July 12, 2013

Tribune announced Wednesday that it intends to split into two companies. So what does that mean for Tribune print properties and the entities that aim to acquire them?

Trouble for the Chicago Sun-Times’ owner: That’s according to Lynne Marek, who says Wrapports LLC’s hopes to buy The Chicago Tribune now appear more farfetched.

Tribune’s broadcasting arm would likely keep the newspaper division’s real estate and the company’s investments in digital assets like CareerBuilder, lowering the value of The Chicago Tribune and thus any price Wrapports might pay, but the move also appears to kick a newspaper sale down the road. And the Sun-Times is losing money right now.

The biggest financial concern for the company is the hefty $70 million a year it must pay a year to Chicago Tribune to print and distribute the Sun-Times papers. While the company has explored printing alternatives, its contract with its larger rival runs for about two more years. After that, Sun-Times would have leeway to explore less expensive options, even a reduction in printing.

Perhaps no Koch ownership of the Los Angeles Times: With Charles Koch saying “we don’t know where we’ll end up” on buying media properties, the various L.A. players who’d like to own the paper may think they’ll get a second bite at the apple, Marielle Wakim writes.

A variety of power players are likely thrilled to hear it. Last month, former FCC Chairman Reed Hunt gave a speech at UCLA in which he shared his thoughts on the Koch’s potential acquisition of the Times. “I’d rather have Murdoch than the Kochs own the Times, if it came down to that choice,” he said. “The Koch brothers use money and media to misinform, misdirect and make miserable all of us.” Just yesterday, Mayor Eric Garcetti shared a similar opinion in an interview with HuffPost Live. “I’d rather see local ownership,” he said simply.

Tribune Co. may be getting ready to sell the papers anyway: Ken Doctor writes that “one savvy insider told me: ‘The process for putting the papers on the market and for preparing for a split of the two companies is essentially the same.'”

Let’s remember its overall goal: make sure the newspaper assets don’t muddy the big broadcast play, and set the clock to do that. Chart the path. Buy some time. Hope for the best.

There’s still sunlight for potential investors: Tribune’s circulation revenue has gone up 9 percent, Kyle Stock notes.

Even so, if the advertising conditions don’t disappear more quickly and Tribune can maintain its circulation gains and cost structure, an optimist could find a way to forecast slight annual gains in profit, at least before pesky things such as interest and taxes are factored in.

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Andrew Beaujon reported on the media for Poynter from 2012 to 2015. He was previously arts editor at TBD.com and managing editor of Washington City…
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