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Mid-Year Media Review
June 18, 2002

Dennis FitzSimons, President and Chief Operating Officer
Good afternoon. It's good to be here with you today to give you a progress report on Tribune Company at the halfway point of 2002.

First, let me introduce our group presenting today: I'm Dennis FitzSimons, President and Chief Operating Officer of Tribune. Jack Fuller, president of Tribune Publishing, and Pat Mullen, president of Tribune Television will be presenting along with me today. Don Grenesko, our senior VP and CFO, will update you briefly on our financial picture, and David Hiller, president of Tribune Interactive is joining us for the question and answer session.

So, this afternoon we'd like to accomplish three things:

• First, update you on our businesses and how they're performing;
• Second, give you a look at the progress we've made in reducing costs over the last two years, including what we've accomplished with the Times Mirror acquisition, and;
• Third, provide you some more detail about how we are positioning Tribune for growth.

Let's begin with a look at business. What a difference a year makes. When we presented at this conference last year, the economic downturn and a particularly tough advertising recession were well underway. Then, as you know all too well, things got worse following 9/11.

But business is finally beginning to look up and sequential improvement continues. So far in the second quarter, publishing revenues are flat, compared to the 6% decline we reported in the first quarter. In television, revenues so far this quarter are up slightly, compared to the first quarter, when they were down 3%. Tribune Interactive revenues are up 35% year-to-date. All-in-all, the first couple of weeks of June for the company as a whole exceeded our expectations, and we're optimistic about the rest of the year.

On the expense side, in the first quarter of 2002, consolidated cash expenses were down 5%, due to a 3% reduction in compensation achieved through salary cuts, staff reductions and lower bonus accruals. Newsprint expenses were down 26%. In the second quarter, and for the full year, we expect consolidated cash expenses to continue to be down in the 3-4% range. Those numbers are better than what we planned when the year began.

The impact of our cost-control efforts is clear. While it's still a challenging environment, 2002 EBITDA should grow 10%, even on flat revenues, and more if revenues are up year-over-year, as trends indicate they might be.

Here are some of the elements contributing to that EBITDA growth:

• At the Los Angeles Times, first quarter EBITDA margins improved by 3 percentage points year-over-year, despite a 4% decrease in revenues. And we're on track for a similar performance in the second quarter.
  
• In television, inventory in many of our markets has tightened, causing pricing to improve and the strong upfront market is a sign that overall advertising environment is improving going forward, and that will drive revenues at the local station level.
  
• And Tribune Interactive is cash flow positive year-to-date, well ahead of schedule.

One important thing that hasn't changed even in a downturn is our ability to generate cash. This year we'll produce about $1.4 billion of operating cash flow, and our free cash flow will be in the range of $600 million.

We're using that cash flow to reduce our debt, which we project will be down to $2.9 billion at the end of the year, a debt to cash flow ratio of 2x.

Our revenue picture is strong, too. As many of you know, Tribune is the second largest newspaper company in terms of revenues, and third in terms of circulation. We are the fourth largest operator of local television stations as measured by revenues. Our interactive sites regularly rank among the top-20 online news and information networks in the country, drawing some 9 million visitors each month.

Separately, these assets give Tribune tremendous national reach-80% of all U.S. households are touched by Tribune products. With a clear concentration in the major markets, we demonstrate daily the value and impact of local mass media to our advertisers. Working together, our newspapers, TV stations and interactive businesses create additional opportunities for us to deliver innovative cross-media solutions to our advertising clients.

At the core of our strategy is the fundamental belief that in a fragmenting media world, owning newspapers and TV stations in major markets gives us a competitive advantage. As the only media company with newspapers and TV in the top three markets, our advantage is unique.

That brings me to my second point, our progress in reducing costs companywide, including what we've done since the Times Mirror acquisition, which closed in June 2000.

• We have reduced debt by $2.3 billion since the merger.
  
