Moody's says Tribune Media's Plan to Explore Strategic Alternatives Needs to Balance Concerns of Shareholders and Creditors

현Moody's Investors Service said that Tribune Media announced during its FY2015 earnings call earlier this week that it retained advisors to explore strategic and financial alternatives to enhance shareholder value. Alternatives may include the sale or separation of select lines of businesses or assets, strategic partnerships, programming alliances, or capital return initiatives. There is no timetable for completion of its review of alternatives, and the company continues to work on monetizing its real estate portfolio, including the Tribune Tower in Chicago and its Los Angeles Times Square property. In addition, the company announced its Board approved a new $400 million stock repurchase program.

Even with the spin-off of publishing operations in 2014, Tribune Media has maintained diverse operations including 42 owned or operated television broadcast stations, its cable network WGN America, digital assets, a real estate portfolio, and equity investments in TV Food Network (31%) and CareerBuilder (32%). "We believe each of these holdings could be divested with minimal negative impact on remaining operations; however, the company's debt ratings and Stable outlook assume credit metrics, including leverage and cash flow ratios, will remain within its Ba3 Corporate Family Rating which may require debt prepayment as assets are divested," stated Carl Salas, Moody's Sr Credit Officer.

As structured, there is the potential for the company to divest real estate holdings and equity investments with limited debt repayment. Furthermore, there would be downward pressure on debt ratings if cash distributions from equity investments, including TV Food Network and CareerBuilder, were eliminated as a result of an asset sale with no debt reduction. "We are following developments closely to determine whether future potential actions of Tribune Media could negatively or positively affect the company's Ba3 Corporate Family Rating or Stable outlook," added Salas.

Tribune Media Company, headquartered in Chicago, IL, benefits from television assets including 42 owned or operated broadcast stations in 33 markets reaching 44% of U.S. households and the WGN America network, whose reach is approaching 80 million households. Tribune Media holds minority equity interests in several media enterprises including TV Food Network which contribute cash distributions. The company emerged from Chapter 11 bankruptcy protection at the end of 2012 and certain creditors prior to Chapter 11 filing are now shareholders with funds of Oaktree Capital Management (approximately 15%), Angelo, Gordon & Co. LP (7%); and JPMorgan Chase (7%) being three of the five largest shareholders and with designees on the board of directors. Reported revenue totaled $2.0 billion for FY2015.