Owners Come and Go, But Tribune Stations Stay Local

Amid a crazy year, Tribune Broadcasting's TV stations somehow managed to do their jobs.

Like it or not, when the year started, parent Tribune Media seemed destined to be acquired by Sinclair Broadcast Group, whose size and conservative political leanings made it a controversial new owner for a company whose stations proclaim themselves as proudly local.

But in August, the $6 billion deal blew up. Both sides terminated the deal and fired off lawsuits accusing the other of acting in bad faith.

Then last week, Tribune Media agreed to be acquired by Nexstar Media Group for $4.1 billion in cash, or $6.4 billion including the assumption of debt.

Through it all, the Tribune stations collected record amounts of political advertising dollars and ran a growing amount of news programming.

Analysts said Tribune's financial results exceeded forecasts in the third quarter, the first period following the collapse of the Sinclair deal.

Tribune stepped back into the public market spotlight as an independent company at a good time political revenues are brimming to new levels; the retrans outlook for broadcast assets remains robust; even core advertiser results are trending better than expected, Deutsche Bank analyst Clay Griffin wrote after the company reported strong third-quarter earnings. All the while, Tribune's management team continues to execute on driving the core business forward.

But it was obvious the company might not be independent for long.

Once for sale, always for sale, analyst Craig Huber of Huber Research Partners observed in a research note last month.

We fully expect Tribune will eventually be sold in whole or in pieces, Huber said. Just because Sinclair could not get a deal through FCC/DOJ (which was Sinclair's own fault due to an aggressive and ill-advised divestiture plan), does not mean another strategic player, etc., could not.

Ignoring the Turmoil

Tribune executives said station staffers managed to largely ignore the corporate turmoil.

Larry Wert, president of broadcast media, Tribune

Hopefully, what's recognized is that through it all, we've assembled a group and a culture and portfolio that has been that's been very productive, Tribune president of broadcast media Larry Wert said. We're interesting because we thought we were going to be part of a different company by the middle of August and then the cheese moved.

Perry Sook, chairman and CEO of Nexstar, noticed.

I would say that the Tribune stations have performed better than our expectations in the first look that we took, Sook said during a Dec. 3 call with analysts after the Tribune deal was announced.

Nexstar made an offer for Tribune two years ago, but was outbid by Sinclair. This time, it made a bigger offer, which was accepted.

The company is just in a much better position now, Sook said. The management team has done a great job of managing through an extended period of being in limbo, but the results have certainly been there and we think that's a great foundation to build on.

In the last five years, Tribune's stations have expanded their news hours by 300 per week, or about 34%. Altogether, the stations were on track to produce about 90,000 hours of news this year.

Tribune says its on-air and online audiences reach more than 100 million each month.

The company's stations produce news in 27 markets, and in 21 of those, Tribune says its stations are No. 1 or No. 2 among adults 25 to 54, citing July figures.

In its home market of Chicago, Tribune says WGN's morning news has been No. 1 in the 25-54 demo since 2010 and is the nation's top-rated independent station after dropping its affiliation with The CW. The station also underwent a bit of drama as Jennifer Lyons, who was B&C's News Director of the Year in 2017, left the station in August to join a nonprofit Catholic fundraising organization, only to return to the station in October. The morning news on Tribune's KTLA Los Angeles has also been No. 1 in the 25-54 demo since 2010, the station group says.

Waking Up Strong

Tribune stations are particularly strong in the morning, when their early newscasts frequently draw more viewers than the national shows on their Big Three network-affiliate rivals. In addition to Chicago and L.A., Tribune stations have top-rated morning newscasts in Cleveland, St. Louis, Milwaukee, Indianapolis and Kansas City, among the top 20 markets.

Tribune is also delivering news digitally across 50 websites, 120 apps and 75 channels of live video reaching 50 million Americans each month. In its local markets, Tribune websites are No. 1 or No. 2 among broadcasters in 23 of the 28 markets tracked by comScore.

To be sure, there were a few corporate hiccups. Executive payoffs based on the Sinclair merger were foregone and a number of layoffs were implemented. Some business planning was ignored and retransmission negotiations with distributors representing 25% of Tribune's footprint thought to be Sinclair's problem had to be restarted. The company recently reached retransmission deals with Altice USA and Verizon Communications. An agreement with Charter Communications expires at the end of the year.

I think we had a bit of a reset, Wert said. The conditions of closing for 15 months had some consent rules that we had to navigate. So when the deal was terminated, we were able to refocus.

But because Tribune gives its stations a fair amount of independence, they were isolated to some degree from the corporate issues.

We've established a cadence of culture and accountability that works, Wert said. We demand respect to go both ways. You have to earn this over time, but we think that the stations see the corporate leadership team as a valuable partnership rather than a big brother watching over them.

Tribune's roller coaste

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