Oh to be a fly on the wall Jan. 15, when Tribune Co. executives meet with the staff of Rep. Henry A. Waxman, D-Calif., in a command performance to explain the media conglomerate’s plans to spin off its newspapers — which include the Los Angeles Times, the Chicago Tribune, and the Baltimore Sun — into a separate company named Tribune Publishing.
Waxman called for the meeting in mid-December after Tribune filed its blueprint with the Securities and Exchange Commission, arguing in a letter that the restructuring may not “be in the best interests” of his constituents, who live in the Pacific Coast-hugging congressional district that runs inland to include Beverly Hills. The spin-off will essentially defund the newspapers, Waxman argued, specifically the Los Angeles Times, which his district depends on for news. Under the terms of the restructuring, the Tribune Publishing newspapers will pay a cash dividend to Tribune Co. The newspapers will also lose their real estate holdings, forcing them to pay rent for their current facilities.
Waxman worries that the deal endangers the long-term survival of the Los Angeles Times, which like most other newspapers has shrunken its newsroom as advertising and circulation have fallen over the past decade. In a second letter to Tribune, which he also made public, Waxman wrote, “At a minimum, you appear to be putting the profits of the Tribune Co. ahead of the interests of the public in viable local newspapers.” In it, he asked Tribune to forward to his staff a raft of relevant spin-off documents before the Jan. 15 meeting.
Absent evidence of law-breaking by Tribune, how can the company’s restructuring be the business of Congress or Henry Waxman? So far, Waxman hasn’t deployed any bogus rhetoric about the “stakeholders” who read the Los Angeles Times having rights equal to those of the shareholders who actually own the property. But it’s early yet. Waxman may get there soon if Tribune’s executives don’t acquiesce to his charms.
So why doesn’t Tribune tell Waxman to go find a hot place and jump into it? Probably because after it sheds its newspapers, its primary assets will be in the highly-regulated business of broadcasting, where it owns 23 television stations. As a member of the House minority, Waxman can’t cause Tribune much in the way of regulatory trouble now, but what if the House flips? (Waxman was, after all, the chair of the Energy and Commerce committee.) Game theory encourages the Tribune to act the supplicant, perhaps giving Waxman some cheap token for his blessing, and then do basically what it was going to do in the first place.