• With regard to Times Mirror, we've reduced the cumulative costs from 2000 through 2002 by $190 million, which puts us several years ahead of the schedule we laid out for you at the time of the announcement of the merger. In addition, other companywide cost reductions will total $80 million. That's a total of $270 million, which includes a staff reduction of 2,100 positions, as well as outsourcing 1,000 staff positions. Also included in that $270 million is what we did at the corporate level, where we reduced expenses by $50 million and eliminated 130 positions.
  
• We said new, incremental revenue from national advertising would be at least $40 million per year. Last year, Tribune Media Net delivered $34 million, despite the severe ad recession. This year, we expect incremental revenue to be in the $50-60 million range, an improvement of more than 50% over 2001's strong start. Through May of 2002, Tribune Media Net had already recognized and booked close to $31 million in revenue, more than 120 percent ahead of where they were at the end of May 2001.
  
• We identified the LA Times as our biggest area of opportunity. And despite the advertising recession, margins have improved at the Times. Now, with just a little help on the top line from a recovering economy, margin expansion should accelerate.

Part of the opportunity we identified at the time of the acquisition was to grow preprint market share in Los Angeles. The Times had just one-third of LA's $350 million preprint market, due in large part to archaic hand inserting. Based on our experience in Chicago, where the Tribune has about 65% of the preprint market, we moved quickly to make improvements at the Times.

We brought a new daily inserting facility on-line in January and we've already taken about $8 million in business away from ADVO and PennySaver, ahead of what our revenue projections were. Later this summer, Sunday insertion will come on-line and offer even greater opportunity. We're looking to bring our LA share much closer to Chicago's over the next few years. We have invested $50 million in this project and expect ROI to be well above 20 percent.

When you put it all together, you can see we've made some very significant progress in the last two years.

Let's turn now to a couple of key areas that will position Tribune for future growth.

First, we're looking to expand our national footprint in television, and "double up" in markets where we can.

In newspapers, we're taking important steps to strengthen our classified advertising franchise, both in print and online, especially in recruitment.

In television, we are building two-station clusters in some of the nation's top markets. In April we created our fourth by agreeing to acquire WTTV-TV in Indianapolis, where we already own a television station.

The purchase of WTTV-TV gives us another WB affiliate and is a good compliment for WXIN-TV, our Indianapolis Fox affiliate. It gives us additional program buying power in the nation's 25th largest market, which is just one way we'll lower costs. We'll also combine facilities and administration, so during the first year of operation we expect about $5 million in cost savings. When you factor that in, the purchase price of $125 million is a reasonable 11-times pro forma 2002 EBITDA, with a return-on-investment in the mid-teens. It's also worth noting that we're using some of the proceeds from the sale of our Denver radio stations to fund this acquisition. You may recall we agreed to sell our three Denver radio stations for $180 million on a tax-efficient basis, so we have $55 million in trade currency remaining.

WTTV is just another example of our disciplined acquisition strategy in television. Since 1991 we've acquired 18 television stations at relatively reasonable prices. Our group will total 24 stations in 20 markets, and we're The WB's #1 affiliate group with 17 stations.

Speaking of The WB, its fall schedule was really well-received by advertisers. Total upfront billing looks to be in the range of $575 million, a 20% increase over last year. And CPMs will be up about 16%. And in case you're wondering, the upfront billing that UPN has been touting is less than half of that, at about $250 million.

Turning to newspapers, our investment in CareerBuilder, the online recruiting firm that we own in partnership with Knight Ridder, has provided a strong foundation for our strategy to "win in classifieds."

Recruitment advertising is a critical area for every publishing company. In recent years, some of that advertising (though not nearly as much as Monster would have you believe) has been migrating to the Internet. We recognized this early on and moved aggressively to provide our advertisers with a strong online alternative in CareerBuilder.

CareerBuilder online complements our print recruitment advertising, and allows us to deliver a local market option that Monster doesn't have and can't compete with. And we're supporting CareerBuilder in a big way, re-branding the Sunday help-wanted sections of all Tribune and Knight Ridder newspapers with the CareerBuilder name.

