owns the Chicago Cubs baseball team. In addition to providing local sports entertainment, the Cubs represent an important source of live programming for the Company's Chicago-based broadcasting operations and regional cable programming service. In 1992, the Company acquired a Class AA Southern League franchise in Orlando and a Class A Midwest League franchise in Rockford, Illinois. The Chicago Cubs baseball team received $12.3 million in Major League Baseball expansion fees in December 1992.
Cable Programming/Development
Cable programming/development contributed 1% of the segment's operating revenues in 1994. CLTV News, a regional 24-hour cable news programming service, was launched in January 1993 and currently is available to more than 1.3 million cable households in the Chicago-area market. In 1993, the Company acquired a 31% equity share in Television Food Network, a 24-hour basic cable channel focusing on nutrition and fitness.
NEW MEDIA/EDUCATION
The new media/education segment represented 5% of the Company's consolidated operating revenues for 1994. Until the fourth quarter of 1994, the new media/education segment's operating results were reported within the publishing segment. In July 1993, the Company acquired Contemporary Books, Inc., a publisher of nonfiction trade titles and educational books and materials, for approximately $22.0 million in cash and $18.5 million in common stock. In September 1993, the Company acquired Compton's Multimedia Publishing Group for approximately $57 million in cash. Compton's develops and distributes interactive multimedia software for the consumer and education markets. In February 1994, the Company acquired substantially all of the assets of The Wright Group, a leading publisher of supplemental education materials for the elementary school market, for approximately $100 million in cash. The acquisitions were accounted for as purchases.
New media/education operating revenues in 1994 were $98 million. Revenues are derived from publishing supplemental education and adult education materials, trade books, and multimedia products. The multimedia products are sold primarily by Compton's and include the "Compton's Interactive Encyclopedia" and other CD-ROM titles.
QUNO CORPORATION
In February 1993, QUNO completed an initial public offering of 9 million shares of common stock. As a result of the offering, the Company held 49% of the voting common shares and 59% of QUNO's total 22 million outstanding common shares. On April 14, 1994, the Company reduced its ownership holdings in QUNO to 34% by selling 5.5 million shares of QUNO common stock. The sale of the shares resulted in an after-tax gain of approximately $13 million, or $.19 per share on a primary basis. The pretax gain was $39 million. The Company also holds a $138.8 million subordinated debenture, convertible into 11.7 million voting common shares of QUNO. The Company has accounted for its investment in QUNO using the equity method since the beginning of 1993. QUNO is no longer a business segment for reporting purposes.
Based in Canada, QUNO's principal operation is the manufacturing and marketing of newsprint. QUNO's related operations presently include a sawmill, a materials recycling company and 60% ownership of a hydro-electric power company in Baie-Comeau, Quebec. QUNO operates two newsprint mills, in Thorold, Ontario and Baie-Comeau, Quebec. QUNO ranks seventh in production capacity among newsprint-producing groups in North America.
The following table shows sources of revenue for QUNO from 1990 through 1992, the last year QUNO's balance sheet and income statement were consolidated in the Company's financial statements.
OPERATING REVENUES (IN THOUSANDS OF U.S. DOLLARS)
Diminished newsprint revenues for 1992 reflect lower transaction prices.
The Company's paper mills in Baie-Comeau and Thorold currently have annual newsprint production capacities of approximately 469,000 and 346,000 metric tons, respectively. Competition for newsprint sales is based upon price, product quality and customer service. Sales of newsprint through 1994 are shown in the following table.
QUNO supplies newsprint to most of the Company's newspapers. The newspapers also purchase newsprint from other suppliers to maintain diversified sources of supply. Approximately 33% of QUNO's 1994 sales (in metric tons) were to the Company's newspapers. See "Publishing" for a discussion of the supply contract between the Company and QUNO.
QUNO sells newsprint to approximately 100 unaffiliated customers located primarily in North America. The majority of such sales are to medium and small newspapers and commercial printers, with no single unaffiliated customer accounting for more than 10% of total newsprint revenue.
Generally, QUNO sells newsprint under renewable contracts varying in length from one to five years. These contracts base the selling price on the list price for comparable newsprint at the date of shipment, with negotiated discounts from the list price.
GOVERNMENTAL REGULATION
Various aspects of the Company's operations are subject to regulation by governmental authorities in the United States and Canada.
