Congressman says the split may come “at the expense of the financial health of the Los Angeles Times”
Rep. Henry Waxman is questioning whether the Tribune Co. is unfairly structuring the spinoff of its newspapers — and specifically of the Los Angeles Times — in a way that could make it more difficult for the newspapers to survive.
The California Democrat sent a letter Thursday to Tribune president-CEO Peter Liguori expressing concern “that corporate actions the Tribune Company is taking may not be in the best interests of the Los Angeles Times.”
“I am writing on behalf of my constituents who rely daily on the Los Angeles Times for their national news and local reporting,” said Waxman. He said those constituents have already suffered as the newspaper reduced staff by 900 people in 2012, 560 in 2011 and 360 in 2010, and has announced plans to lay off another 700.
Waxman pointed to a Securities and Exchange Commission filing by the company on Dec. 9 about plans to spin off its newspaper division.
“According to the filing, the newspaper unit would be required to pay an undetermined cash dividend to the Tribune Company funded exclusively through borrowing,” he wrote. “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.
Waxman said that while layoffs were unavoidable, “I have questions … 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.”
He said some have described the obligation of the Los Angeles Times to pay rent to the Tribune Company as “life as a corporate orphan.”
Waxman has requested a briefing on the spinoff plans that details “why the transaction was structure this way and what the ramifications will be for one of the nation’s most important sources of news.”
Gary Weitman, a Tribune spokesman, said the company appreciated Waxman’s interest in the LA Times.
“We are happy to address his questions and have already been in touch with his office to schedule a meeting,” Weitman said. “Tribune remains fully committed to the to the long term vitality of the LA Times and all of Tribune publishing.”