Rep. Henry Waxman said Friday he wants L.A. Times corporate parent Tribune Co. to change the structure of its plans to spin-off its newspapers into a separate company.
Under the current plans, the newspapers would need to pay a cash dividend through debt financing. The Chicago Tribune has reported this dividend could be worth $325 million and Waxman (D-CA) would like to see that number reduced.
"It is unfair to make struggling newspapers take on hundreds of millions of dollars in debt to pay a cash dividend to the profitable TV broadcasters remaining in the parent company," Waxman wrote in a letter to Tribune's CEO Peter Liguori.
Waxman wrote he has consulted with other media and business experts who also express concerns about the L.A. Times' corporate parent Tribune Co.'s plans to spin-off its newspapers into its own separate company.
He says the experts, most of whom are professors at universities, raised questions about the spin-off's structure: the amount of debt the newspapers will need to take on, how the papers would need to pay rent to Tribune for the buildings the newspapers staffs currently use and whether the spin-off would impact how the L.A. Times and other papers "provide strong and independent local coverage."
"I hope you will review the assessment the distinguished experts provided to me and then revise the terms of the transaction," Waxman said in a statement. "When the newspapers become a separate company, they need the financial and other resources necessary to compete effectively in the Internet age."
Eddy Hartenstein, publisher of the L.A. Times, said Waxman should be "aware that the structure of the spin-off … is based on sound financial principles and a deep commitment to providing Tribune's newspapers with a strong, long-term future." Hartenstein will become chairman of the board of the spin-off, called Tribune Publishing.
"The assertions of the academics consulted by the Congressman provide no new insight and in many cases are simply wrong," Hartenstein said in a statement.
Waxman, who is a ranking member of the Energy and Commerce committee, has voiced his concerns several times regarding Tribune's newspaper spin-off through letters and statements. In January, the Energy and Commerce committee staff met with Tribune executives in January.
This story has been updated