The Company's television and radio broadcasting operations are subject to Federal Communications Commission ("FCC") jurisdiction under the Communications Act of 1934, as amended. FCC rules, among other things, govern the term, renewal and transfer of radio and television broadcasting licenses, prohibit concentrations of broadcasting control inconsistent with the public interest, strictly limit common ownership of most communications media in the same market and regulate network programming and syndication of programs. The FCC also regulates certain commercial practices of local broadcast stations, including the rates charged for political advertising and the quantity of advertising within children's programs. The Company is permitted to own both newspaper and broadcast operations in the Chicago market by virtue of "grandfather" provisions in the FCC regulations. Licensees are currently permitted to own up to 12 television stations, 18 AM radio stations and 18 FM radio stations. These numerical limits are subject to other FCC regulations which impose geographic market restrictions and limit the percentage of the national television audience that may be reached by a licensee's television stations in the aggregate. Television and radio broadcasting licenses are subject to renewal by the FCC at five-year and seven-year intervals, respectively, and at such times may be subject to competing applications for the licensed frequencies. The Company presently has FCC authorization to operate eight television stations and three AM and three FM radio stations.
From time to time, the FCC revises existing regulations and policies in ways that could affect the Company's broadcasting operations. In addition, Congress from time to time considers and adopts substantive amendments to the Communications Act of 1934 and related legislation. The Company cannot predict what regulations or legislation may be proposed or finally enacted or what effect, if any, such regulations or legislation could have on the Company's broadcasting operations.
EMPLOYEES
The average number of full-time equivalent employees of the Company in 1994 was 10,500, approximately 600 more than the average for 1993. This increase was due to the acquisition of The Wright Group, WLVI-Boston and Farm Journal Inc.
Pension and other employee benefit plans are provided for substantially all employees of the Company. Eligible employees also participate in the Company's Employee Stock Ownership Plan.
During 1994, the Company's publishing segment employed approximately 7,800 full-time equivalent employees, about 8% of whom were represented by a total of five unions. Contracts with unionized employees of the publishing segment expire at various times through October 1996.
Broadcasting and entertainment had an average of 2,300 full-time equivalent employees in 1994. Approximately 23% of these employees are represented by a total of 22 unions.
New media/education had an average of 400 full-time equivalent employees in 1994. None of these employees are represented by unions.
EXECUTIVE OFFICERS OF THE COMPANY
Information with respect to the executive officers of the Company is set forth below. The descriptions of the business experience of these individuals include the principal positions held by them since March 1990.
Robert D. Bosau (48)
Executive Vice President/General Manager, Tribune New Media since August 1994; Vice President/Administration of Tribune Publishing Company* from 1991 to August 1994; Vice President/Human Resources of the Company from 1987 to 1991.
Charles T. Brumback (66)
Chairman since January 1993, Chief Executive Officer since August 1990 (Chief Operating Officer until July 1990) and President from January 1989 to May 1994 of the Company; Director of the Company since 1981.
Joseph D. Cantrell (50)
Executive Vice President, Tribune Publishing Company* since August 1994; President of The Daily Press, Inc.* and Publisher of the Daily Press from 1986 to August 1994.
James C. Dowdle (61)
Executive Vice President/Media Operations since August 1994, Executive Vice President of the Company since August 1991; President and Chief Executive Officer of Tribune Broadcasting Company* since 1981; Director of the Company since 1985.
Dennis J. FitzSimons (44)
Executive Vice President, Tribune Broadcasting Company* since August 1994; President of Tribune Television* from 1992 to August 1994; Vice President/General Manager of WGN-TV* from 1987 to 1992.
Donald C. Grenesko (46)
Senior Vice President and Chief Financial Officer (since March 1993) and Vice President and Chief Financial Officer (from October 1991 to March 1993) of the Company; President and Chief Executive Officer (until September 1991), Chicago National League Ball Club, Inc.*
David D. Hiller (41)
Senior Vice President/Development since November 1993; Senior Vice President and General Counsel (from March to November 1993) and Vice President and General Counsel (until March 1993) of the Company; Partner, Sidley & Austin until November 1993.
John S. Kazik (52)
Senior Vice President/Information Systems since March 1993; Vice President/Information Systems from December 1989 to March 1993 of the Company and Vice President of Chicago Tribune Company* since 1982.
John W. Madigan (57)
President and Chief Operating Officer of the Company since May 1994; Executive Vice President of the Company and President and Chief Executive Officer of Tribune Publishing Company* from August 1991 to May 1994; Publisher of the Chicago Tribune from August 1990 to May 1994 and President and Chief Executive Officer of Chicago Tribune Company* until September 1993. Director of the Company since 1975.
