Tribune Spinoff Won’t Affect Cross-Ownership Concerns, Officials Say
A Tribune Co. announcement that it plans to spin off its publishing holdings into a separate company probably won’t affect cross-ownership concerns about the company’s planned purchase of Local TV and its 19 TV stations, said industry officials Wednesday. Tribune said in a Wednesday press release it will spin off all of its publishing assets into the newly formed Tribune Publishing Co., while the company’s other businesses -- including 42 TV stations - would remain in Tribune Co. Shares of the new Tribune Publishing will be distributed tax-free to Tribune shareholders, the release said. A Tribune spokesman said the spinoff is designed to increase value for shareholders, and is not related to cross-ownership.Since that means the shareholders will still own both TV stations and newspapers, it doesn’t change status regarding FCC cross-ownership rules, said Fletcher Heald attorney Peter Tannenwald: “Unless they do something to change the ownership at the beginning it won’t make it any difference.” But Tannenwald said if the companies want to try to use the split to come into compliance with cross-ownership rules without receiving an FCC waiver, they could do so by more clearly separating the ownership of the two companies. Tribune said each of the companies will have its own board and senior management team, and “revenues in excess of $1 billion.” “This doesn’t remove the need to ask the question” about possible cross-ownership violations in the proposed Tribune/Local TV merger, said Free Press Senior Policy Director Matt Wood. He also said the spinoff doesn’t do anything to fix Free Press concerns about media consolidation. “We still see reduced journalism and reduced diversity of viewpoint,” he said.
The spinoff is “designed to allow each company to maximize its flexibility and competitiveness in a rapidly changing media environment,” said CEO Peter Liguori. In the wake of Tribune’s announcement, Standard & Poor’s said in an emailed release it will keep Tribune on “CreditWatch Negative” despite the spinoff. “We believe that profitability at the publishing segment will continue to decline, as additional cost cuts may be insufficient to offset long-term pressures of readership declines and advertising moving online,” said Standard & Poor’s.
Tribune hasn’t said “how much cash, debt, and pension obligations might be initially spun off with the publishing assets, or what the new entity’s longer-term capital needs might be,” said S&P. But it did say the move may improve the remaining Tribune Co. “Once the publishing assets are spun-off, we expect that the broadcasting entity would maintain a ’satisfactory’ business risk score,” S&P said.