Tribune Co. said Wednesday that it wants to split its broadcasting and publishing businesses into two companies.
Tribune said the move will let one company take advantage of growth in broadcasting and allow the other to focus on newspapers, an industry where revenue has been declining for years.
Chicago-based Tribune owns 23 TV stations and cable network WGN America. Earlier this month, it announced plans to buy Local TV Holdings and its 19 television stations for $2.73 billion. It also owns eight daily newspapers, including The Baltimore Sun, Chicago Tribune and Los Angeles Times.
Fellow media company News Corp. completed a split into separate publishing and entertainment companies late last month.
Since the split became final on June 28, shares of News Corp., now a standalone publishing company that includes The Wall Street Journal, have edged up about 1 percent to $15.37 by late trading Wednesday. Shares of Twenty-First Century Fox Inc., the entertainment company, have risen about 3 percent to $29.95.
The split would divide a company with a long, storied past. It was founded in 1847 with a hand-cranked print run of 400 copies of the Chicago Tribune. The company founded the WGN broadcasting brand with a radio station in 1924 and TV station in 1948. Tribune first went public in 1983 and expanded through the purchase of newspapers and TV stations. But a debt-heavy acquisition by Chicago real estate mogul Sam Zell in 2007 caused it to file for bankruptcy protection a year later.
Tribune, which emerged from bankruptcy protection at the end of 2012, said that over the past several months its board and management have been looking at ways to ensure long-term growth and boost value for its stakeholders.
Tribune said in February that it hired a pair of investment banks to help it sell its newspapers. The move was largely at the behest of the group of lenders that took over the company as part of its reorganization.
Under the proposal announced Wednesday, the newspapers would be spun off into an independent company to be called Tribune Publishing Co.
Alan Mutter, a media consultant and former newspaper editor, said the move "indicates Tribune could not find buyers to pay the price it was hoping to get for its publishing assets."
Tribune's newspapers have been hurt by an industrywide shift that has driven more advertisers to the Internet. The downturn in print advertising was one of the factors that caused Tribune to file for Chapter 11 bankruptcy protection in 2008.
The remaining company, which would keep the Tribune Co. name, would include Tribune's local television stations; WGN radio and cable networks; its television production, digital and media services ventures; and its interests in Classified Ventures, CareerBuilder, the Food Network and real estate.
By holding onto the growing digital classifieds business and the real estate, Tribune Co. is decreasing the value of its newspaper group by at least a third, according to Ken Doctor, a newspaper industry analyst with Outsell Inc. Doctor previously valued Tribune's newspaper business between $450 million and $700 million.
Doctor said he expects Tribune will still try to sell the newspapers individually or as a group, but the spinoff will help clarify its focus on TV assets.
"They want to make sure these assets don't muddy the broadcast play and they set the clock to do that," Doctor said.
Tribune said its board will develop a detailed plan for the split over the next nine to 12 months. After the split is complete, the companies will have separate boards and management.