NEW YORK — Ending months of speculation, the Tribune Co. announced Wednesday that it would spin off its newspapers, including The Los Angeles Times and The Chicago Tribune, into a separate division called Tribune Publishing Co. Its broadcasting properties would remain together with other assets in the Tribune Co.
The Tribune Co., which emerged from bankruptcy at the end of 2012, signaled last week that it was shifting its emphasis toward television when it purchased 19 stations in 16 markets, bringing its total number of television stations to 42 and giving the company a large footprint in the local TV business.
At the same time, the company has been exploring the sale of some or all of its newspapers. Initial efforts to sell have proceeded slowly, and a bidding process that was supposed to have begun by now has not. Speaking to investors after announcing the television acquisition last week, Peter Liguori, Tribune’s chief executive, said the company was still considering all of its strategic options regarding the newspapers.
One potential holdup on a sale is the tax implications; given that the newspapers are mature businesses, the taxes on a sale of all the properties could reach well over $100 million.
The spinoff announced Wednesday does not preclude a sale of any of the papers, the company said, and executives are hoping the announcement stirs interest in some of the properties and perhaps a greater willingness to shoulder some of the tax implications.
Executives are hoping the announcement stirs interest in some of the properties and perhaps a greater willingness to shoulder some of the tax implications.
The company has interests in large digital assets like CareerBuilder.com and Classified Ventures that include publishing arrangements with the newspapers that would have been invalidated by a sale. The broadcast entity, which will continue to be called the Tribune Co., will retain those assets, but the agreements will remain in place.
In a news release Wednesday, Liguori said each division would be able to operate independently. Each of the new entities will 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,” Liguori said. “We expect that this transaction will serve our shareholders and employees well, and put these businesses in a strong position for continued success.”
The split is expected to take months and is subject to regulatory approval.
In addition, Liguori has shown an increasing interest in the operational aspects of newspapers, indicating the company would probably not be selling them off wholesale.