A lot of companies are interested in Tribune Media Co. -- just not in all of it.
The Chicago-based company said last week that it has hired Guggenheim Securities and Moelis & Co., to explore strategic options, including selling all of Tribune or specific assets. While Tribune would prefer a single buyer for tax purposes, the company is more likely to sell itself in pieces, according to people familiar with the matter, who asked not to be named because the discussions are private.
Meredith Corp. is interested in buying some of Tribune's broadcast TV stations, according to two of the people, and would be particularly keen on some of the 19 stations Tribune added when it acquired Local TV in 2013, one of the people said. Tribune also plans to speak with private equity firms interested in expanding their media portfolios, one of the people said.
The sales process is just beginning, no decisions have been made, and there's no guarantee Tribune will sell any stations, the people said.
"We're going on a process using, I would say, truly best-in-class outside advisers to explore every strategic and financial option with just one simple clear goal: unlock the value of our stock," Tribune Chief Executive Peter Liguori said on a Feb. 29 conference call. "So it includes each and every option."
Spokesmen for Tribune and Meredith declined to comment. Tribune has a market value of about $3.6 billion and an enterprise value of about $7 billion.
Tribune's stations reach 44% of the country, topping the FCC's 39% cap. The FCC gave Tribune an exemption when it acquired Local TV, allowing the company to surpass the cap. The high concentration means Tribune can't sell itself to a company that already owns stations, without the buyer making significant divestitures.
Tribune may also decide that selling only some stations doesn't make sense when scale is so important to broadcasters, the people said. The more stations a company owns, the more leverage it has with pay-TV negotiators over carriage fees.
Tribune also owns a 31% stake in the Food Network. Scripps Networks Interactive would be the most logical buyer, according to Amy Yong, an analyst with Macquarie Capital USA Inc. Tribune's stake in the Food Network is worth about $1 billion, according to John Janedis, an analyst at Jefferies LLC.
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"We've built some of the strongest brands in television, which in turn builds value for our shareholders -- Food Network is one of those key brands, and we have always maintained that we would be interested in acquiring Tribune's minority stake at the right price," said Dylan Jones, chief communications officer at Scripps. "We recently completed the purchase of Cox's stake in Travel Channel at an appropriate valuation, and we'll continue to monitor the situation at Tribune."
Tribune is also focused on selling its Gracenote entertainment data business, which could be worth about $400 million, according to Jefferies's Mr. Janedis.
Among Tribune's other assets are WGN America, which has a distribution of about 80 million homes, and a stake in CareerBuilder, which is worth about $300 million, Mr. Janedis wrote in a note to clients. Tegna Inc., which owns the rest of CareerBuilder, is the obvious buyer for Tribune's stake, two of the people said. "We really don't know," if there's a buyer for WGN America, analyst Marci Ryvicker wrote in a note to clients.
Tribune announced in October it's exploring selling its real estate assets, which include Tribune Tower in Chicago and Times Mirror Square in Los Angeles.
-- Bloomberg News