TVNewser FishbowlDC AgencySpy TVSpy LostRemote PRNewser SocialTimes AllFacebook 10,000 Words GalleyCat UnBeige MediaJobsDaily

$1,000,000,000

money.jpgYes, a billion dollars. That’s how much the Tribune Co. owes in back taxes from its acquisition of Times Mirror, according to a Tax Court decision yesterday. Editor & Publisher has a thumbnail backstory sketch:

The closely watched tax case revolved around a 1998 transaction between the old Times Mirror Co., which Tribune acquired in 2000, and the Dutch publisher Reed-Elsevier. The deal, in which the Matthew Bender legal textbook publishing company went from Times Mirror to Reed-Elsevier, was designed to be a tax-free event.

Times Mirror ended up with $1.38 billion when the deal was completed. It argued in Tax Court that the transaction was a “corporate restructuring.” Times Mirror, then led by Chairman and CEO Mark Willes, later structured a similar deal to dispose of a health publishing subsidiary.

In 2001, Internal Revenue Service (IRS) issued a legal opinion contending the deals were taxable sales. A hearing in Tax Court was held last December in Los Angeles.

The Tribune Co. is, of course, appealing.

What does a billion dollars mean for a company like the Tribune Co.? Well, LAT revenue last year was $1.07 billion (and people think the paper is worth somewhere north of $3 billion). So it’s as if a whole year of its biggest newspaper’s revenue was washed away. (Well, not exactly, because a lot of the liability will be covered by bonds the company issued over the summer in anticipation of an unfavorable court decision. But still, it’s a lot of money.)

Mediabistro Course

Magazine Writing

Magazine WritingStarting September 4, learn how to get your work in top publications! You'll learn how to create captivating stories editors will want and readers will love, understand which magazines are right for your stories, craft compelling pitch letters, and more! You'll leave this class with two polished articles and corresponding pitch letters. Register now!