Tribune Co. to Consider Selling Newspapers Individually

After Getting Low-Ball Offers in Its Auction

By Published on .

CHICAGO (AdAge.com) -- Unable to attract a premium price from private-equity bids due today, Tribune Co. will now consider selling its assets piecemeal. Three bids for the media conglomerate -- which publishes the Los Angeles Times and Chicago Tribune -- came in in the "low $30s," The Wall Street Journal reported on its website this afternoon.
The Tribune Co. could sell its assets piecemeal by letting deep-pocketed locals bid for individual properties within their markets, such as the 'L.A. Times' and 'Hartford Courant.'
The Tribune Co. could sell its assets piecemeal by letting deep-pocketed locals bid for individual properties within their markets, such as the 'L.A. Times' and 'Hartford Courant.'

Bids in that range value Tribune at around 9.5-times earnings, a number that seems fairly low when compared to other recent newspaper acquisitions. McClatchy Co., for example, purchased Knight-Ridder for roughly 11 times its earnings.

Downside to large markets
That discount could be a result of Tribune's holdings being concentrated in the largest and most competitive markets, which have seen greater audience fragmentation than smaller markets. Tribune is the only company to own newspapers and TV stations in New York, Chicago and Los Angeles.

Selling assets piecemeal could solve that by letting deep-pocketed locals bid for individual properties within their markets. A number of wealthy Los Angelinos -- including Ron Burkle and David Geffen -- have already expressed interest in the Times. And The Hartford Courant, Long Island's Newsday and The Baltimore Sun have also reportedly sparked local interest.

James Goss, an analyst at Barrington Research Associates, in Chicago, said Tribune will likely get better offers for individual properties. "There's no question that individual properties are generally more salable," he said. "And it gives them the opportunity to be selective about what they hang on to."

Not limited to Tribune
This phenomenon isn't limited to Tribune papers: A group of Philadelphia investors recently teamed up to buy The Philadelphia Inquirer and Philadelphia Daily News, and, in Boston, a group headed by former General Electric CEO Jack Welch and Hill Holliday ad agency founder Jack Connors have said they'd like to buy The Boston Globe.

Some analysts have argued for Tribune to keep its lucrative Chicago holdings -- including the Tribune, the Chicago Cubs baseball team, a CW network affiliate and the market's top-rated radio station -- and sell everything else.

John Miller, a VP at Ariel Capital Management, Tribune's largest outside shareholder, said he was surprised the bids came in as low as they did. "When you look at other deals, it looks awfully low," Mr. Miller said.

A Tribune spokesman declined to comment. "When the process is complete, we'll make an announcement," he said. "But not before then."

Tribune stock closed today at $32.62, down 71 cents.
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