Oct. 24 (Bloomberg) -- Tribune Co. reported third-quarter profit that fell less than analysts estimated, easing investor concern that Sam Zell will have trouble financing an $8.2 billion buyout of the second-biggest U.S. newspaper publisher.

Tribune shares rose after the company said profit excluding some items was 38 cents, beating the 26-cent average of analysts' estimates compiled by Bloomberg. Games played by the Chicago Cubs, the baseball team owned by Tribune, and higher ratings for the CW network boosted TV advertising, while national print ads helped mitigate a drop in classifieds.

``This is very important considering that there's been uncertainty in the market regarding whether the transaction will close,'' said Mike Simonton, a bond analyst at Fitch Ratings in Chicago. ``Any progress forward could be a good sign.''

Net income declined 7 percent to $152.8 million from $164.3 million a year earlier, Chicago-based Tribune said today in a statement. On a per-share basis, earnings almost doubled to $1.22 after the company bought back stock in May as part of its plan to go private. Sales fell 4.1 percent to $1.28 billion.

Real-estate billionaire Zell, who is leading the $34-a-share buyout, has said he plans to sell the Chicago Cubs and hold on to Tribune's 11 metropolitan newspapers and 23 television stations. Tribune said today it still expects to complete the transaction in the fourth quarter.

Tribune shares gained 63 cents, or 2.3 percent, to $28.18 at 4:02 p.m. in New York Stock Exchange composite trading. They are 17 percent below the price offered by Zell.

Classified Ads

Newspaper advertising sales fell 9 percent to $674.5 million in the third quarter. Sales of classifieds dropped 18 percent, with real-estate ads plummeting 26 percent because of a housing slump in markets including Florida and California. Television revenue rose 3.9 percent to $288.3 million.

``Tribune's classified business is still in a world of hurt,'' Ken Doctor, a media analyst for Outsell Inc. in Burlingame, California, said before results were announced. ``Tribune needs to get the transaction closed and decide what they want to do next.''

To complete the deal, Tribune still needs a waiver of U.S. government regulations that bar companies from owning a newspaper and television station in the same market. Tribune owns the Los Angeles Times and the city's KTLA-TV, and its existing permissions would expire if the company is sold.

The lower sales at Tribune's newspapers reflect an industrywide slump as advertisers and readers move to the Internet. Gannett Co., the owner of USA Today, and McClatchy Co., the publisher of the Miami Herald, both reported lower third- quarter earnings last week. New York Times Co. reported a surprise gain in profit yesterday after it reduced printing costs and countered falling classifieds with fashion and movie ads.

Tribune's net income for the quarter was reduced by 2 cents a share for employee buyouts, mainly at its publishing group. The settlement of a tax dispute added 33 cents a share to profit. A year earlier, Tribune recorded a gain of 22 cents a share as it unwound partnerships with its largest shareholder.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net.

Last Updated: October 24, 2007 16:11 EDT