Why Is Peter Liguori Exiting Tribune Media?


By Adam R Jacobson

Peter Liguori, a television industry veteran who took the reins as President/CEO of Tribune Media Co. in January 2013, will be stepping down from his role immediately following the release of the company’s Q4 2016 and full-year earnings, set for an as-yet-unconfirmed date during the first week of March.

Peter Liguori
Peter Liguori

Liguori will also tender his resignation from Tribune Media’s board of directors at that time, the company said in an early morning announcement on Wednesday (1/25)

The Tribune Media board will begin a search for Liguori’s successor, using executive search firm Korn Ferry to identify the next chief executive for the Chicago-based owner of 42 owned-or-operated local television stations, nationally distributed pay-TV network WGN America, Tribune Studios, nationally distributed digital multicast networks Antenna TV and THIS TV, and Talk WGN-AM 720 in Chicago.

One of the company’s current directors, Peter M. Kern, will serve as the interim chief executive officer during the search process. Kern was appointed to Tribune Media’s board in October 2016 and currently serves as Chairman of the Board of Hemisphere Media Group and Managing Partner of media-focused private equity firm InterMedia Partners. Kern also serves on the board of Expedia Inc., and a number of private companies.

It’s been an interesting ride for Liguori, who joined Tribune Co. five months before it decided to split its broadcast media and print media into two separate companies. This put Liguori in charge of the newly formed Tribune Media Co., while newspapers including the Los Angeles Times and flagship Chicago Tribune were placed in a company now called tronc, inc. As The New York Times reported, the split was also a way for Tribune to avoid “the tax consequences of a sale in the near term.”

Ligouri was lured to Tribune to not only lead a newly split Tribune Media, but to also make it more profitable than the publishing side of Tribune Co. In 2012, the publishing division saw $2 billion in revenue. By comparison, the television division saw $1.14 billion in revenue.

Boosting the launch of Tribune Media was the pre-split announcement that it would purchase 19 television stations in 16 markets from Local TV Holdings in a deal valued at $2.725 billion. It was a statement of renewed vigor for Tribune Co., which started 2013 by abandoning Chapter 11 bankruptcy protection and the arrival of Liguori from Discovery Communications, where he served as COO. Before joining Discovery in 2009, Liguori served as Chairman of Fox Broadcasting Company’s entertainment division. From 1998-2005, he was President/CEO of FX Networks, overseeing business and programming operations for Fox’s FX and Fox Movie Channel. He’s also worked at Home Box Office (HBO) and in the advertising industry at both Ogilvy & Mather and Saatchi & Saatchi. Additionally, Liguori served on the Board of Directors of Yahoo! from April 2012 to June 2014.

‘Now Is The Ideal Time’

Commenting on his decision to exit Tribune Media after four years at the helm, Liguori said in a statement, “Following the successful completion of several financial, strategic and creative initiatives, culminating in the pending sale of Gracenote, Tribune Media is well advanced in its transformation to a more focused broadcast and cable networks company. I believe that now is the ideal time for a new leader to steer today’s Tribune. As curious and excited as I am about pursuing new opportunities, I am equally grateful for the achievements, commitment and integrity of this company’s management team and its dedicated employees.”

However, it seems clear that Tribune Media seeks to make the change at the top.

In prepared comments, Bruce Karsh, chairman of Tribune Media’s board of directors, said, “We greatly appreciate Peter’s leadership in the transformation of Tribune Media over the last four years, including the efforts to monetize non-core assets and simplify the company. It became clear to Peter and the board that in this last year of his contract it was time to find a new CEO to run the more broadcast-centric company.”

Marci Ryvicker, a noted Wall Street financial analyst who serves as Managing Director of Wells Fargo Securities, believes Tribune pushed for Liguori’s exit. In a note distributed Wednesday (1/25), she said, “While Mr. Liguori has been known for his programming expertise with FX and Discovery, the stock has been under a lot of pressure given the troubles at WGN America. Based on the tone of the release, we think the Board will look to bring in a new CEO with extensive experience in the broadcast industry.”

