US & World

Tribune to acquire 19 TV stations for $2.7 billion

Vehicles travel along Wacker Drive near the Tribune Tower (right center), headquarters of the Tribune Company, on June 7, 2012 in Chicago, Illinois.
Vehicles travel along Wacker Drive near the Tribune Tower (right center), headquarters of the Tribune Company, on June 7, 2012 in Chicago, Illinois.
Scott Olson/Getty Images

Listen to story

Download this story 0MB

Tribune Co. said Monday that it plans to purchase 19 TV stations for $2.73 billion in cash, making it the nation’s largest owner of commercial television stations.

Tribune, which owns KTLA-TV and the Los Angeles Times, said the deal would boost its profits immediately. The company will buy all the TV stations from Local TV Holdings, LLC., which will give it access to additional 16 markets. Local TV is principally owned by private equity firm Oak Tree Capital Partners.

“It is truly an ability to take scale and spread your content costs, [content] risk and your content data to the greatest number of homes,” said Peter Liguori, Tribune’s CEO and president on a conference call Monday with investors.

Some analysts speculated that the deal could position Tribune to launch an IPO.

“The investors who now own the company are not inclined to own it over the long term, but rather want to exit the investment,” said Alan Mutter, a media consultant in San Francisco.

On a conference call with investors, an analyst asked the company if the deal with local TV has changed the expectations that it may “list the company…onto lists of exchange.” A Tribune executive said, “No, it doesn’t change our thinking at all.” 

Tribune said the deal would result in more than $100 million annual cost savings within five years. The deal is expected to close by the end of 2013.

Tribune said it would pay for the stations through debt financing and cash on hand. The company received up to $4.1 billion in financing from JPMorgan Chase, BofA Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse.

Tribune already owns 23 television stations and cable network WGN America, along with eight newspapers.

Tribune said it is exploring all strategic options for its eight newspapers, which include the L.A. Times. One of those options is selling the papers. 

Rick Edmonds, a media business analyst at the Poynter Institute, said he thinks the deal to expand its broadcast stations indicates that Tribune will sell its newspapers.

“I think it just makes it all the more likely that all those properties will be sold, and if they can’t sell all of them, they will sell most of them,” Edmonds said.

Mutter said the newspapers will probably not be a part of the company’s IPO.

“There’s probably a preference to get out of print publishing,” Mutter said, adding the people recruited to run the company are broadcasters. Also, the newspaper business has experienced a steep decline in print advertising sales, he said.

Amid that decline, newsrooms across the country have been cutting their staffs. The L.A. Times had a modest round of staff reductions on Friday.