Print Is Still Dying: Tribune Co. Chief Orders $100 Million In Cuts To Newspapers
By Chuck Sudo in News on Sep 27, 2013 1:55PM
Our thoughts this morning are with our friends in Tribune Co. newsrooms who are waiting for the other metaphorical shoe to drop after media critic Robert Feder reported Thursday the media company was ordered to make $100 million in budget cuts as Tribune prepares to spin off its newspapers into a separate company.
The mandate was handed down by Tribune Co. CEO Peter Liguori and, Feder reports, will affect all areas of operation, including newsrooms. Tribune Co. owns the Chicago Tribune, Los Angeles Times, Baltimore Sun, Hartford Courant, the South Florida Sun Sentinel, the Orlando Sentinel and the Morning Call and Daily Press. Tribune Co. spokesman Gary Weitman confirmed to the Los Angeles Times the company has started a budget review process and newspaper managers were asked to look at areas to trim their bottom lines. Although Weitman disputed the $100 million figure, he told the Times, “Everything is on the table. We’re looking at how to put our publishing businesses on the best possible footing for the long term.”
Liguori announced plans in July to spin the newspapers into their own company, Tribune Publishing Company. Billionaire industrialists and conservative astroturfers Charles and David Koch expressed interest in buying the newspapers but backed away from the idea after a review of Tribune Co. financials revealed a “founders’ agreement” was in place where Tribune’s newspapers could sell local ads on behalf of the company’s digital assets Careerbuilder.com and Classified Ventures LLC, boosting the papers’ digital ad revenue. Tribune newspapers earned $2 billion in revenue last year compared to $1.14 billion on the broadcasting side, mostly from the strength of digital advertising. CareerBuilder.com and Classified Ventures are staying with Tribune Co. in the split and without that digital ad revenue, Koch Industries determined the newspapers weren’t economically viable.
Tribune reported net income of net income of $66.3 million in the second quarter of 2013, compared to $170.8 million for the same time frame last year—a 61.2 percent decrease. The company's revenues were $730.2 million (a 10.5 percent drop) while pretax income plunged 39.7 percent to $110.4 million.
Separating the newspapers into a separate company would shield Tribune from the tax burden it would face if they tried to sell off the papers outright. Tribune has retained New York-based consulting firm Empirical Media to assist in the process. The cuts are expected to go into effect Dec. 1.