Tribune Media considers selling businesses

Tribune Media, one of the US’s largest television station owners, has hired Wall Street advisers to examine options for the company less than two years after spinning off its newspaper business.

Tribune, which owns 42 local TV stations in markets including New York, Los Angeles, Chicago and Philadelphia, as well as the WGN America cable network, said it was exploring moves including “the sale or separation of select lines of business or assets, strategic partnerships, programming alliances and return of capital initiative”.

The company’s board “believe[s] that the value of the portfolio of businesses of Tribune Media is not fully reflected in the stock price and intend to explore ways to unlock value by reviewing strategic alternatives,” said Bruce Karsh, chairman.

Tribune stock was up more than 9 per cent on Monday morning in New York. The share price has slumped 46 per cent during the past 12 months as losses have piled up, ratings for some shows have declined and advertising sales slowed. Programming expenses have also increased as WGN has invested in original shows.

The US television industry has been consolidating as station owners seek larger footprints to cut costs and gain leverage in negotiations with pay-TV providers, which are themselves merging.

Nexstar Broadcasting agreed last month to buy Media General for $4.6bn in a deal that will extend its reach to 171 stations in 100 markets, covering 39 per cent of US TV households. Tribune’s stations reach 44 per cent of US households, according SNL Kagan.

Tribune shed its publishing business, which includes papers such as the Los Angeles Times and the Chicago Tribune, through a spin-off 18 months ago. It announced plans six months ago to sell some of its real estate holdings, including the Tribune tower in Chicago.

The company said on Monday it would also look to sell “numerous other properties” in its real estate portfolio.

Tribune has retained Moelis & Co and Guggenheim Securities as financial advisers to carry out the strategic review.

The announcement of the review came as Tribune reported an operating loss of $382m for the fourth quarter, largely because of a $381m impairment charge related to the writedown of the goodwill value of its cable reporting unit.

Operating revenue for the quarter fell 1 per cent to $547.6m, with revenue at its core television and entertainment unit hit by a fall in political advertising revenue due to 2015 being an off-cycle political year.

Despite its woes, Tribune Media has maintained its dividend policy and authorised a new stock buyback programme that could see the company repurchase up to $400m of its own stock.