This increased awareness of CareerBuilder contributed to a very strong first quarter, with revenues up 10% compared with the fourth quarter of 2001. And our competitors? We estimate that Monster was down 5% and HotJobs, down 15%.

And as Jack will tell you, we expect the recruitment business to continue improving as the economy bounces back and as job creation increases. In addition, the Tribune Classified group is rolling out a series of new, integrated print and online products for small, medium and large employers.

In summary, Tribune has great strength in "local mass media"-our newspapers and TV stations are among the best in the country. The added value in the equation is the combined power of our media assets, and what they can do together. We're cross-selling advertising, we're building audience share through cross-promotion and we're building our brands by sharing content. This is something few other media companies can do.

We continue to believe that there is substantial upside in owning multiple media franchises in the same market. We started in Chicago, with the Chicago Tribune, WGN-TV and WGN-Radio, added the Chicago Cubs and later CLTV, our all-news cable channel. Today the group also includes chicagotribune.com and our weekly Hispanic newspaper, ¡Exito!. It's a powerful model.

Our model works because it's built on solid local franchises in some of the best markets in the country. Our newspapers and television stations serve the needs of both advertisers, and millions of readers and viewers who depend on Tribune for news, information and entertainment.

We have excellent fundamentals and a streamlined cost structure. Our cash flow gives us the flexibility to move quickly as industry deregulation presents new opportunities for growth. And our experience is that the large markets, where our local media franchises are located, come back more quickly and are even stronger following a recession. As the rebound takes shape, we are in great position to take advantage of it.

On that note, let's turn to Jack Fuller for a closer look at our publishing operations.

Jack Fuller, President/Tribune Publishing

Thank you Dennis, and good afternoon. Today, I am going to give you a brief update on our newspaper business, talk about our readership and advertiser market share, and discuss a powerful new integrated print/online recruitment product that we think will be a Monster-slayer.

Near term, business is improving. We're pleased with retail ad revenue's performance, which has showed sequential improvement since January. Pre-print revenues are up 7% year-to-date. In addition, classified auto and real estate have shown growth on a year to date basis. National continues to be up and down, making it difficult to call a trend. Help wanted has continued to improve since the first of the year-January was down 44% vs. May, which was down 23%.

The trend in help wanted is similar to what we saw during the 1990-1 recession. We expect the business to continue improving as the economy and job creation increases. As you can see from this chart, current job creation is tracking slightly ahead of the same point in the 1990-1 recession. This gives us hope that we will see year-over-year growth in recruitment advertising by the fourth quarter.

We have moved aggressively to cut costs in Tribune Publishing Company and it showed in the first quarter results. Publishing cash expenses were down 7%. Excluding newsprint, compensation and other cash expenses were 3% lower due to the voluntary retirement program, other reductions in force and outsourcing of certain circulation operations in LA.

We did all of this without sacrificing the long-term health of our franchises. Let me show you our way of accomplishing this by talking for a moment about our readership strategy. Paid circulation is, of course, important because of the revenue it represents and the fact that twice a year everyone focuses on the ABC numbers. But we are paying a lot more attention to readership these days, and we think you should be, too. A paper that is bought but not read does our advertisers no good. Nor does it increase public knowledge, the promotion of which is the calling of great journalism.

We measure readership at our newspapers through internal tracking studies and market surveys by both Gallup and Scarborough. These metrics correspond to the way TV and other media measure their audience.

Our strategy is to grow readership in a steady, durable, cost-effective manner. And it works. Let me use the LA Times as an example.

When we acquired Times Mirror, we found that this world class paper was being marketed as a community newspaper at a rock-bottom price. The first thing our team in LA did was to reposition the LA Times as a premium newspaper - the voice of the West -- the only one in its market that is able to handle the most important, far-reaching, and difficult-to-cover stories.

As part of this repositioning, the editorial department reorganized the news sections. The management team eliminated the 14 weekly Our Times supplements, which had been begun in an attempt to make the LA Times seem more like a community newspaper. These sections were both financial and journalistic failures.

