Tribune just took a page from the play books of Rupert Murdoch, who recently separated his print operations from entertainment at Fox, and Time Warner, which plans to spin off its magazine unit. Today’s announcement follows Tribune’s agreement last week to pay $2.7B for Local TV, which will make it the nation’s No. 1 independent owner of major network TV affiliates. Tribune also has acknowledged that it’s shopping its newspapers which include the Los Angeles Times, Chicago Tribune, Baltimore Sun, and Hartford Courant. The company offers familiar justifications for the spin off of its assets in the weakening print business to create a new company called Tribune Publishing: It will enable the execs running that operation to focus on its special needs with its own capital structure — and give them additional flexibility to cut deals. CEO Peter Liguori adds an obligatory assurance to his reporters and editors that the change “will bring single-minded attention to the journalistic standards, advertising partnerships and digital prospects of our iconic newspapers, while also enabling us to take advantage of the operational and strategic opportunities created by the significant scale we are building in broadcasting.” Each company will generate more than $1B a year in revenues after the separation, with sufficient cash flow to “put these businesses in a strong position for continued success.” It could take as long as a year, though, for Tribune to hammer out the details for the spin off — and to secure the approvals it will need from tax officials and the SEC, among others. The company warns “that there can be no guarantee that the transaction will be concluded or assurances as to transaction terms.” Tribune emerged from the media industry’s biggest bankruptcy ever at the end of 2012. Its chief creditors — Oaktree Capital Management, Angelo, Gordon & Co. and JPMorgan Chase & Co – were empowered to run Tribune, valued then at $4.5B. In Q1 publishing accounted for about 66% of Tribune’s $705M in revenues, but 56% of the $83.5M in operating profits.
Here’s today’s release: (more…)