Tribune Company announced plans Wednesday to spin off its newspaper division, which includes the Los Angeles Times and Chicago Tribune, from its television holdings in a move to designed “to maximize shareholder value.”
The move marks the latest breakup of media companies facing troubles on the publishing side: Rupert Murdoch’s News Corp recently completed a similar split, and Time Warner is planning to spin off its magazine publishing operations.
Tribune Co., which emerged from bankruptcy December 31 after four years of court supervision, owns 23 television stations and last week announced a $2.7 billion deal to buy 19 more local television stations.
The Chicago-based firm said splitting into two distinct companies would give each “greater financial and operational focus.”
“Moving to separate our publishing and broadcasting assets into two distinct companies will bring single-minded attention to the journalistic standards, advertising partnerships and digital prospects of our iconic newspapers, while also enabling us to take advantage of the operational and strategic opportunities created by the significant scale we are building in broadcasting,” said Peter Liguori, Tribune’s president and chief executive.
“In addition, the separation is designed to allow each company to maximize its flexibility and competitiveness in a rapidly changing media environment.”
Since its emergence from bankruptcy, a number of reports have said Tribune Co. was preparing to sell off many of its assets, starting with the newspapers.
Although no official bids have been announced, the mere hint of interest from billionaire industrialists Charles and David Koch, famous for bankrolling conservative causes, has some activists in a frenzy. Protests have been held in Los Angeles and other cities.
Murdoch’s media group has been among those likely to be interested in the big dailies.
Tribune Co. said that details of the breakup will be unveiled over the next nine to 12 months.
It said each entity, Tribune Publishing Company and Tribune Company, would have its own board of directors and senior management team.
“The two companies resulting from this transaction would each have revenues in excess of $1bn and significant operating cash flow,” said Liguori. “We expect that this transaction will serve our shareholders and employees well, and put these businesses in a strong position for continued success.”
In addition to the Chicago and Los Angeles dailies, the company owns The Baltimore Sun; the Sun Sentinel in Fort Lauderdale, Florida; the Orlando Sentinel; Hartford Courant in Connecticut; The Morning Call in Allentown, Pennsylvania; and Daily Press in Hampton Roads, Virginia.
Dan Kennedy, a journalism professor at Northeastern University, said a diversified media company could allow profits from television to “trickle” down to newspapers, “but Tribune doesn’t want to operate that way.”
Kennedy added that “it sounds like they don’t have a lot of interest” in the newspapers but noted that “if they end up in the hands of local owners which have a stake in the community I don’t see any reason why they can’t do well.”
Sam Zell, a Chicago real estate titan, led an $8bn leveraged buyout of the Tribune Co. in 2007 and the company declared bankruptcy the next year, with $13bn in debt.
It sold the Chicago Cubs baseball franchise and its iconic stadium, Wrigley Field, in 2009.
Tribune Co. also operates websites including CareerBuilder.com, Cars.com and Apartments.com, and holds a stake in the Food Network cable channel.