Tribune Pushes More Debt On Newspapers Ahead Of Spinoff

With Tribune Co.’s planned spinoff of its newspapers as an independent company coming up in the third quarter of 2014, the parent company is pushing more debt onto Tribune Publishing, as the new company will be known, according to The Chicago Tribune, which first reported the news.
 
Tribune Publishing will walk away from the rest of Tribune Co. with $350 million in debt when the spinoff is complete, per the latest amendment to the spinoff plan, up $25 million from the amount previously disclosed in regulatory filings. The total includes a one-time cash dividend of $275 million that will be paid to Tribune Co. upon completion of the spinoff.

Tribune Publishing will also pay Tribune Co. $30 million in rent for office space through 2017, according to the same filings.
 
The filings also contained some details about the financial performance of the publishing division, which includes the Chicago Tribune, Los Angeles Times and Baltimore Sun, among others. In 2013, the newspaper division’s total revenues declined 6% to $1.8 billion, but still turned a profit of $167 million. Revenues have continued to fall in 2014, with a 5% drop in the first quarter, while operating profit tumbled 45%.
 
The planned spinoff of the newspaper division has been over a year in the making. In March, Tribune announced that Jack Griffin, who previously served as CEO of Time Inc. and Meredith Corp., had been appointed CEO of Tribune Publishing Co. He will lead the newspaper operation’s planned spinoff from the rest of the old Tribune Co.
 
The newspaper spinoff is part of a major strategic shift by Tribune. The company is distancing itself from the newspaper business to focus on its local TV broadcasting operations, along with cable network WGN America, a stake in the Food Network, and online businesses, like Classified Ventures and CareerBuilder.
 
In February 2013, shortly after emerging from a tortuous four-year bankruptcy, Tribune put its newspapers on the auction block, but later withdrew them -- presumably because of a lack of attractive offers. The company acquired 19 stations from Local TV Holdings for $2.73 billion, which closed in December 2013.

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