DBRS Maintains Tribune Company Under Review -- Developing at B, B (low)

DBRS has today maintained Tribune Company’s (Tribune or the Company) ratings of B and B (low) -- Under Review with Developing Implications. This rating action reflects DBRS’s expectation that it will finalize its ratings both on Tribune’s current debt, and any future debt acquired through drawing on its credit facilities to complete its nearly $8.5 billion privatization. Pending various regulatory approvals, Tribune expects to close the remaining portion of this transaction before the end of 2007. (DBRS originally downgraded Tribune to its current level on April 2, 2007, following the announcement of this transaction.)

As a result of the planned privatization, DBRS expects leverage at Tribune will approach 10.0 times (x) gross debt-to-EBITDA for 2008, with debt levels expected to increase to over $12 billion from $5 billion at the end of 2006. This is net of nearly $1 billion in expected asset sale proceeds by the end of 2008, as the Company has announced its intention to sell the Chicago Cubs and its stake in Comcast SportsNet, and will also receive other sale proceeds and a tax settlement of nearly $300 million. DBRS expects Tribune to be around free cash flow break-even for 2008, as higher interest costs are more than offset by the cancellation of its dividend and cash tax savings.

From a business risk perspective, DBRS notes that Tribune continues to experience pressure in its Publishing operations, as a sharp decline in advertising linage (specifically in the national and classified categories) in 2007 and ongoing circulation erosion has more than offset its cost-cutting initiatives. To date, this has caused further EBITDA pressure in 2007. While DBRS expects EBITDA pressure to possibly stabilize in 2008, with both Tribune’s Publishing and Broadcast and Entertainment operations benefiting from an election year, the structural pressures caused by advertisers continuing to shift their spending to different mediums and circulation erosion remain ongoing.

DBRS notes the Company completed the first stage of its privatization in June 2007. This included tendering for 126 million shares at $34 per share, for a total of $4.3 billion, using proceeds from a new $8.028 billion credit facility. Additionally, as part of the transaction: (1) the Tribune Employee Share Ownership Plan (the ESOP) purchased 8.9 million shares for $28 per share in exchange for a $250 million note of the ESOP; and (2) Sam Zell invested $250 million for 1.5 million Tribune shares at $34 per share and a $200 million exchangeable note.

Notes:
All figures are in U.S. dollars unless otherwise noted.