Chicago loses in Tribune Media sale to Sinclair – Marketing/media News

on May9

8 May 2017 | 6:36 pm

Sinclair Broadcast Group, which announced a $3.9 billion purchase of Tribune Media today, doesn’t need two headquarters so the one acquired in Chicago will have to go.

As Sinclair CEO Chris Ripley told analysts today, nothing changes for his headquarters, in Hunt Valley, Md., or his management or board so everything probably changes at Tribune Media’s.

For Tribune Media, born and bred in Chicago from its start as the Chicago Tribune in 1847 to its launch of WGN Radio in 1924 and the addition of WGN-TV in 1948, the broadcaster’s longtime connection to the city soon will come to an end. That means corporate functions, like accounting and marketing, and top executives, including Broadcast President Larry Wert, will likely shift to suburban Baltimore or leave.

“Chicago will probably lose quite a bit in this,” says Hamed Khorsand, a Los Angeles media analyst with BWS Financial. “Sinclair is not tied to Chicago as Tribune was. There is little to no nostalgia when it comes to brands or properties so everything they would consider non-core is probably going to get sold.”

That could very well include WGN Radio. Because Sinclair is mainly a TV broadcaster, with just three radio stations outside Chicago, it’s not critical to Sinclair’s main strategy of owning TV stations across the country, now including the top three markets. While it’s an advantage in winning antitrust approval that Sinclair doesn’t have other TV stations in Chicago, it’s a competitive disadvantage to operate just one radio station in the city when rivals have clusters of stations.

The owner of the Chicago Tribune, now called Tronc, split with its broadcast operations in 2014.

The broadcast industry has been consolidating in recent years as TV station outlets grapple with the same pressures from digital alternatives that have challenged their print media counterparts. TV viewership declined 5 percent in 2015 from the prior year, continuing a downward trend since 2007, Pew Research Center reported last year. The drop is happening as viewers opt instead to watch streamed content or other digital alternatives.

In addition to the $3.9 million price tag, Sinclair will be absorbing $2.7 billion in Tribune Media debt, Sinclair said in a statement.

Sinclair’s cost-cutting also is likely to be felt at WGN America, the cable network for which former Tribune Media CEO Peter Liguori spent heavily on original programming to create shows like the witch drama “Salem” and the Civil War-era “Underground” series. Ripley told analysts that TV ratings for those shows don’t justify the spending and he plans to lower expense there to return the business, mainly run out of the Los Angeles area, to profitability.

WGN America “will no longer be producing many original programs, if any,” says Standard & Poor’s analyst Jeanne Shoesmith, who is based in Chicago. “I’m not sure if that will impact any positions or facilities in Chicago, but there will be some positions eliminated as a result of the shift away from producing original programs.”

Sinclair plans to continue the effort by Tribune Media CEO Peter Kern, and Liguori before him, to auction off Tribune Media real estate all over the country, said Ripley, who estimated that $650 million to $700 million in property remains to be sold.

In Chicago, Tribune Tower on Michigan Avenue and the WGN-TV studio campus on the North Side already have been sold, and Tribune Media has been mulling plans for riverfront land near River North built for Chicago Tribune printing and distribution facilities.

While WGN employees have remained put so far, the TV and radio businesses might be tempted to explore alternatives, depending on future lease rates for their buildings, though moving broadcast equipment is an expensive proposition. Tribune Media last year signed a lease to move its headquarters to the office tower at 303 E. Wacker Drive, but that commitment may be up in the air as a result of today’s transaction. A Sinclair spokeswoman didn’t immediately respond to requests for comment.

Ripley also said the company will continue efforts to “monetize” Tribune Media’s stake in Chicago-based CareerBuilder.

Tribune Media isn’t the only media headquarters pulling up decades-old stakes in Chicago. Ebony Media, the African-American magazine company founded in 1942, announced last week that it’s shifting its base to Los Angeles.

So far, Chicago is on the losing end of the media industry’s 21st-century transformation and consolidation.



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