Tribune Company announced today that it will spin off the newspapers it owns, including the Los Angeles Times, into a new company. All of the other assets, including TV stations and real estate, would stay with Tribune. "The goal is to boost the stock market value of the broadcast properties by unshackling them from the newspapers, whose revenue has been declining sharply," says the LA Times story.
“Each will be a stronger company when separated from the other,” Peter Liguori, Tribune’s chief executive, said in a memo to employees. “… A company that is growing and succeeding on its own merits has a surer, clearer path forward, built on the ability to invest in and shape its own future.”
Until now, Tribune appeared to be taking steps to unload the newspapers in a private sale. In February, the company hired investment bankers to advise on a potential sale and vet potential buyers. Several prominent suitors, including industrialists Charles and David Koch, Murdoch and local philanthropist Eli Broad, have expressed interest, according to sources.
But the process has moved slowly and Tribune has yet to open the newspapers’ books to potential buyers. The papers still could be sold at any time and the idea of the spinoff abandoned.
Crucial details of the proposed spinoff have not been determined, including the leadership of the new company and its financial structure.
Symbolically, the split would mark a historic break with the newspaper business that has always been at the heart of Tribune.
From David Carr at the New York Times:
The move mirrors one by News Corporation, which late last month formally separated its newspapers into a new company. The common motivation is an effort to separate high-value, high-return entertainment and television assets from newspapers, which face a difficult operating environment that has dragged down earnings....
The spinoff announced Wednesday does not preclude a sale of any or all of the newspapers, the company said, and executives are hoping that the announcement stirs interest in some of the properties and perhaps a greater willingness to shoulder some of the tax implications.
Here's the Tribune news release. The company will be called Tribune Publishing Company and include, in addition to the LA Times, the Chicago Tribune, Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, The Morning Call and Daily Press.
Separation Designed to Maximize Shareholder Value, Provide Greater Financial and Operational Focus
Latest Step in Continuing Transformation of Dynamic Media Company
Tribune Company today announced its intent to pursue the separation of its iconic broadcasting and publishing businesses into two distinct companies, each with greater financial and operational focus, the ability to tailor its capital structure to its specific business needs, and a management team dedicated to seizing strategic growth opportunities with maximum flexibility. The proposed transaction is the latest step in the transformation of the dynamic media company, which last week announced it has entered into an agreement to acquire Local TV Holdings and the 19 television stations it owns in 16 markets across the country.
The proposed separation is designed to maximize shareholder value through the spin-off of Tribune’s publishing assets to an independent company and the tax-free distribution of shares in that company to the stockholders of Tribune. The two companies that would exist following the separation would be:
--Tribune Publishing Company, which would become home to Tribune’s publishing assets, including the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, The Morning Call and Daily Press.
--Tribune Company, which would consist of the company’s other principal businesses, including 42 local television stations in 33 markets (following the close of Tribune’s acquisition of Local TV), WGN Radio, superstation WGN America, Tribune Studios, Tribune Digital Ventures, Tribune Media Services, its equity interests in Classified Ventures, CareerBuilder, and The TV Food Network, and its valuable portfolio of real estate assets.
Over the last several months, Tribune’s board of directors and management team evaluated a variety of strategic options intended to maximize shareholder value and position the company for long-term growth. As a result of this process, the board has authorized management to pursue the separation of the company’s primary lines of business, broadcasting and publishing.
“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 officer. “In addition, the separation is designed to allow each company to maximize its flexibility and competitiveness in a rapidly changing media environment.”
During the next nine to twelve months, Tribune’s management team plans to develop detailed separation plans for the company’s board of directors to consider. Upon the closing of the proposed transaction, 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 $1 billion 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.”
The completion of Tribune’s separation into two companies is subject to a number of important conditions, including the receipt of regulatory approvals, opinions from tax counsel, further due diligence and the effectiveness of appropriate filings with the United States Securities and Exchange Commission. While Tribune Company intends to pursue the separation of its broadcasting and publishing businesses, there can be no guarantee that the transaction will be concluded or assurances as to transaction terms.
Photo of Los Angeles Times building: LA Observed