Koch Industries will not be buying the Tribune Company’s eight newspapers, which include the Chicago Tribune and the LA Times, The Daily Caller has learned.
Sources with knowledge of the business proceedings told The Daily Caller that Koch Industries, after conducting its due diligence, has not been interested in buying the newspapers for “a couple months.”
The company determined that purchasing the newspapers was “not economically viable” and that both parties walked away from the negotiations, they said.
Two of the Tribune Company’s digital assets in particular, CareerBuilder.com and Classified Ventures LLC., a source with knowledge of the proceedings told The Daily Caller, were discovered to be half of the company’s revenue.
“They’re basically such an important part of the revenue,” the source confirmed, “in a way that if they sold them, it goes away.”
The Wall Street Journal reported in June that due to what is dubbed a founders’ agreement, “a sale of the newspapers could invalidate long-standing arrangements under which Tribune’s papers sell local ads on behalf of the websites, boosting the papers’ digital ad revenue.”
Without the current revenue stream provided to the newspapers by CareerBuilders.com and Career Ventures LLC, the newspapers are unsustainable, the source said to The Daily Caller.
“The founders’ agreement is the problem,” said the source.
Since Peter Liguori, former Discovery Communications chief operating officer, took the helm as Tribune Company’s new CEO following its emergence from bankruptcy, he has pushed the company’s focus further towards broadcasting and cable.
The Tribune Company announced on July 1 a $2.73 billion all cash deal to buy Local TV LLC, which would add 19 stations in 16 markets to the company’s portfolio and make it the largest the nation’s largest commercial television station owner.
On July 10, Tribune Company announced that it planned to spin off the publishing business into a separate company, Tribune Publishing Company, furthering Liguori’s vision to delve further into television media.
Chicago Tribune wrote that the move by the Tribune Company, however, “likely pushes back any potential sale of the publishing assets” until some time in 2014.
Koch Industries Chairman & CEO Charles Koch had told the Wichita Eagle the previous day that the potential purchase of the newspapers was “not on the front burner” for his company but “still possible.”
Progressive activists opposed to the business and political activities of Koch Industries’ leadership — Charles Koch and Executive Vice President David Koch — heavily dreaded the potential purchase and organized protests against the business deal.
The Hartford City Council also passed a resolution on August 12 opposing what its progressive members feared as a takeover by the Kochs’ of Tribune, which owns the local Hartford Courant.
The resolution, introduced on May 28, was raised by members of the council’s Working Families Party, whose political affiliations have been traced to organizations such as defunct Association of Community Organizations for Reform Now (ACORN) and the Service Employees International Union (SEIU).
When the Tribune Company announced the spin off of the newspapers, Kochs’ critics speculated whether the move was meant to deter their ideological foes from purchasing a media property.
But a source with knowledge of the proceedings between the two companies told The Daily Caller that the decision to end the negotiations came from a recognition that the deal would be unfavorable for both parties involved.
Another source confirmed that Koch Industries is still interested in purchasing media properties. Koch Industries declined the Daily Caller’s request for comment.
Tribune Company spokesman Gary Weitman declined the Daily Caller’s request for comment, stating, “As a policy matter we do not comment on speculation about the company or its businesses.”
Correction: Peter Liguori was the former chief operating officer of Discovery Communications, not the Disney Communications as previously reported.