The other key element of positioning the LA Times as a premium paper was increasing both home-delivery and single copy prices.

Meanwhile, the new management team got rid of the phony circulation. It did away with gimmicks and forced buys. It eliminated heavily subsidized circulation. It stopped distributing papers in ways that involved a high likelihood they would not be read.

As a consequence daily ABC circulation dropped, as we knew it would, but importantly during the same period readership, as measured by Scarborough, actually improved. Included in those readership numbers is an interesting statistic--nearly two thirds of African Americans and English-speaking Hispanics read the LA Times.

Interestingly, by the way, an LA Times readership study showed the readership among U.S. born-Hispanic adults is only slightly lower than non-Hispanic adults.

On Sunday the picture is better by all measures. Circulation since the acquisition is up 20,000 copies despite a 17% increase in price. Sunday readership is up too.

Consumers are willing to pay more for great newspapers, when they're positioned and marketed properly. As you can see from this chart, our circulation strategy is a financial winner too, yielding $27 million in incremental revenue since the acquisition.

And if that doesn't prove that the premium branding strategy worked, consider the results in Orange County where the Times faced its most intense competition. The Orange County Register did not follow our newsstand price increase until April 2002, which reinforced the perception we wanted to build - that the LA Times was the premium brand. The result - on Sunday, the Register's Sunday circulation numbers fell more than the LA Times, which gained one share point against the Register. Finally, on both weekday and Sunday, the LA Times readership rose while the Register's readership slid.

This same premium price strategy is working for us in South Florida where our newspaper, the Sun-Sentinel, competes with the Miami Herald in South Broward County, and is priced higher. While the circulation numbers make it look as if we're running neck and neck in South Broward, the readership data shows the Sun Sentinel leads the Miami Herald by 30% daily and 39% on Sunday.

Looking at Tribune Publishing Company as a whole, our 12 daily newspapers are read by 8.7 million readers daily and 11.7 million readers every Sunday. Nine of our 12 newspapers are in the top 20 markets. Tribune newspapers reach more people in the top 20 markets than any other newspaper company in the country. This is significant for advertisers because the top 20 markets represent 51% of the total U.S. consumer buying power. We deliver the audience advertisers need to reach. We have a national footprint, unparalleled news coverage and journalistic excellence and our newspapers generate nearly $4 B in revenue annually.

If some of you are wondering what our12th daily newspaper is-it is Hoy, which means Today in Spanish. In just a little more than two years Hoy has become the largest Spanish language newspaper in New York and it is nicely profitable. Its daily circulation of 75,000 puts it already among the 150 largest daily newspapers in the country. Revenue is up over 30% in the first quarter from 2001. Hoy's goal is to become the largest Spanish language daily in the United States. Through Hoy and our other Spanish language papers, we have a real opportunity to grow with the Hispanic community, both in Spanish and then if successor generations prefer, in English.

So as you can see, Tribune is focused on smartly growing readership share. Now let me turn to the most important advertiser share battle for newspapers, which is in the help wanted market against Internet competitors. The headline is this: through CareerBuilder we are gaining on Monster and the other online competitors. Make that a very big, bold headline.

As Dennis mentioned, in the first quarter CareerBuilder revenue was up 10% while Monster was down 5% in the United States and HotJobs was down 15%. And we haven't even hauled out our best weapons yet.

We are gaining share because recruitment is fundamentally a local business. Almost 90% of job seekers who start looking for a job today want to find one in the town where they live. Even among professional and executive employees fewer than 20% relocate for their next position. Consumers overwhelmingly go first to their local newspaper when they start a job search.

It is no wonder they do, since we have more than twice as many job postings as Monster in our local markets. We're the place employers turn to most, as well, because 50% more job seekers look to CareerBuilder-branded online and print offerings than Monster. This with much lower customer acquisition cost than Monster.

