Tribune Publishing Sinks on Suspended Dividend, Board Movesby
Publisher intends to use freed up cash for growth plans
Ferro buys 16.6 percent stake, becomes non-executive chairman
Tribune Publishing Co., owner of the Los Angeles Times and Chicago Tribune, plunged the most ever after suspending its dividend and saying entrepreneur Michael Ferro became its non-executive chairman and largest shareholder with a $44.4 million investment.
Ferro bought 5.22 million newly issued shares, the Chicago-based company said Thursday in a statement. That’s equal to a 16.6 percent stake, Tribune spokesman Matthew Hutchison said. As part of the deal, he is replacing Eddy Hartenstein, a former Los Angeles Times publisher, as non-executive chairman, though Hartenstein will retain a board seat.
Tribune suspended its quarterly payout to free up cash for possible acquisitions and digital initiatives, according to the statement. The struggling publisher, which said it ended 2015 with $41 million in cash, also reported some preliminary results for the year, saying revenue will be $1.66 billion to $1.67 billion, compared with the average of two analysts’ estimates for 1.68 billion.
Ferro, founder and chief executive officer at Merrick Ventures, is the majority owner of the Chicago Sun-Times. His Wrapports LLC, a media holding company, bought the paper in December 2011. According to the statement, he will relinquish “all operating involvement” with the Sun-Times.
Tribune Publishing shares sank as much as 30 percent to $6.28, the biggest intraday drop since it was spun off from Tribune Co. in July 2014. They fell 14 percent to $7.73 at 2:30 p.m. in New York.
The company has paid a quarterly dividend of 17.5 cents a share since 2014. It will pay its previously declared fourth-quarter dividend on Feb. 11.
It has been a tumultuous time for the publisher. In September, Tribune fired Los Angeles Times Publisher Austin Beutner after little more than a year on the job, replacing him with Timothy Ryan, an executive from the Baltimore Sun.
Last summer, Eli Broad, a Los Angeles billionaire, made an overture to buy the newspaper and the San Diego Union-Tribune, according to a person with knowledge of the matter. Broad and Beutner had previously teamed up in a bid to buy the Times.
Tribune’s newspaper unit was spun off from its TV business, now called Tribune Media Co. Last May, Tribune Publishing acquired the San Diego Union-Tribune and nine community weeklies and related digital properties.