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Tribune Co. said Wednesday it wants to split its broadcasting and publishing businesses into two companies. Chicago-based Tribune owns 23 TV stations, including KTLA-TV, cable network WGN America, along with the Los Angeles Times, Chicago Tribune and six other newspapers. (File photo: The Los Angeles Times building is seen on June 7, 2012).
The Tribune Co. — which owns the Los Angeles Times and L.A. TV station KTLA — announced Wednesday that it wants to split its broadcasting and publishing businesses into two companies.
Tribune said the move will let one company take advantage of growth in broadcasting while the other focuses on newspapers, where revenue has been falling.
Chicago-based Tribune owns 23 TV stations, cable network WGN America, along with the Times, Chicago Tribune and six other newspapers. Earlier this month, it announced plans to buy Local TV Holdings and its 19 television stations for $2.73 billion. Those plans prompted several analysts to suggest Tribune would sell off its newspapers as a group and focus on its growing broadcast business.
The newspapers would be spun off into an independent company called Tribune Publishing Co. The remaining company would include Tribune's local television stations; WGN radio and cable networks; its television production, digital and media services ventures; and its interests in other companies and real estate.
Tribune Co. CEO Peter Liguori said both the publishing and broadcast-focused companies would each have sales of more than $1 billion.
“The separation is designed to allow each company to maximize its flexibility and competitiveness in a rapidly changing media environment,” Liguori said in a news release.
The creation of the two companies would need regulatory approval. Each company would have its own separate board of directors and senior management team, Tribune said.
When Tribune Co. spins off its newspaper properties, the flagship company would control its broadcast stations, WGN America, real estate assets and equity assets in CareerBuilder.
San Francisco media consultant Alan Mutter said he believes Tribune would launch an initial public offering, probably after it gets out of the newspaper business. Mutter made the comments to KPCC earlier this month, when Tribune had announced plans to buy the 19 TV stations from Local TV Holdings.
“The investors who now own the company [Tribune Co.] are not inclined to own it over the long term, but rather want to exit the investment," Mutter said.
Mutter said that Tribune's plans to spin off its newspaper business into a separate company signals the papers may not be sold off as a group anytime soon.
"My guess is if Tribune could have sold the papers at an acceptable price, they would have done so," said Mutter.
There have been several interested buyers in Tribune's eight daily newspapers, which includes the Los Angeles Times and Chicago Tribune. Mutter said those buyers probably didn't offer enough money to buy the papers.
Rick Edmonds, a media business analyst with the Poynter Institute, said the separation of the newspapers from the rest of the company also gives Tribune the option of selling one or couple of the papers if the demand is strong.
Tribune’s newspaper division saw a 3 percent drop in first quarter operating revenues due to a 9 percent decline in ad revenues, the company said. The largest declines in operating revenues were in Los Angeles, Chicago and South Florida. The company reported revenues of almost $466 million in its newspaper division in the first quarter.
Earlier this month, the Los Angeles Times conducted a round of staff reductions in its newsroom, which included some layoffs.
This story has been updated.