(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
By Jeffrey Goldfarb
NEW YORK, July 10 (Reuters Breakingviews) - It isn't often
that the tarnished Rupert Murdoch finds himself looking anything
like a white knight. Tribune Co's TRBAA.PK plan to spin off
its newspapers seems, though, to put the media mogul squarely in
After emerging from bankruptcy in January, Tribune refocused
on its more profitable broadcasting operations instead of
publishing. Hence last week's $2.7 billion deal to buy a
collection of TV stations. Efforts to sell Tribune's eight
newspapers attracted interest, including from David and Charles
Koch, the billionaire brothers who run one of the country's
biggest private companies and back conservative causes and
candidates like 2012 Republican presidential contender Mitt
The possibility of the Kochs running the Los Angeles Times
and the Chicago Tribune may well have brought political pressure
on Tribune's owners, the largest of which is Oaktree Capital
(OAK.N), the Los Angeles-based private equity firm run by Howard
Marks. Many of the city's power brokers, including Hollywood
players like Jeffrey Katzenberg, are big Barack Obama
supporters. In Chicago, meanwhile, the president's former chief
of staff, Rahm Emanuel, is the mayor.
Tribune, now led by former Murdoch lieutenant Peter Liguori,
says spinning off its publishing assets will create the most
value for its shareholders. But the tax-free transaction it has
in mind does not necessarily meet the stated goal of maximizing
flexibility. For one thing, the approach can prevent a sale of
the company, for instance to the Kochs, for two years. And it's
possible the newspaper assets will be valued at less than their
tax basis, rendering the tax-free process and constraints
For Murdoch, however, the extra time might come in handy.
Though he's a natural buyer, splashing out on Tribune's
publishing assets so soon after spinning off his own newspapers,
including the Wall Street Journal and other titles, might not
sit well with investors. U.S. rules governing the ownership of a
TV station and a newspaper in the same geographic market for now
are also problematic. And Murdoch is under scrutiny again from
British politicians over the costly phone-hacking scandal
involving his UK tabloids.
If the veteran News Corp (NWSA.O) and Twenty-First Century
Fox (FOXA.O) boss does eventually wind up with Tribune's
newspapers, he'd get something of a last laugh. The man whose
outlets are denounced by liberal critics as right-wing
mouthpieces will have managed it partly because the same
politics kept the even more conservative Kochs at bay, and
played into Murdoch's hands.
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS:
- Tribune Co said on July 10 it would spin off its
publishing business, which includes the Los Angeles Times and
Chicago Tribune, separating it from its broadcasting operations.
The company had explored a sale of its newspapers.
- The two companies each would have revenue of at least $1
billion and "significant operating cash flow," Chief Executive
Peter Liguori said in a statement.
- The separation will require a number of regulatory
approvals, opinions from tax counsel and additional due
diligence, Tribune said. It expects to develop detailed
separation plans over the next nine to 12 months. Each company
will have its own board of directors and senior management team.
- Reuters: Tribune to separate broadcasting, publishing
Watch it again [ID:nL2N0F71IL]
Split it again [ID:nL2E8HS3RW]
- For previous columns by the author, Reuters customers
can click on [GOLDFARB/]
(Editing by Richard Beales and Martin Langfield)
Keywords: BREAKINGVIEWS TRIBUNE/
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