As I mentioned earlier, we are deploying some new weapons in the help wanted share battle. The first of these is the full-market listing. This is an easy-to-post, integrated print and online listing that delivers tremendous local market reach and value for employers. Monster and HotJobs just can't compete with our full-market product because they only have the online part and we own both.

This is the banner that has been running on the front of the CareerBuilder section in Hartford, where we are test-marketing the new product. Our sales force is telling us that employers are actually switching their dollars from Monster back to us. After only a few weeks in the market almost 20% of print ads in Hartford are being converted to full market listings. These are not conventional uploads of agate listings. This is a new and more powerful tool for recruiters. We plan to have this product up and running in all our markets by the fourth quarter.

Put all this together and it looks more and more like the eighties, when everyone said ADVO was going to take all of our pre-print business away. Well, it didn't happen. We eventually got our act together, listened to our customers, and built great products that delivered what they wanted with great efficiency through integrated print-direct mail products. Because of this, our insert business has had tremendous growth over the last 15 years, and ADVO has struggled in our markets. As Dennis mentioned, the Chicago Tribune has two thirds of the market and in LA the Times is well on its way to growing its share. We're going to do the same thing in recruitment -- give customers great solutions that use the best of print and online and build one heck of a business.

Now here's Pat Mullen to give you a closer look at the success we've been having at our broadcast operations...

Pat Mullen, President/Tribune Television

Thank you Jack.

It's nice to be able to stand here today and say business is looking up: our stations had an excellent May sweep, revenue for the month of June looks very strong, and the upfront for The WB network was terrific, which all bodes well for a strong second half in 2002.

Television is a business driven by programming and with top performing syndicated shows like "Everybody Loves Raymond" and "Friends," and the addition of "Will & Grace" this fall our strong news franchises and the strength of The WB network, our share of the audience will continue to grow.

Let me start with the early- and late-fringe programs which account for 40% of our revenue. "Raymond" was up, on average, 19% versus the May 2001 time period. "Friends" continues to be the top rated off-network sitcom with ratings generally equal to or above last year's numbers. And we enhance the line-up this fall with the addition of "Will & Grace."

News continues to be a key strategy for our local stations, delivering about 15% of station revenue. It's what links us to the communities we serve. And, in combination with network affiliation, news gives a station its identity. Additionally, because of its unique connection to the local marketplace, news programming commands premium advertising rates.

So, we continue to expand our news efforts, and the results have been rewarding.

• In Chicago, WGN's morning news is the #1 local show in the market and #2 overall, beating NBC's "Today Show" handily. At night, WGN has the #1 rated news at nine o'clock.
  
• We have similar high ratings in Los Angeles where KTLA's morning news is #3 among all morning news programs.
  
• Here in New York, "The WPIX Morning News" continues to beat the "CBS Morning News." WPIX's 10 pm news was the only late news broadcast in the market whose audience share was up compared to May of last year.

And our newest morning news programs in Indianapolis, Seattle and Denver grew their audience share by 40%, 50% and 66% respectively.

Moving to The WB…May was a record-setting month. The network scored its highest-ever May Sweep ratings - across the entire 18-34 demographic and in adults 18-49. The WB also posted the strongest growth this May of any network among households, key male demos, and tied NBC for highest growth among total viewers.

Advertisers have demonstrated their enthusiasm for this programming, too. As Dennis mentioned, The WB had a record upfront, with $575 million in sales.

Last year at this conference, when we stood here in front of you and talked about the WB's new program lineup, we focused on two shows in particular: "Smallville" and "Reba". We had great confidence in those shows - and both have gone on to become major hits. Well, it just gets better.

The development slate for the WB's 2002 season is the best yet. There are a number of pilots we're excited about, but there is one show that you really should see: "Everwood", starring Treat Williams. Our advertisers are saying it's one of the best pilots they've ever seen.

This fall on Monday nights, "Everwood" will follow The WB's top rated "7th Heaven" - a perfect time slot to launch this show. We think "Everwood" looks like a hit, but we know it's a program that makes us proud to be part of The WB network.

