NEW YORK (
) -- U.S. labor is counting as a victory, albeit a temporary one, that
decided last week not to put its eight big-city newspapers, including the
Los Angeles Times
, up for sale.
Tribune's decision to spin off its newspapers and retain its television holdings rather than auction them to the highest bidder came after labor unions pressed the Chicago-based media company to resist a sale that could result in their purchase by David and Charles Koch, the billionaire oil and gas magnates, and founders of Americans for Prosperity, a key funder of Tea Party groups and other conservative causes.
Brandon Rees, acting director of the AFL-CIO's Office of Investment, said the labor federation welcomed Tribune's decision and was guardedly optimistic that the letter-writing campaign and rallies held in front of its newspapers discouraging the company from selling its publications to the Kochs had been effective.
Organized labor, which has been in decline for more than three decades, had an unusual ability to influence Tribune because of the billions of dollars in pension fund monies managed by the media company's two largest shareholders, L.A.-based Oaktree Capital Management, the world's largest distressed debt investor, which owns a 22% stake in Tribune, and the similarly debt-focused private-equity firm Angelo Gordon & Co., which holds 8.6% of the company's shares.
"It's a temporary victory in our efforts to encourage the Tribune to stay independent of the Kochs,'' Rees said. "But it has to be seen in any light as being a setback to the Koch brothers aspirations for these papers.''
Tribune spokesman Gary Weitman had no comment regarding the possible influence the unions may have had in the company's decision to spin off its newspapers rather than sell them. Instead, Weitman pointed to Tribune's July 10 press statement trumpeting the spinoff as providing the company the ability to "tailor its capital structure" to the differing needs of its television holdings apart from its newspapers -- and being able to execute the transaction tax-free.
For Rees, preventing the newspapers from being acquired by the Kochs, at least in the short-to-medium term, was a success worth embracing.
"There's a long history of pension funds using their voice as owners in publicly traded companies," Rees said in a phone interview from Washington. "This is an example of an active voice being used by pension funds in a private-equity situation, and it being used to create value for the pension funds as well as address broader issues of corporate responsibility. In this case, the obligations of a newspaper to the communities they serve.''
Few doubted that the Kochs, the sixth and seventh-richest people in the U.S. according to data compiled by
, each with a combined net worth of $44 billion, would have had trouble winning an auction had their hearts and minds been set on it.
Representatives of Koch Cos. as well as Oaktree Capital weren't immediately available for comment. Oaktree Capital President Bruce Karsh is also chairman of Tribune's board.
Labor and environmental groups have cautioned that Koch's activism on behalf of deregulation of the oil and gas industries as well as financial services along with efforts to prevent actions aimed at curbing global warming, or even questioning its existence, would have had outsized influence if Tribune had agreed to sell the newspapers to Koch Cos.
Tribune's newspapers comprise the largest dailies in Illinois, California, Maryland (
The Baltimore Sun
) and Connecticut (
) as well as two in the politically-charged state of Florida (
South Florida Sun-Sentinel
of Fort Lauderdale), and also the national Spanish-language daily
Regardless of their ownership, the future of Tribune's newspapers nonetheless remains uncertain. Legacy print publications continue to suffer from declining circulation and advertising sales. And while Tribune management has said that the newspapers are profitable, the company still has debt to manage left over from the error-filled reign of real estate mogul Sam Zell.
As for the Kochs, they could attempt a hostile takeover of the spun-off Tribune Publishing Co. somewhere down the road though that's a scenario Rees views as unlikely given the billionaire brothers historic preference for staying out of public markets.
In the meantime, Tribune shareholders may benefit from continuing to own newspapers that the company said are beginning to show improved earnings while the Kochs may have to go elsewhere if they still want to become publishers.
Tribune shares were rising for a 15th consecutive day on Wednesday, climbing to $66.70, a 37% gain since shares began trading in January.
Written by Leon Lazaroff in New York
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