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The Deal: Tribune Makes Split Official

Stocks in this article: BRK.B

NEW YORK ( The Deal) -- Tribune (TRBAA) said Wednesday, July 10, it plans to split its newspaper operations into a separate entity, freeing the recently reorganized company to focus on its more lucrative broadcasting business.

The announcement comes just weeks after Chicago-based Tribune, which emerged from Chapter 11 protection in December, said it would acquire a portfolio of 19 television stations by purchasing Local TV for $2.72 billion. Post-deal, Tribune would own 42 local television stations in 33 markets, along with WGN radio and television, studio and digital assets and stakes in CareerBuilder and the Food Network.

Tribune said all of those assets would remain inside the company, while the newly formed Tribune Publishing Co. would contain publishing assets including the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, The Morning Call and Daily Press.

The company said the split is the result of Tribune's board and management's post-bankruptcy process of evaluating options in search of growth.

"Moving to separate our publishing and broadcasting assets into two distinct companies will bring single-minded attention to the journalistic standards, advertising partnerships and digital prospects of our iconic newspapers, while also enabling us to take advantage of the operational and strategic opportunities created by the significant scale we are building in broadcasting," said Peter Liguori, who was named Tribune CEO in January. "In addition, the separation is designed to allow each company to maximize its flexibility and competitiveness in a rapidly changing media environment."

Rumors have circulated in recent months that Tribune was considering selling its newspaper assets, including reports that privately held Koch Industries, run by prominent Republican donors Charles and David Koch, was interested in acquiring the titles. Other potential buyers that have been mentioned in reports include Berkshire Hathaway (BRK.B) and Freedom Communications.

Liguori said that post-split each business would generate more than $1 billion in annual revenue and "significant" cash flow.

The deal is subject to conditions including regulatory approvals, opinions from tax counsel and additional due diligence, and is expected to take about one year to complete.

Written by Lou Whiteman

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