In February 201itunespics-0556, Tribune Media initiated a process to review its strategic and financial alternatives. This resulted in the sale of certain real estate assets — following through on strategic options first made public in June 2008. In September 2016, the transactions closed. This
saw the iconic 36-story Tribune Tower built for the Chicago Tribune more than 90 years ago become the property of Los Angeles-based CIM Group, acquiring it for $240 million.

The Tribune Co. real estate assets were assigned to Tribune Media, rather than tronc., inc., when prepped for sale.

Then, in late December 2016, the data and technology “that underpins the programming guides and personalized user experience” for top video, music, audio and sports content” was acquired by the company responsible for the Portable People Meter (PPM) and the March 2017 rollout of Total Content Ratings.

This saw Nielsen agreeing to purchase Gracenote, the provider of media and entertainment metadata, from Tribune Media Co. for $560 million. The deal is still awaiting its closing.

As Tribune Media sees it, Liguori “led the restructuring and transformation of Tribune Media” during his four years at the helm. But, it was a bumpy ride. Tribune closed out 2013, its first full year since emerging from bankruptcy, with a double-digit revenue decline during Q4. Q4 revenue was $773 million, down 11% from the previous year. FY revenue was $2.9 billion, a nearly 8% decline from 2012.  The company cited lower ad revenue and one less week in the fiscal year as contributing to the decline.

But, by Q3 2014, Liguori had turned things around, making difficult decisions including the loss in November 2013 of 240 jobs. On a pro forma basis, Tribune Media’s Q3 2014 TV revenue was up 7% to $417.2 million, boosted by a 70% increase in retransmission income, to $58.1 million. Advertising was statistically flat, however, at $321.1 million.

Mixed results were then seen in Q1 2015, with revenue up for Tribune Media despite a loss in television advertising revenue. A turnaround was seen in Q3 2015: Core advertising (comprised of local and national advertising revenues, excluding political revenues) grew at a rate of 4.3% for the third quarter despite 40 fewer NFL games due to the season starting one week later, as compared to Q3 2014.

By August 2016, the tide turned again for Tribune Media, as Tribune’s Q2 and 1H results were plagued by its decision to resolve a dispute with the Internal Revenue Service related to its Newsday sale, resulting in a $209.9 million income tax expense that ballooned the company’s net loss from $3.3 million (4 cents per share) to $161.6 million ($1.76 per share).

At the same time, an ongoing dispute with Dish Network—an “important partner,” Liguori said at the time, resulted in a $1 million net revenue loss during Q2 2016. But, he commented, “Our impact on net revenue without their distribution for a small part of the quarter was small.”

Then came the “Trump effect,” as Tribune Media saw its diluted earnings per share grow from 28 cents to 48 cents in Q3 2016, based on a net income rise from $27.9 million to $145.8 million. However, the consensus estimate of analysts was 51 cents. At the same time, Q3 revenue growth from $488.6 million to $518.1 million missed the analyst consensus estimate of $547.9 million.

Advertising grew in the quarter, from $319.5 million to $329.3 million. Also up were retransmission consent fees, from $69.9 million to $78.7 million; and carriage fees, from $19.5 million to $29 million. But operating profit for Television and Entertainment fell from $64.1 million to $46.2 million. One key reason: Broadcast rights payments, which ballooned from $108.5 million to $123.6 million.

Regarding the “troubles at WGN America” noted by Ryvicker, Television and Entertainment operating profit for Q3 2016 was $46.2 million, compared to $64.1 million in the year-ago period. That’s a 28% decrease and was primarily due to higher programming expenses resulting from a $37 million program impairment charge for the syndicated program Elementary at WGN America. There was also higher severance expense related to “significant position eliminations” as part of ongoing cost reduction initiatives, partially offset by an increase in revenue.