WASHINGTON -- Rep. Henry A. Waxman said Friday that six media experts he consulted have serious concerns about the fate of the Los Angeles Times under the Tribune Co.'s plans to spin off the newspaper and seven others into a separate unit and called on company executives to change the terms.
The experts said the spinoff provisos, such as a requirement for the newspaper unit to pay the parent company a cash dividend that could be about $325 million, would "place the long-term viability of the Los Angeles Times and other Tribune papers at risk," Waxman (D-Beverly Hills) wrote in a letter to Tribune Chief Executive Peter Liguori.
"I hope you will review the assessments the distinguished experts provided to me and then revise the terms of the transaction," Waxman told Liguori.
"When the newspapers become a separate company, they need the financial and other resources necessary to compete effectively in the Internet age," Waxman wrote.
Times Publisher Eddy Hartenstein, who will become chairman of the new Tribune Publishing unit, said he was "extremely confident that the plan put forth by Tribune Co. 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."
"From our ongoing discussions, Congressman Waxman should by now be fully aware that the structure of the spinoff of Tribune Publishing is based on sound financial principles and a deep commitment to providing Tribune's newspapers with a strong, long-term future," Hartenstein said.
"The assertions of the academics consulted by the congressman provide no new insight and in many cases are simply wrong," he said.
Tribune filed paperwork with the Securities and Exchange Commission in December as a preliminary step toward breaking off The Times, the Chicago Tribune and six other newspapers as a separate unit to be called Tribune Publishing Co.
The spinoff would allow Tribune to focus on its more valuable broadcasting properties.
Waxman raised concerns about the spinoff's effect on The Times in December, and discussed them with Liguori during a Capitol Hill meeting in February requested by the lawmaker.
Waxman said the experts he consulted were concerned primarily that the publishing unit would have too much debt, that the Tribune Co. would retain ownership of the newspapers' buildings and that proposed consolidation of key functions at the publications would hurt their ability to cover local news.
Under the spinoff, the newspapers would pay rent to Tribune. Gabriel Kahn, a professor at USC's Annenberg School for Communication and Journalism, told Waxman that the real estate, which includes historic structures such as The Times' downtown building, account for as much as half of the market value of individual newspapers.
"Stripping them of these assets will have an adverse impact on their financial health and create new strains on cash, as they will be forced to make lease payments" to Tribune, Kahn wrote to Waxman.
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