Updated from 9:45 a.m.

Tribune ( TRB) posted a drop in second-quarter earnings as circulation at the newspaper company continues to slide.

The Chicago-based company made $164 million, or 53 cents a share, from continuing operations for its quarter ended June 25. That's down from the year-ago continuing operations profit of $231 million, or 72 cents a share.

The latest quarter included a penny-a-share tax gain and a 3-cent nonoperating loss. Excluding those items, latest-quarter earnings were 55 cents a share, a penny shy of the Thomson Financial forecast.

Revenue fell 1.4% from a year ago to $1.43 billion, short of the $1.46 billion consensus estimate.

"With the successful completion of the tender offer, our leveraged recapitalization is on track," said CEO Dennis FitzSimons. "We are moving aggressively with additional divestitures of noncore assets.

"In publishing, the competitive environment in our larger markets is still challenging, but we saw good growth in the second quarter at many of our medium-sized markets like Orlando and South Florida," the CEO said. "Interactive revenues, the fastest growing segment of our business, were up 27% this quarter. In television, our stations in Los Angeles, Seattle, Indianapolis and Sacramento were our top performers."

Advertising revenue was flat for the quarter. Excluding Newsday, advertising revenue rose 2%. National advertising revenue fell 7%, with decreases in movies, autos, resorts and technology, partially offset by increases in health care, media, financial and transportation.

Circulation revenue slid 5%. Individually paid circulation for Tribune's 11 metro newspapers averaged 2.7 million copies daily, down about 2% from the same reporting period in 2005, and 4.1 million copies Sunday, down about 2.5% from the same reporting period in 2005.

The issue of the dissident 12.5% shareholder the Chandler family trusts was not raised until well into Thursday's earnings call. The Chandlers loudly objected to Tribune's Dutch auction and repurchase program and are calling for a split of the company along asset lines.

FitzSimons said Thursday that the tender offer has been completed and management looks forward to "do something there that makes sense for both sides and all shareholders." While he indicated that he hoped to move forward constructively on the issue, he declined to comment on any negotiations.

Probed about divestitures and whether Tribune would consider going beyond its current committment to shed $500 million in assets, FitzSimons said the company will "look for situations where if we don't have a competitive advantage." He implied that the $500 million benchmark could be surpassed if the company sold a reasonably large asset.

Tribune says it has completed $300 million of divestitures since announcing the program. It has recently sold TV stations in Atlanta and in Albany, N.Y.

Shares fell 68 cents Thursday to $31.67.