John T. Sloan (43)
Senior Vice President/Administration since March 1993 and Vice President/Human Resources of the Company from August 1991 to March 1993; Vice President and Director of Human Resources of the New York Daily News until July 1991. - ----------- * A subsidiary of the Company.
ITEM 2.



ITEM 2. PROPERTIES.
The corporate headquarters of the Company are located at 435 North Michigan Avenue, Chicago, Illinois. The general character, location and approximate size of the principal physical properties used by the Company at December 25, 1994 are listed below. In addition to those listed, the Company owns or leases transmitter sites, parking lots and other properties aggregating approximately 450 acres in 58 separate locations, and owns or leases an aggregate of approximately 1,590,000 square feet of space in 185 separate locations. Included in these figures are 62 acres and 233,000 square feet of space owned by the Company which had previously been owned by the New York Daily News. On March 20, 1991, the Company sold the Daily News, and these properties are in the process of being sold. Also included in these figures are 82,000 square feet of space owned by The Peninsula Times Tribune. On March 12, 1993 the Times Tribune ceased publication. Since then, the Company has been in the process of selling the property owned in Palo Alto, California. The Company also owns the 39,000-seat stadium used by the Chicago Cubs baseball team. The Company considers its various properties to be in good condition and suitable for the purposes for which they are used.
- ----------- (1) Includes Tribune Tower, an approximately 630,000 square foot office building in downtown Chicago, and Freedom Center, the approximately 697,000 square feet production center of the Chicago Tribune. Tribune Tower houses the Company's corporate headquarters, the Chicago Tribune's business and editorial offices, offices of various subsidiary companies and approximately 80,630 square feet of space leased to unaffiliated tenants. Freedom Center houses the Chicago Tribune's printing, packaging and distribution operations.
(2) Represents New River Center, an approximately 279,000 square feet office building in downtown Fort Lauderdale. New River Center houses the business and editorial offices of the Sun-Sentinel, which occupies approximately 91,000 square feet. The remaining space is leased to or available for commercial tenants.
(3) Includes space leased by subsidiary companies in the New York Daily News building, which is owned by a limited partnership in which the Company has a minority interest. No portion of this building is listed as "owned" property in the table.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are defendants from time to time in actions for libel and other matters arising out of their business operations. In addition, the Company and its subsidiaries are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.
The State of Florida Department of Environmental Protection ("DEP") has issued a preliminary draft report identifying the Company's subsidiary, Sentinel Communications Company (the "Sentinel"), as a source of certain trichloroethene (TCE) groundwater contamination in downtown Orlando, Florida. Based upon separate environmental reviews performed by the Company's environmental consultants, management believes that many of the findings contained in the DEP's preliminary draft report are inaccurate and that the Sentinel is not the source of the extensive contamination.
The Company does not believe that any of the matters or proceedings presently pending will have a material adverse effect on its consolidated financial position or results of operations.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is presently listed on the New York, Chicago and Pacific stock exchanges. The high and low sales prices of the Common Stock by fiscal quarter for the two most recent fiscal years, as reported on the New York Stock Exchange Composite Transactions list, were as follows:
At March 7, 1995 there were 4,554 record holders of the Company's Common Stock.
Quarterly cash dividends declared on Common Stock were $.26 per share in 1994 and were $.24 per share in 1993. Total cash dividends declared on Common Stock by the Company were $69,907,000 for 1994 and $63,799,000 for 1993.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
The information for the years 1990 through 1994 contained under the heading "Eleven Year Financial Summary" in the Company's 1994 Annual Report to Stockholders is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information contained under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's 1994 Annual Report to Stockholders is incorporated herein by reference.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's Consolidated Financial Statements and Notes thereto and the information contained under the heading "Business Segments" appearing on pages 43 through 60 of the Company's 1994 Annual Report to Stockholders, together with the report thereon of Price Waterhouse LLP dated January 27, 1995, appearing on page 42 of such Annual Report and the information contained under the heading "Quarterly Results" on pages 62 and 63, are incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information contained under the heading "Executive Officers of the Company" in Item 1 hereof, and the information under the heading "Election of Directors" in the definitive Proxy Statement for the Company's May 2, 1995 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the heading "Executive Compensation" (except those portions relating to Item 13, below) in the definitive Proxy Statement for the Company's May 2, 1995 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the subheadings "Principal Stockholders" and "Management Ownership" under the heading "Ownership Information" in the definitive Proxy Statement for the Company's May 2, 1995 Annual Meeting of Stockholders, is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the heading "Executive Compensation" (except those portions relating to Item 11, above) and the subheadings "Compensation of Directors" and "Other Transactions" in the definitive Proxy Statement for the Company's May 2, 1995 Annual Meeting of Stockholders, is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1)&(2) Financial Statements and Financial Statement Schedules filed as part of this report
As listed in the Index to Financial Statements and Financial Statement Schedule on page 22 hereof.
