Representative Henry Waxman is insisting that the owners of the L.A. Times cancel current plans to spin-off its publishing division into a stand-alone company. Waxman thinks that the announced structure is detrimental to the newspapers he wants protected.
Tribune Co., owner of the L.A. Times, the Chicago Tribune and a host of other papers, have created a plan that will require the papers to pay a cash dividend through debt financing once they become a stand-alone, publishing concern.
The Chicago Tribune reported that its share of the dividend could amount to as much as $325 million and other papers would have similar costs facing them. Rep. Waxman (D, CA) thinks this is too harsh a toll to levy on newspapers that are already facing difficult financial times.
Financial filings for the Chicago Tribune show the publishing division’s revenue fell 6% in 2013, due in large part to a 9% drop in newspaper ad revenue.
On April 11, the Congressman insisted that “experts” he consulted told him the spin-off plans were a bad deal for the papers.
In the letter, Waxman said, “I hope you will review the assessment the distinguished experts provided to me and then revise the terms of the transaction. When the newspapers become a separate company, they need the financial and other resources necessary to compete effectively in the Internet age.”
But Eddy Hartenstein, the publisher of the Times, disagreed with Waxman’s claims saying that the Congressman’s “experts” were all university professors and none of them ever ran a business.
Hartenstein, who will become chairman of the publishing arm when the deal is done, said the structure of the spin-off, “is based on sound financial principles and a deep commitment to providing Tribune’s newspapers with a strong, long-term future.”
“The assertions of the academics consulted by the Congressman provide no new insight and in many cases are simply wrong. As publisher of the Los Angeles Times for the last six years and soon-to-be Chairman of the Board of Tribune Publishing, I am extremely confident that the plan put forth by Tribune Company is sound, reasonable and will help protect and build a strong future for the Los Angeles Times and Tribune’s other newspapers for years to come,” Hartenstein said in an email to Poynter.
The restructuring of Tibune Co. is expected to be completed later this year.
Rep. Waxman recently announced he is not running for re-election.
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