Tribune Co. in $2.7b deal for 19 TV stations

Purchase reflects shift from papers

Tribune Co., which emerged from bankruptcy protection in 2012, is seeking to sell its newspaper portfolio, which includes the Chicago Tribune and Los Angeles Times.
Tribune Co., which emerged from bankruptcy protection in 2012, is seeking to sell its newspaper portfolio, which includes the Chicago Tribune and Los Angeles Times.2007 Reuters file

CHICAGO — Tribune Co. said Monday that it had reached a deal to buy Local TV Holdings LLC’s 19 TV stations for $2.73 billion in cash, significantly boosting its television business as it looks to sell its newspaper operations.

Tribune currently owns 23 TV stations and cable network WGN America, along with the Chicago Tribune, Los Angeles Times, and other newspapers.

The deal will make the Chicago company one of the nation’s top TV station owners. Tribune said it will be the number one commercial TV station group in the country, based on its broadcast reach into more than 50 million homes.


The deal reshapes the broadcast media landscape and follows two other deals by companies whose roots are in newspapers. These companies are trying to acquire additional television stations at a time when the newspaper industry is faltering.

Last month, Gannett Co., the publisher of USA Today, announced plans to buy TV station owner Belo Corp. for about $1.5 billion. The acquisition would nearly double Gannett’s portfolio of stations from 23 to 43, reaching nearly one-third of US households. The company said the deal will give it access to what it said are some of the fastest-growing media markets, including Dallas, Houston, and Seattle.

A week earlier, Media General Inc. and New Young Broadcasting Holding Co. unveiled plans to combine into a company that would operate 30 TV stations in 27 markets, including San Francisco. That came after Media General sold all of its newspapers last year.

There are several reasons broadcast stations are increasingly attractive. They offer companies more opportunities to sell increasingly lucrative political-campaign ads in battleground markets. Another plus: The more stations a conglomerate owns, the more clout it has when negotiating the fees that cable and satellite TV companies pay to include stations on customers’ lineups.


Tribune cited those factors, as well as its potential to maximize its national and local advertising sales, while acquiring more outlets to distribute its video and digital content.

‘‘Our investment thesis is simple. Scale matters,’’ chief executive Peter Liguori said in a conference call with analysts.

The company said it expects the deal to quickly boost its profit and result in more than $100 million in annual cost savings within five years.

Local TV’s stations are mainly in the West and Midwest, including Cleveland, St. Louis, Denver, and Milwaukee. Markets served by Tribune include Chicago, New York, Los Angeles, Philadelphia, and Seattle. Tribune also has one radio station, WGN-AM in Chicago. Tribune will be getting seven additional Fox stations and five more CBS affiliates through the deal.

Tribune is trying to sell its newspapers to focus on its more profitable broadcasting operations. The newspaper sale is being done at the behest of a group of lenders that took over the company as part of a bankruptcy reorganization.

The newspapers have been hurt by a shift that has driven more readers and advertisers to the Internet and mobile devices. The downturn in print advertising was one of the factors that caused Tribune to file for Chapter 11 bankruptcy protection in 2008. It emerged from court oversight at the end of 2012.

Local TV is principally owned by the private equity firm Oak Hill Capital Partners.

The Tribune deal, which remains subject to antitrust and Federal Communications Commission approvals, is expected to close by the end of 2013.


Tribune Co. said it has received committed financing of up to $4.1 billion and expects the deal will be financed through a combination of debt financing and cash on hand.