Chicago's Media -- Tribune Company: The Advantages of Cross-ownership

V. Tribune Company: The Advantages of Cross-ownership

The biggest media player in Chicago is the Tribune Company, owner of the Chicago Tribune, WGN-AM 720, WGN-TV and other major media outlets in the area and across the country. Founded in 1847, Tribune reaches more than 80 percent of U.S. households through newspaper publishing, television and radio broadcasting and the Internet. Operations are concentrated in the nation’s major markets, including the top three, New York, Los Angeles and Chicago. In 1983, after 136 years of private ownership, Tribune became a public company with an initial offering of 7.7 million shares valued at $206 million.(1)

The Tribune Company dominates the Chicago media landscape, owning the area’s most-read newspaper, most listened-to radio station, popular TV stations, the area’s only 24 hour local cable news channel and more. The company controls nearly one-fifth of the local news market for the entire Chicago area.

Broadcasting
Tribune entered the infant television industry in 1948, when it established WGN-TV in Chicago, followed by WPIX-TV in New York. These stations, now affiliates of The CW Television Network, became the foundation for Tribune Television,(2) today one of the country’s largest independent TV groups.

Several acquisitions served to accelerate Tribune’s growth in the mid-1980s. Most significant was the 1985 purchase of KTLA-TV in Los Angeles for $510 million.(3) This made Tribune the only non-network company to own VHF stations in the country’s top three markets.

Tribune grew dramatically during the 1990s, spurred by a loosening of federal regulations restricting television and radio ownership. This resulted in rapid consolidation within the broadcasting industry and Tribune played the role of consolidator by expanding its holdings in the top 40 markets. Through a series of acquisitions and investments, the company emerged as one of the largest owners and operators of television stations in the nation.

Newspapers
The most significant Tribune acquisition ever was the merger with The Times Mirror Company, completed in June 2000. The deal effectively doubled the size of Tribune. The $8.3 billion transaction was the largest acquisition in newspaper industry history. The Times Mirror merger added seven daily newspapers to the Tribune fold, headlined by the Los Angeles Times, Newsday, The Baltimore Sun and the Hartford Courant. Tribune became the only media company with newspapers and television stations in the top three markets. Advantages from the merger advanced by company management included more effective competition for national newspaper advertising.(4)

Spanish-language newspapers continue to grow in importance and Tribune is well positioned in major markets with large Hispanic populations. Hoy is published daily in Los Angeles and Chicago, and weekly Spanish-language newspapers are offered in Central Florida and South Florida. Tribune recently announced plans to more aggressively expand circulation of Hoy in Chicagoland suburbs where 52% of Chicago-area Hispanics now live.

Daily newspapers targeting urban commuters represent yet another growth initiative for Tribune. The Chicago Tribune launched its RedEye edition in 2002, and one year later Tribune invested in amNewYork. Both tabloids are distributed free of charge and geared to young adults who want their news in a fast-paced, entertaining format. In 2006, Tribune acquired the minority equity interest in amNewYork and now holds full ownership in the newspaper, which is printed by Newsday.

Cable and Satellite Channels
In October 1978, United Video uplinked the signal of the Tribune’s WGN-TV channel 9 in Chicago to the Satcom-3 satellite for cable and satellite subscribers nationwide. For the next 12 years, the national WGN-TV signal was the same exact signal as the Chicago area signal. After changes to law on syndicated programming, Superstation WGN launched a special national feed in 1990 available via satellite to DirecTV and Dish Network in the United States as well as through some smaller Canadian cable companies. As of 2006, Superstation WGN boasts over 68 million households on cable and satellite.

CLTV, the Chicago area’s first and only 24-hour all-news cable channel, took to the air in 1993. The channel reaches over 1.8 million cable households, making it one of the largest local cable channels in the country.

Content
The Chicago Tribune-New York News Syndicate was formed in 1918. Its successor, Tribune Media Services, is one of the largest content syndication operations in the world, managing and delivering content.

Tribune Entertainment Company was created in 1982 and today develops, produces and distributes television programming for Tribune stations and non-Tribune stations nationwide. Based in Hollywood, the business distributes and co-produces syndicated shows including, American Idol Rewind, Gene Roddenberry’s Andromeda, Soul TrainU.S. Farm Report, Ron Hazelton’s House Calls, and DIC Kids’ Network, a 3-hour block of animated entertainment for children.

A key event in Tribune history was the 1981 acquisition of the Chicago Cubs baseball team from the Wrigley family for $20.5 million. WGN Radio and WGN-TV had been broadcasting Cubs games since those stations first went on the air. Since 1978, when WGN-TV became a "superstation," the Cubs have been aired to a national audience via satellite and cable. Today, Superstation WGN reaches about 60 million US homes outside Chicago through cable and direct broadcast satellite.

The Advantages of Cross-ownership
Tribune is one of three companies actively seeking a change in FCC media ownership rules, especially the ban on cross-ownership of broadcast outlets and local newspapers. Since the 2000 Times Mirror deal, observers have recognized that the Tribune wants to apply its Chicago model to additional U.S. media markets. The idea is to offer a host of avenues for advertisers to reach consumers – those consumers are surrounded by different points of contact: the radio or TV as they prepare for and get to work, billboards along the way, on the Internet as people surf instead of working, in newspaper ads as they take a coffee break, in magazines in the restroom and so forth.

At the time of the merger with Times Mirror, the Tribune was the largest multimedia company in four of the five most populous states: California, New York, Illinois and Florida. In the fifth, Texas, it owned two major-market TV stations: KDAF-TV in Dallas and KHWB-TV in Houston.

Tribune’s own corporate web site highlights the strategy with examples:

• Tribune’s television stations and newspapers are complemented by high-traffic news and information websites. The sites are operated by Tribune Interactive -- established in 1999 and now among the leading online networks in the country. The group manages all aspects of the company’s TV and newspaper sites, plus special-interest sites like ChicagoSports.com and many sites featuring local dining and entertainment information. Affiliated national-brand classified advertising sites, in which Tribune owns an equity interest, include CareerBuilder, cars.com and apartments.com.
• As the sister station of the Chicago Tribune, CLTV quickly became a model for consolidated ownership, multimedia content sharing and cross promotion throughout Tribune. Today, Tribune newspapers actively partner with the news operations of Tribune television stations in their markets or with non-Tribune broadcasters, including local radio stations. The strategy expands the audience for the company’s newspaper content and the on-air promotion helps increase readership.

1. At the time, it was one of the largest IPOs ever made.

2. The formation of the Tribune Broadcasting Company in 1981 signaled the growing importance of television in the company’s business mix.

3. Television stations in Atlanta and New Orleans were acquired shortly before KTLA.

4. Tribune Media Net, the national advertising sales organization of Tribune Publishing, was established in 2000 to take advantage of the company’s expanded scale and scope.