Tribune Co., publisher of the Los Angeles Times, Chicago Tribune and Baltimore Sun, plans to spin off its newspapers into a separate business, letting the company focus on its more lucrative local TV stations.
The plan would create a newspaper company called Tribune Publishing Co. and a TV-focused business called Tribune Co. with 42 stations in 33 markets, according to a statement today. The move follows a $2.73 billion deal to acquire 19 stations this month from Local TV Holdings LLC in the biggest broadcast-industry transaction in six years.
But it is also the latest example of a major media company cleaving off its publishing assets to please investors that don't want to own newspapers or magazines. News Corp. recently completed its split into 21st Century Fox, which owns movie studios and TV networks, and a new News Corp., which owns assets such as The Wall Street Journal. Time Warner is planning to spin off Time Inc., the magazine division from which the company sprang, into an independent company this year.
In spinning off its newspaper business, Tribune is backing away from seeking a bidder for the operation. The company, which emerged from bankruptcy at the end of 2012, had hired advisers to evaluate interest from potential buyers, according to people familiar with the process. Tribune's publishing group was valued at about $623 million in its bankruptcy filings.
"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," CEO Peter Liguori said in the statement.
The proposed sale of Tribune's newspapers drew protests in May from union organizations, who were concerned that the business would be sold to Koch Industries, a closely held company controlled by the billionaire Republican donors Charles and David Koch. Koch had been cited among several potential buyers -- a group that includes News Corp., Berkshire Hathaway, Wrapports and Freedom Communications, people familiar with the negotiations said in March.
Mr. Liguori said in a memo to employees in May that the company had received "a great deal of unsolicited interest in our publishing businesses, which says a lot about the strength of our brands."
The company expects to spend the next nine to 12 months developing its separation plan for the board. When the transaction is completed, each business will have its own management and directors. Shares in the newspaper business will be distributed to investors.
The newspaper company will have a stable of some of the highest-profile publications in the U.S. In addition to the Los Angeles Times and the Chicago Tribune, its holdings include the Sun Sentinel, Orlando Sentinel, Hartford Courant, Morning Call and Daily Press.
"Pursuing the separation of our publishing and broadcasting businesses will also allow us to maintain flexibility as we continue considering all our strategic alternatives for maximizing shareholder value," Mr. Liguori said in a separate memo to employees today.
~ Bloomberg News ~