For the first time in 90-plus years, the Chicago Tribune is disconnected from the broadcast business.
Its corporate family has been broken up and the Tribune, the wellspring of an empire built on ideas and innovation, is no longer complemented by the TV and radio industry it helped launch in Chicago.
Now we’ll see what the newspaper group is really made of, and just how much that’s worth.
What previously was known as Tribune Co. is set Monday to become Tribune Media Co., spinning off this newspaper and corporate siblings such as the Los Angeles Times, The Baltimore Sun and Connecticut’s Hartford Courant to make it on their own as Tribune Publishing Co.
They’re still referred to as papers despite their increasingly digital orientation in the same way people might say they dial phones. But on paper, pixel, video stream or whatever platform they play, these are organizations that over the decades have survived all manner of challenges from within and without — including a 2008-12 bankruptcy odyssey — and yet this latest may be their biggest and most critical yet.
“I would call it a singular moment,” Tribune Publishing Chief Executive Officer Jack Griffin said Friday. “It’s a tremendously important inflection point. It has its challenges, but it has its great possibilities.”
The newly christened Tribune Publishing has been born into an unforgiving new media environment that has shown little tolerance for faltering first steps.
Stripped down and exposed, cord cut and bottom slapped, the spinoff must move with speed and agility from the moment it hits the Street, officially making its New York Stock Exchange debut Tuesday as a publicly traded company under the symbol TPUB.
This is no trust fund baby. It must run wholly on its own.
Tribune Publishing got Tribune Co.’s newspaper print and digital operations in Chicago, Los Angeles and a half-dozen other markets, along with associated publications such as Chicago Magazine, Hoy and RedEye.
Tribune Media kept everything else, the so-called faster-growth properties, including digital assets the papers played no small role in making prosperous. Here in Chicago, it retains not only WGN-AM 720 (which this newspaper took over in 1924) and WGN-Ch. 9 (which the paper put on the air in 1948), but also Tribune Tower (built by the paper and its home since the 1920s). So the newspapers will be paying rent.
The publishing group gets off the ground with $50 million in cash on its balance sheet and at least $350 million in debt, with $275 million earmarked for a special dividend Tribune Media has demanded.
Griffin, who has been out making presentations to the investment community around the country, said that if he thought any of that was too great a handicap to keep the newspaper company from doing what it needs to do, he wouldn’t have taken the post.
“I just got done with the investment roadshow, and there’s so much interest in and fascination about pure digital-play companies,” Griffin said. “Most of them don’t make any money, and for every one that succeeds, there are probably 100 just like it that never saw the light of day.”
Part of the pitch for Tribune Publishing is that it’s already established, already doing what the upstarts aspire to, and what it can’t yet do or hasn’t mastered, it can grow into. Not content to be a paper tiger, it looks to be a new media lion.
Peter Liguori, the TV executive who took the reins as Tribune Co.’s chief executive after its emergence from restructuring, orchestrated the split. Although he voiced support for the publishing division, he never introduced a grand strategy to unlock the newspapers’ value on par with his plans to reinvent cable channel WGN America and empower the TV station group through acquisitions.
Griffin came aboard four months ago, taking on the challenge after a large role in guiding Meredith Corp. into the digital age, a brief but transformative hitch as CEO of Time Inc. (which since has been spun from Time Warner), and the founding of Empirical Media, which advised Tribune Co. on the way out of its lengthy bankruptcy.
Beyond acknowledging the obvious need for top-line revenue growth and managing costs while remaining open to possible investments, Griffin has kept his specific plans close to the vest in the run-up to the split.
“The opportunity going forward,” Griffin said, “is to develop these (Tribune Publishing) brands in ways that are traditional, in ways that are developing and in ways that are brand new.”
The benefits of the break from broadcasting, Griffin said, include more focused management that no longer forces the publishing properties to fight within the company for attention and capital, and the removal of cross-ownership barriers that would have thwarted the acquisition of properties where Tribune Co. owned or wanted TV stations.
It may surprise those who follow the industry only casually, but Tribune Co.’s newspaper group makes money. Even it, however, has not been immune to the sectorwide drop-off in revenue that has dampened investment enthusiasm.