(a)(3) Index to Exhibits filed as part of this report
As listed in the Exhibit Index beginning on page 25 hereof.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed in the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 22, 1995.
TRIBUNE COMPANY
By: Charles T. Brumback Chairman/CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 22, 1995.
Signature Title --------- -----
Charles T. Brumback Chairman/CEO and Director (principal executive officer)
John W. Madigan President and Chief Operating Officer and Director
James C. Dowdle Executive Vice President and Director
Donald C. Grenesko Senior Vice President and Chief Financial Officer (principal financial officer)
Signature Title --------- -----
R. Mark Mallory Vice President and Controller (principal accounting officer)
Stanton R. Cook Director
Diego E. Hernandez Director
Newton N. Minow Director
Donald H. Rumsfeld Director
TRIBUNE COMPANY
AND FINANCIAL STATEMENT SCHEDULE
- ----------- * Incorporated by reference to the Company's 1994 Annual Report to Stockholders. See Item 8 of this Annual Report on Form 10-K.
---------------
All other schedules required under Regulation S-X are omitted because they are not applicable, not required or the required information is shown in the consolidated financial statements or notes thereto. Financial statements of entities accounted for by the equity method have been omitted because they do not constitute significant subsidiaries.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Tribune Company
Our audits of the consolidated financial statements referred to in our report dated January 27, 1995 appearing in the 1994 Annual Report to Stockholders of Tribune Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Chicago, Illinois January 27, 1995
SCHEDULE II
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS OF DOLLARS)
================================================================================
- -------------- (1) For 1993, $4,612 represents deductions pertaining to QUNO Corporation. As a result of an initial public offering by QUNO in February 1993, QUNO's balance sheet is no longer consolidated in the Company's financial statements.
================================================================================
TRIBUNE COMPANY
EXHIBIT INDEX
Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by Tribune Company with the Securities and Exchange Commission, as indicated. Exhibits marked with a circle (o) are management contracts or compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. All other documents listed are filed with this Report.
NUMBER DESCRIPTION ------ -----------
3.1 * Restated Certificate of Incorporation of Tribune Company, dated April 21, 1987; Certificate of Designations of Series A Junior Participating Preferred Stock, dated December 31, 1987; Certificate of Designations of Series B Convertible Preferred Stock, dated April 4, 1989 (Exhibit 3.1 to Annual Report on Form 10-K for 1991).
3.2 * By-laws of Tribune Company.
4 * Rights Agreement between Tribune Company and The First National Bank of Chicago, as Rights Agent, dated as of December 22, 1987 (Exhibit 1 to Form 8-K Current Report dated January 6, 1988); First Amendment thereto dated as of July 31, 1990 (Exhibit 4 to Form 10-Q Quarterly Report for the quarter ended July 1, 1990); Second Amendment thereto dated as of October 31, 1990 (Exhibit 4 to Form 10-Q Quarterly Report for the quarter ended September 30, 1990).
10.1a o* Employment agreement dated as of July 31, 1990 between Tribune Company and Stanton R. Cook (Exhibit 19.1 to Form 10-Q Quarterly Report for the quarter ended September 30, 1990).
10.1b o* Consulting agreement dated as of December 14, 1993 between Tribune Company and Stanton R. Cook (Exhibit 10.1b to Annual Report on Form 10-K for 1993).
10.2a o* Employment agreement dated as of July 27, 1993 between Tribune Company and Charles T. Brumback (Exhibit 10.2a to Annual Report on Form 10-K for 1993).
10.2b o* Amendment dated February 15, 1994 to employment agreement dated as of July 27, 1993 between Tribune Company and Charles T. Brumback (Exhibit 10.2b to Annual Report on Form 10-K for 1993).
10.2c o Termination of Employment Agreement dated December 22, 1994 between Tribune Company and Charles T. Brumback.
