CHICAGO – Tribune Publishing, the troubled owner of the Chicago Tribune and other newspapers around the country, said it received a $44.4 million cash infusion from a Chicago investor who has a stake in its rival newspaper the Chicago Sun-Times.
The company also suspended its quarterly dividend Thursday to free up more money in the aftermath of a difficult year. Revenue has slumped as readers and advertisers continue to migrate online and the company has trimmed staff to cut costs. Its stock has plummeted 68 per cent in the last year.
Tribune said Thursday that it plans to use the cash for digital initiatives and for possible acquisitions. The company has expressed interest in bidding for some assets of Freedom Communications, the bankrupt publisher of the Orange County Register and several other California newspapers and magazines.
The $44.4 million comes from Merrick Media, which is controlled by Michael W. Ferro Jr. The 49-year-old was added to Tribune’s board as a non-executive chairman. Through a company called Wrapports, Ferro has a stake in Sun-Times Media Holdings. Because of the Tribune investment, Ferro has stepped down from the board of Wrapports. Tribune said Ferro will keep his stake in Wrapports, but he will not attended meetings related to Sun-Times Media Holdings.
Merrick will receive more than 5.2 million in Tribune shares in exchange for the money. That will give Merrick a nearly 17 per cent stake in Tribune, making it one of Tribune’s largest shareholders. Merrick paid $8.50 for each Tribune share, 50 cents below the stock’s closing price of $9 on Wednesday.
Shares of Tribune Publishing Co. fell $2.13, or 24 per cent, to $6.87 in afternoon trading Thursday.
Chicago-based Tribune Publishing owns 11 daily newspapers, including the Los Angeles Times and the Orlando Sentinel. It spun off from media company Tribune Co. about two years ago.