Bidders said to be lukewarm on Tribune
Investment firms appeared to have only lukewarm interest in buying Tribune Co. in its entirety as of a Friday deadline for initial offers, increasing the chances that the media company would be broken up and sold as pieces.
The company declined to release details on the preliminary, nonbinding letters of interest it received from suitors, but people familiar with the situation confirmed that they included at least two private equity firms that teamed up seven months ago in an unsuccessful attempt to acquire Knight Ridder Inc., which was instead bought by McClatchy Co.
Texas Pacific Group of Fort Worth and Thomas H. Lee Partners of Boston, which aligned with three other firms in the Knight Ridder offer, planned to be a duo in an offer for Tribune, the people said.
The firms did not disclose what they had offered. But several industry analysts say the company is worth about its current market value and in a sale would get little if any premium.
After climbing to a yearly high during trading Thursday, Tribune closed at $33.47 on Friday, down 32 cents. The company’s market value stands at just under $8 billion.
The other investment firms eyeing the company declined to say whether they formally declared their interest Friday. The potential suitors include Washington-based Carlyle Group and Boston-based Bain Capital -- both considering solo offers -- and a consortium made up of Madison Dearborn Partners of Chicago, Providence Equity Partners of Rhode Island and New York-based Apollo Management.
A partner at one of those firms said he did not expect any offers for Tribune to reach $40 a share. A person at another of the firms said Tribune would be a challenging acquisition. He stressed that interest was only marginal because the firm’s partners were having a hard time seeing how they would wring more savings or higher revenue out of Tribune.
Those people and others interviewed for this story requested anonymity, saying that their companies normally conducted such transactions in private and that they had not received permission to speak about the Tribune deal.
The muted response could mean a sale at little premium or it could force the special committee of directors reviewing offers to conduct a second round, this time soliciting bids for Tribune’s 11 daily newspapers, 25 television stations and other holdings, which include the Chicago Cubs baseball team and stakes in the online job-search service CareerBuilder and television’s Food Network.
Investment experts observing the deal doubted that an outside buyer would keep Tribune intact.
“No one will buy this and keep it whole,” said one executive at a private equity firm that is among the bidders.
“They’ll do the dirty work of selling off the pieces that the board doesn’t want to do.”
Tribune also could face substantial pressure to sell assets from its biggest shareholder, the Chandler family. The Chandler’s representatives on the Tribune board savaged the company’s management in June and demanded action to jump-start its sagging value.
The family has declined to comment. But it has not backed away from an earlier claim that the company’s value is $42 to $46 a share.
The prospect of a breakup has fueled talk in several cities about local interests buying Tribune’s papers, including the Los Angeles Times, the Baltimore Sun, the Hartford Courant and Newsday on Long Island.
Three prominent Los Angeles businessmen -- entertainment mogul David Geffen, former supermarket magnate Ron Burkle and onetime home builder Eli Broad -- have stated their interest in buying The Times.
On the East Coast, publishing baron William Dean Singleton is said to have an interest in linking Tribune papers in Connecticut and Pennsylvania to his current operations in those states. Singleton’s holdings include the Los Angeles Daily News and the Long Beach Press-Telegram.
On Friday, the Baltimore Sun reported that a local group in that city had offered to buy the newspaper. It includes the Abell Foundation, whose founders once owned the paper, and Theodore G. Venetoulis, a former politician and publishing executive.
Like businesspeople in the other cities, Venetoulis said the Baltimore group understood the newspaper’s public-service mission and would be willing to accept lower profit than would public shareholders.
Newspaper experts noted that private owners were not immune, however, to economic pressures. This month a local group that bought Knight Ridder’s Philadelphia Inquirer and Philadelphia Daily News for $515 million announced massive reductions in advertising revenue and warned that it would have to cut staff.
That and threatened pension reductions led workers at the two papers this week to authorize a strike.
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