Remarkably, only eight years ago, entertainment mogul David Geffen dangled $2 billion for the Los Angeles Times but failed to budge Tribune Co. from its refusal to sell the paper. Shares in the new Tribune Publishing, trading on a when-issued basis since July 24, closed Friday at $22, which pegs the market value of the entire newspaper group at around $558.8 million.
That diminished value is a reflection of Wall Street impatience with — or lack of faith in — the efforts of newspapers everywhere to arrest and restore their eroding businesses. And it’s a factor behind the growing number of media conglomerates that have de-glommed their print components.
Just Wednesday, Cincinnati-based E.W. Scripps Co., which has papers in 13 markets, announced its plan to merge with Milwaukee Journal Sentinel parent Journal Communications. The companies look to combine their TV and cable assets while completing sometime next year a spinoff of their newspaper assets as Milwaukee-based Journal Media Group, pending shareholder and regulator approval.
For publishers, cutting costs has been a go-to move to preserve margins and viability, though no one believes it is a long-term solution. New business and new business models are required. Like department stores in an increasingly boutique world, every aspect of what they do — particularly how, why and for whom they do it — bears review.
Griffin pointed with pride to a Tribune Publishing website redesign introduced in Los Angeles and Chicago and set to be adopted companywide. The changes are meant to optimize user engagement and social media sharing, showcase video and, critically, function optimally no matter on what kind of device a reader might access it.
“That really resonates with investors,” Griffin said. “Before the introduction of new technology, we’re reaching about 40 million unique visitors every month, so that’s a big number companywide. We think with this new technology, by the time it’s fully deployed, we’ll scale that number demonstrably.”
More than just leveraging their content and standing as community hubs, there will be an increased emphasis on other opportunities, such as sharing their digital expertise to help marketers find more and better ways to reach consumers.
“The job … is to acknowledge the reality and focus on the possibilities and execute on the possibilities,” Griffin said. “Print advertising has declined pretty much every year since 2006. We have to manage that while we transition.
“It doesn’t happen in one year or two years. It happens over time.”
Not everything is going to work. Newspapering has always been a work in progress.
The Chicago Tribune gave the world President Abraham Lincoln, baseball’s All-Star Game and Gasoline Alley. It also, in 1862, heaped praise on an actor named John Wilkes Booth, and had Dewey defeat Truman.
This paper tried to reinvent English spelling, for years forcing simplifications upon readers such as “thru” for “through,” “tho” for “though” and “iland” for “island.” Some of the streamlined spellings, such as “catalog” and “canceled,” actually caught on. Most left people “agast.”
Tribune Co. also was among the first of its peers to bet on radio, TV, cable television and the Internet.
Some expansion moves didn’t pay off as hoped, however.
The 2000 acquisition of Los Angeles Times parent Times Mirror Co. didn’t merely fail to deliver expected synergies. It set in motion events that culminated in Chicago real estate mogul Sam Zell taking Tribune Co. private in 2007.
Zell’s highly leveraged deal left Tribune Co. ill-suited to weather the economic downturn and industry upheaval, ushering it into Chapter 11 bankruptcy within a year. It didn’t emerge from restructuring for four years and, in some ways, the Tribune Publishing spinoff is the final result.
Those who would write off newspapers as history may wish to consider the adaptability and wherewithal it’s taken for them to get this far.
The Hartford Courant, which traces its roots back 250 years, got through the American Revolution and all the political, social, sexual, economic, global and technological revolutions that followed, evolving one edition at a time.
Joseph K.C. Forrest, James Kelly and John E. Wheeler — founders overshadowed by the later, more influential proprietors such as Joseph Medill and Robert R. McCormick — launched the Chicago Daily Tribune in 1847. They entered an already competitive market ostensibly intending little more than to make greater use of the hand press on which they produced a Sunday literary publication called The Gem of the Prairie.
Almost 170 years later, there are many more ways for people to interact and inform themselves and, despite whatever handicaps they may have, newspapers will continue to do all they can to hold their central position.
“We have very significant challenges,” Griffin said. “But we have very significant opportunities that come from how much we matter in these communities we’re in, how much we matter in Chicago, how trusted our brand is, how well our content creators know the communities, know what the consumer cares about.
“And, if we do it right, if we execute on those strengths, we’ll find a business model, as we manage these transitions, that’s viable and durable for the long haul.”
Nothing about any of this will be easy for the Chicago Tribune and its sister papers. They’re not thru, tho.
Twitter @phil_rosenthal
