Plan for Tribune Spinoff Raises Concerns for Future of Newspaper Operations

A plan by the Tribune Company to separate eight newspapers -- including The Los Angeles Times and The Chicago Tribune -- from its more profitable digital and television businesses could threaten their survival, staff members, industry analysts and Rep Henry Waxman (D-CA) said.

Under the proposal, outlined in a recent securities filing, the newspaper business will pay rent to its former parent company, as well as a dividend. Such moves, its critics say, will give the newspaper company less financial resources and operational flexibility at a difficult time for the industry. Employees at Tribune newspapers criticized the plan. “Just as we’re struggling to reinvent ourselves, they’re making life more difficult for us,” said Angie Kuhl, union chairwoman for The Baltimore Sun, another Tribune paper. “It feels like we’re being hobbled. Money that could go into online ventures and exploring new markets is going into rent.”

Tribune said its management plans to meet with Rep. Waxman to discuss his concerns. The congressman raised his concerns in a letter to Tribune Chief Executive Peter Liguori. Rep. Waxman pointed to Tribune's disclosures in a regulatory filing this month that the newspaper company created in the spinoff would take on debt to finance a special dividend to Tribune. "The requirement that the newspaper unit go into debt to pay a cash dividend to the Tribune Co. will undoubtedly enrich the Tribune Co., but it may do so at the expense of the financial health of the Los Angeles Times and the other papers in the newspaper unit, all of which are already facing financial strains," Rep. Waxman said.