10.3 o* Chicago Tribune Company Split-Dollar Insurance Plan dated June 29, 1978, together with first amendment dated August 28, 1981, covering certain employees of Tribune Company and Chicago Tribune Company (Exhibit 10.4 in File No. 2-86087).
10.4a o* Tribune Company Supplemental Retirement Plan, as amended and restated on January 1, 1989 (Exhibit 10.6 to Annual Report on Form 10-K for 1988).
NUMBER DESCRIPTION ------ -----------
10.4b o* First Amendment of Tribune Company Supplemental Retirement Plan, effective January 1, 1994 (Exhibit 10.4b to Annual Report on Form 10-K for 1993).
10.5 o* Quebec and Ontario Paper Company Ltd. Supplemental Retirement Plan dated January 1, 1989 (Exhibit 10.7 to Annual Report on Form 10-K for 1988).
10.6 o* Tribune Company Deferred Compensation Administration Plan, as adopted on July 29, 1982, and first amendment thereto dated December 1, 1982 (Exhibit 10.16 in File No. 2-86087); second amendment thereto dated October 29, 1984, and third amendment thereto dated December 16, 1986 (Exhibit 10.8b to Annual Report on Form 10-K for 1989).
10.7 o Tribune Company Directors' Deferred Compensation Plan, as amended and restated on July 1, 1994.
10.8 o* Tribune Company Bonus Deferral Plan, dated as of December 14, 1993 (Exhibit 10.8 to Annual Report on Form 10-K for 1993).
10.9a o* Tribune Company Management Incentive Plan, dated as of January 1, 1991 (Exhibit 10.10 to Annual Report on Form 10-K for 1990).
10.9b o* Amendment effective January 1, 1992 to the Tribune Company Management Incentive Plan dated as of January 1, 1991 (Exhibit 10.9b to Annual Report on Form 10-K for 1991).
10.10 o* Tribune Company Amended and Restated 1984 Long-Term Performance Plan, effective as of July 25, 1989 (Exhibit 19.2 to Form 10-Q Quarterly Report for the quarter ended June 25, 1989); Forms of Incentive Stock Option Agreement and Non-Qualified Stock Option Agreements for Tribune Company Amended and Restated 1984 Long-Term Performance Plan (Exhibit 19.2 to Form 10-Q Quarterly Report for the quarter ended July 1, 1990).
10.11 o Tribune Company 1992 Long-Term Incentive Plan, dated as of April 29, 1992 and as amended and in effect on April 19, 1994.
10.12a o* 1988 Restricted Stock Plan For Outside Directors, dated February 16, 1988 (Exhibit 10.12 to Annual Report on Form 10-K for 1992).
10.12b o* Amendment effective April 28, 1992 to the 1988 Restricted Stock Plan For Outside Directors (Exhibit 10.12b to Annual Report on Form 10-K for 1993).
10.13 o* Tribune Company Executive Financial Counseling Plan, dated October 19, 1988 and as amended effective January 1, 1994 (Exhibit 10.13 to Annual Report on Form 10-K for 1993).
10.14 o Tribune Company Amended and Restated Transitional Compensation Plan for Executive Employees, effective as of January 1, 1995.
NUMBER DESCRIPTION - ------ -----------
10.15 o* Tribune Company Supplemental Defined Contribution Plan, effective as of January 1, 1994 (Exhibit 10.15 to Annual Report on Form 10-K for 1993).
10.16 * Amended and Restated Agreement of Limited Partnership of Two Twenty East Limited Partnership, dated as of November 5, 1982, and first amendment thereto dated December 6, 1982 (Exhibit 10.25 in File No. 2-86087).
10.17 * Asset Purchase Agreement dated March 14, 1991 by and among Maxwell Newspapers, Inc., Mirror Group PLC, New York News Inc. and Tribune Company; and letter amendment thereto dated March 20, 1991 (Exhibits 10.1 and 10.2 to Form 8-K Current Report dated March 14, 1991).
10.18 * Newsprint Agreement dated December 2, 1992 between Tribune Company and QUNO Corporation (Exhibit 10.17 to Annual Report on Form 10-K for 1992).
11 Statements of Computation of Primary and Fully Diluted Net Income Per Share.
12 Computation of Ratios of Earnings to Fixed Charges.
13 The portions of the Company's 1994 Annual Report to Stockholders which are specifically incorporated herein by reference.
21 Table of subsidiaries of Tribune Company.
23 Consent of Independent Accountants.
27 Financial Data Schedule
99 Form 11-K financial statements for Tribune Company Savings Incentive Plan (to be filed by amendment).