Tribune Media has agreed to pay about $200 million to settle a tax dispute over the 2008 sale of Newsday under Sam Zell.
The settlement, reached Wednesday, covers capital gains taxes on the $650 million sale of the New York newspaper to Cablevision, which Zell hoped to avoid by structuring the deal as a leveraged partnership. The Internal Revenue Service challenged that strategy, as well as Tribune Media’s sale of the Cubs, seeking about $500 million in assessments, penalties and interest on the two transactions.
Tribune Media took a $193 million second-quarter tax charge connected to the Newsday sale, and said in a Securities and Exchange Commission filing Wednesday the settlement was “substantially consistent” with that amount. In 2013, Tribune disclosed it could owe an additional $273 million on the Newsday sale, and $225 million on the Cubs sale.
The Chicago-based company said Thursday it expects to make payments of about $102 million to federal and state tax authorities during the fourth quarter of 2016. The settlement reflected credit for tax payments made by Tribune Media through December 2015.
Next up to bat for Tribune Media is the disputed tax bill on the $845 million sale of the Cubs to the Ricketts family in 2009, which also was structured as a leveraged partnership. The company plans to challenge the IRS in tax court over any potential liabilities.
“That position hasn’t changed with regard to litigation,” Tribune Media spokesman Gary Weitman said Thursday.
A billionaire real estate investor, Zell took Tribune private in a heavily leveraged $8.2 billion deal in 2007. The company filed for bankruptcy protection the following year.
After emerging from bankruptcy, Tribune Media spun off its publishing division — including the Chicago Tribune, Los Angeles Times and other daily newspapers — in August 2014, keeping the broadcasting business and real estate portfolio.
Tribune Media owns 42 TV stations, WGN-AM radio and national cable channel WGN America. The company also retains a 5 percent stake in the Cubs.
rchannick@chicagotribune.com
Twitter @RobertChannick
An earlier version of this story did not indicate the Newsday settlement included credit for previous tax payments by Tribune Media, resulting in additional cash payments of $102 million.