Dennis spoke earlier about our strategic objectives: expanding our footprint in the top 30-40 markets, extending our cross-media assets, and building two-station-clusters. Given our recent announcement regarding the acquisition of WTTV in Indianapolis, let's talk a little more about the advantages of two-station clusters.

It's a simple formula-a common infrastructure, reduced backroom costs, and staffing efficiencies, mean higher margins. In addition, there are major programming and cross-promotion advantages.

With a two-station cluster, you take a competitor out of the market and programming costs decline. Market license agreements, as opposed to individual station licenses, allow us to air shows on one or both stations. And, with careful scheduling and demographically targeted cross-promotion…ratings increase for both stations.

A great example of this is the performance of our two-station cluster in Seattle. We have an aggressive strategy of programming "A" sitcoms against one another - "Friends" on our Fox station, KCPQ, and "Raymond" on our WB affiliate, KTWB. Then, we actively promote each show on both stations. The result… higher ratings on both stations. Ratings for "Friends" on KCPQ were up 24% in the May book and ratings for "Raymond" on KTWB were up 50%. Our combined market revenue share up nearly 2 points.

That's why a station like WTTV in Indianapolis is a perfect fit. As we look for additional acquisition opportunities, we plan to "double up" wherever we can.

While our primary business is local mass media, Tribune also has several important national assets. People often overlook our 31% interest in The Food Channel, the fastest growing cable network, our 9% stake in The Golf Channel, and of course, 22.5% ownership of The WB network.

But perhaps our best-known national assets - aside from the Chicago Cubs - are WGN Superstation and Tribune Entertainment.

WGN Superstation now reaches more than 56 million homes. And, by taking control of national distribution to cable operators, we've added a second revenue stream that will continue to grow, as well.

Tribune Entertainment is a significant program supplier to our station group and this fall we are looking forward to the launch of "Beyond with James Van Praagh" - a half hour strip that showcases the remarkable talents of the internationally renowned psychic, James Van Praagh.

The "buzz" on this show is fantastic. CBS recently ran a highly-rated four hour miniseries about Mr. Van Praagh (thank you CBS for the national promotion), and just a couple weeks ago, there was a front page feature story in Electronic Media.

Let me conclude by echoing Dennis's statements that we are believers in the power of local mass media. As investors look to the future, it's important to recognize the differences between national and local media options and how advertisers access those options.

Today there are seven over-the-air broadcast networks and scores of cable networks and numerous other national media options. For advertisers seeking to reach a national audience, these networks are viable options. However, reaching mass media audiences in specific local markets is an entirely different story. And that makes Tribune's local media franchises more valuable than ever.

To illustrate this point, let me show you a few slides from a presentation that Tribune stations have created to help dispel the myth of local cable. From these slides, you will see that local cable simply cannot compete as an effective local mass media option. Let me explain...

Let's take a look at the Chicago example. When selling to local advertisers, the local interconnect will present a slide such as this which suggest that cable stations receive 42% total viewing and should therefore take a much larger share of the television dollars.

• But let's take a closer look at the 42%.
  • 5% of viewing is to non-interconnect or DBS homes...
  • 14% to networks without local inventory to sell...
  • 9% to kids networks such as Nick and Cartoon...
  • and 3% to pay cable.
  • That leaves only 11%.

Cable suggests 42%, but the percentage of cable viewing actually available to local advertisers is only 11%... and there are 33 insertable cable network sharing that 11% for an average rating of a .18. Hardly local mass media.

This is a really important point so to clearly demonstrate what this means to a local advertiser, take a look at WGN's news vs. cable news. WGN's 9 pm news achieves a 6.8 rating reaching more that 228,000 homes. One spot on each of the cable news networks combined reaches less that 64,000 homes.

To be sure, cable advertising has legitimate use as a national vehicle. But, in the end, cable is not a local mass media substitute for broadcast television.

Advertisers have always had, and will always have, the need to reach large local audiences to sell their products and services-that's exactly what they get with Tribune Television.

