Rep. Waxman Questions Tribune Company on Future Plans for the Los Angeles Times
Today Rep. Henry A. Waxman sent a letter to Tribune Company President and CEO Peter Liguori expressing concerns about the Tribune Company’s future plans for the Los Angeles Times. The Los Angeles Times is the largest metropolitan newspaper in the country, serving as the primary source of news for millions of people in Southern California.
Recent filings with the Securities and Exchange Commission indicate that the Tribune Company intends to spin off its newspaper unit, which includes the Los Angeles Times. The newspaper unit will be required to pay an undetermined cash dividend to the Tribune Company funding exclusively through borrowing, and the Los Angeles Times will have to pay rent to the Tribune Company to occupy the paper’s own building.
In the letter, Rep. Waxman writes, “I am writing on behalf of my constituents who rely daily on the Los Angeles Times for their national news and local reporting. I am concerned that corporate actions the Tribune Company is taking may not be in the best interests of the Los Angeles Times.”
The full text of the letter is available below and online here.
December 19, 2013
Mr. Peter Liguori
President and Chief Executive Officer
435 North Michigan Avenue
Chicago, IL 60611
Dear Mr. Liguori:
I am writing on behalf of my constituents who rely daily on the Los Angeles Times for their national news and local reporting. I am concerned that corporate actions the Tribune Company is taking may not be in the best interests of the Los Angeles Times.
First published in 1881, the Los Angeles Times is the largest metropolitan newspaper in the United States. Millions of people in Southern California and throughout the country use the Los Angeles Times as their primary source of distinguished and reliable news gathering and reporting. Since 1942, the Los Angeles Times has won 41 Pulitzer Prizes, six of which are gold medals for public service. It is in the interests of both Southern California and the nation that the Los Angeles Times remain a vibrant news source.
In recent years, the Los Angeles Times has suffered as Tribune Company reduced staffing levels by approximately 900 positions in 2012, 560 positions in 2011, and 360 positions in 2010. In November, the Tribune Company announced to its staff it intended to further lay off 700 employees, representing an additional cut of 6% of its workforce.
Now the difficulties faced by the Los Angeles Times may get worse. According to paperwork filed with the Securities and Exchange Commission on December 9, 2013, the Tribune Company intends to spin off its newspaper unit, which includes the Los Angeles Times. According to the filing, the newspaper unit would be required to pay an undetermined cash dividend to the Tribune Company funded exclusively through borrowing. And the historic Los Angeles Times building will become the property of the Tribune Company, with the newspaper paying money to rent its own facility.
I recognize that recent years have been difficult for the newspaper industry. There have been layoffs throughout the industry, so I understand that cost-cutting at the Los Angeles Times may have been unavoidable. But I have questions about how the terms of the spin-off could affect the future of the Los Angeles Times. The requirement that the newspaper unit go into debt to pay a cash dividend to the Tribune Company will undoubtedly enrich the Tribune Company, but it may do so at the expense of the financial health of the Los Angeles Times and the other papers in the newspaper unit, all of which are already facing financial strains. Some have described the obligation of the Los Angeles Times to pay rent to the Tribune Company to occupy the paper’s own building as tantamount to “life as a corporate orphan.”
I would like to learn more about the transaction you are proposing and how it will impact the Los Angeles Times and my constituents. I ask that company officials knowledgeable about the transaction contact Shawn Chang on my staff to schedule a briefing on why the transaction was structured this way and what the ramifications will be for one of the nation’s most important sources of news.
Henry A. Waxman