The Tribune Co. announcement follows hard on the heels of the selloff of a dozen newspapers by Knight Ridder, which was the nation's second-largest newspaper chain (after Gannett).
“The restructuring of these partnerships frees the company to move quickly to pursue strategic alternatives to further enhance shareholder value,” said Tribune Co. CEO Dennis FitzSimons. “Under these terms, all shareholders benefit.”
The firm's newspapers have been hit hard by competition from the internet, as the New York Times reports:
The media business has been in turmoil as readers, viewers and advertisers have shifted their habits and turned to the Internet. Newspapers in particular are facing a slump in circulation and little growth in advertising revenues while at the same time facing rising costs.The competition has depressed the media giant's stock price, and the only thing that has raised it, interestingly, has been the increasing recent rumors that Tribune Co. would divest itself of some of its holdings:
Tribune shares, like those of other public media companies, have weakened significantly over the last few years, falling 36 percent since 2003, when Mr. FitzSimons took over. But the stock has risen recently as speculation has increased that it might sell some assets, and it shot up 4.4 percent yesterday.As reported earlier on this site, the corporatization and business consolidation of the U.S. media, which began in the 1960s and caused much anguish among leftist critics and media analysts, was in fact a positive thing that actually increased competition in American mass media. And as I noted in in the post cited at the head of this paragraph, it was always very likely that the consolidation would reverse once it became necessary in order for media firms to make themselves leaner and more effective at responding to competition. This, too, will increase competition and will ultimately be a good thing, as I suggested earlier.
The current de-consolidation, then, is a response to competition and will itself create greater competition.
That is how markets work: brilliantly.
From Karnick on Culture.