And with that, let me turn it over to Don Grenesko, who will review our key financials.

Don Grenesko, Sr. Vice President/Finance and Administration

I'll wrap up our formal presentation with a summary of key financial highlights:

Revenues continue to improve. Although consolidated revenues declined by 5% in the first quarter, April and May together are about flat with last year (+2%/-1%). Year-to-date, consolidated revenues are down just 3% and we expect continued improvement in the second half.

Cash expenses are down significantly. Cash expenses for the full year should be 3-4% lower than in 2001.

We'll achieve this despite a $15M increase in broadcast rights due to new shows and our accelerated amortization policy, a $30M decrease in our pension credit and restoration of moderate management bonuses.

Without these changes, cash expenses would be down in the 5-6% range.

Average staffing levels for the company as a whole will be 5-6% below last year.

Operating cash flow will grow by at least 10% and will be significantly higher if revenues increase on a full-year basis.

For the second quarter we are comfortable at the upper end of the range of analysts' earnings-per-share estimates which is currently 42-47 cents. For the full year we are comfortable within the range which is $1.50-$1.65.

We have reduced capital expenditures to about $250 million for the year, a decrease of $25 million.

Moving to the balance sheet, our year-end debt level should be at or below $2.9 billion, excluding the PHONES transaction. On this basis our debt should be about 2x operating cash flow by the end of 2002. We believe this is consistent with a mid-"A" bond rating and top-tier commercial paper rating, and these ratings are among the highest of media companies.

Let me take a moment here to discuss our PHONES transaction and related debt, which was mentioned last week by one of the rating agencies.

If you recall, 3 years ago we monetized 16 million shares of AOL stock at $78/share, very close to AOL's all-time high.

We received proceeds of $1.25 billion, while also realizing two significant tax benefits. We deferred $500 million of capital gains taxes for 30 years, and we are able to deduct 8 1/8% interest for tax purposes annually, while only paying 2% interest. At the end of 30 years, we will owe PHONES holders the higher of the AOL stock price at that point in time, or the original $78/share.

From an accounting standpoint, we include the PHONES as a liability on our balance sheet and the AOL stock as an asset, in accordance with Generally Accepted Accounting Principles. Each quarter, we mark the PHONES liability and AOL stock to market and reflect the non-cash gains and losses as non-operating items in our earnings statements.

From a debt-holder and rating agency standpoint, we feel that the best treatment is to net the deep discount debt component of the PHONES against the underlying value of the AOL stock, which would increase our current debt level by $100-150 million, but this will vary depending upon the value of AOL stock. Needless to say, this was both a terrific investment and monetization strategy.

Returning to our operating businesses, let me update you on the projected investment returns on two of our recent acquisitions:

We're very pleased with the Times Mirror acquisition, we're well ahead of schedule on cost reduction and we're projecting an investment return in the low double digits. This is above our 9% cost of capital, and is in spite of the severe recession we have gone through.

Also, our TV acquisitions, including the recently announced purchase of WTTV in Indianapolis, should have returns in the mid-teens.

Finally, in terms of valuation, we think a sum-of-the-parts analysis best captures the value of our company.

It's based upon current multiples of cash flow of our operating businesses plus our equity investments such as The WB Network, TV Food Network, Golf Channel, CareerBuilder, Classified Ventures and Brass Ring, which total $1.6 billion.

This comes to a value of about $50 per share, and that's on depressed cash flow.

If you assume a more normalized cash flow, the value increases significantly.

For all of these reasons, we're optimistic about the future.

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This document contains certain comments or forward-looking statements that are based largely on the company's current expectations and are subject to certain risks, trends and uncertainties. Such comments and statements should be understood in the context of Tribune's publicly available reports filed with the SEC, including the most current annual report, 10-K and 10-Q, which contain a discussion of various factors that may affect the company's business. These factors could cause actual future performance to differ materially from current expectations. Tribune Company is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet service providers.