Tribune to spin off LA Times, other papers into separate company

Tribune Company announced plans to spin off its beleaguered newspaper unit into a separate company, freeing the media conglomerate to focus on its more promising television and Internet properties.

The new entity, to be called Tribune Publishing Co., would include the Los Angeles Times, the Chicago Tribune and six other daily papers. All other assets, including the company’s real estate holdings and stakes in several Internet sites, would remain part of Tribune Co. The spinoff would be tax-free to Tribune shareholders and could take as long as a year to complete. Symbolically, the split would mark a historic break with the newspaper business that has always been at the heart of Tribune. The company was founded in 1847 as the parent of the Chicago Tribune. It acquired Times Mirror Co., the publisher of the Los Angeles Times, in 2000. Despite the woes facing newspapers, the publishing division still accounted for 64% of Tribune’s operating revenue last year. The announcement reflects the forces buffeting the print media industry and the comparatively brighter prospects of the TV business. A key issue for Tribune Publishing would be its financial structure. The newspaper unit is profitable, but advertising has been eroding at a precipitous pace. Ad revenue skidded 9% in the first quarter, after declining 14.5% from 2010 to 2012. The company has slashed 2,200 jobs in the last three years. Among the key questions to be answered: How much debt would the new company carry? And how much capital would it get as a financial underpinning?