Cablevision wins bid for Newsday

E&P reports “Tribune will receive $612 million in cash, with its 3% equity stake in the partnership valued at $20 million.”

The deal gives cable television operator Cablevision the ability to combine marketing forces with a daily that has a virtual monopoly in affluent Long Island -- and it gives Tribune a timely infusion of cash as it faces a big payment on the $8.2 billion in debt it took on to go private last December.

Cablevision owns the NBA’s New York Knicks, NHL’s New York Rangers and Madison Square Garden and the purchase of Newsday marks it's “first foray” into newspaper ownership.

The deal brings the newspaper back to local ownership.

"We admire Newsday's strong editorial voice and reputation for quality as well as its leadership in print and online journalism," Cablevision Chairman Charles Dolan [pictured] said in a statement. "We are committed to maintaining Newsday's journalistic integrity and important position in the marketplace," Dolan said.

Here's a few numbers from Bloomberg :

Newsday had a circulation of 379,613 in the six months through March, according to the Audit Bureau of Circulations. That's a 4.7 percent drop from a year earlier. The newspaper had $80 million in earnings before interest, taxes, depreciation and amortization last year, a person familiar with the sale talks said last month.

Read More......

Murdoch’s out

So much for closing a deal with the “man of his word.” News Corp withdrew it’s $580M bid for Tribune Saturday morning. Murdoch indicated last week that he would not raise his price following the $650M bid offered by Cablevision. “It became uneconomical for us to continue,” said Teri Everett of Murdoch's News Corp.  

Zell needs a deal quickly. Revenues continue to decline as newspaper ad sales and circulation slide. With $1B in debt payments coming due this year, the Cablevision offer must certainly be more attractive, not just because its richer but because it won't face as many federal challenges as a News Corp. deal.

"I really think that Tribune is very focused on making sure that they work with someone who can get the deal closed," said Mike Simonton, a bond analyst from Chicago-based Fitch Ratings. "The regulatory and legislative uncertainty around cross ownership could have been playing a role in Tribune's thinking in terms of who to work with."

Read More......

‘Zell owns a valuable thing’

So writes a “loyal Los Angeles Times peon” who launched a new LA blog, Tell Zell What You Really Think, to “explain what he has — from someone who desperately, urgently believes in journalism, nut grafs and all sorts of other good stuff.” On Randy Michael's promotion:

All signs point to Randy taking over. Whatever thin hopes there were for Bill Pate, Zell's BFF from an Oklahoma newspaper family, are vanishing. The radio guys are in charge.

What's that mean? Even less of a voice for the LA Times and other individual newspapers. This whole "petri dish" idea where individual papers seek their own solutions seems less likely with the publishers weakened. The Clear Channel Crew chip away.

Sam thinks Brazil is the new China. Lee thinks newspapers are the new Tears. And Randy? ...

The public (and maybe some frustrated LAT staffers?) are invited to chime in.

(via LAObserved)

Read More......

Murdoch: ‘I trust Zell absolutely’

Confident Zell is “a man of his word,” Murdoch expects to close his deal to buy Newsday in about a week. The deal is in a "pretty advanced stage," he said. He told anaylsts today that he doesn't think Cablevision will prevail in it's $650 million bid to take Newsday off Tribune's hands.

“We see Newsday continuing to be a very important local newspaper covering two of the greatest counties in America and wealthiest counties in America and the Post covering basically the City of New York, a paper with a very different character,” Murdoch said. “We're not putting them to be one newspaper. But there are great savings in printing and distribution and normal back office (functions). There's a lot we can do together and we'll pursue that. We're very optimistic for both papers. We're hoping to wrap it up within the next week and I dont mean the end of next week, I mean within the next seven days. It takes two to agree, but we're at a pretty advanced stage.”

The unions that represent workers at the New York Post and Newsday will be ready to help him with plans for a “super printing plant”.

Read More......

Cablevision ups the ante for Newsday by $70M *

The bidding war is on. Cablevision placed a $650 million bid for the Long Island-based Tribune paper and its subsidiaries. Murdoch and Zuckerman now have the opportunity to reaccess their own offers. Though reports say Zell favors Murdoch, timing and terms are important to any deal.

Cablevision's bid would just about cover a payment due Dec. 4.

Guess who's advising Cablevision on the deal: Former Tribune Co. Chairman and Chief Executive Dennis FitzSimons, with current Tribune management's blessing.

* Is Murdoch out? According to a "person familiar with the matter", Murdoch won't raise his offer. AP

Read More......

Zuckerman matches Murdoch's $580M bid

The owners of rival NYC papers The New York Post and NY Daily News appear to be headed for a bidding war for Newsday even as the News Corp/Tribune deal is reported to be near completion. According to this AP story, Mortimer Zuckerman submitted his offer late Friday.

The Post and Daily News circulate mainly in the New York City area, while Newsday is read mostly in neighboring Long Island. That would offer either bidder the potential of selling advertisers a broad reach of readers in a single ad buy.

It is widely thought that any News Corp. deal would be met with scrutiny by regulators and consumer groups concerned that Murdoch's company would be getting too much control over the New York media market, where News Corp. also owns two local television stations.

It doesn't matter which of the tycoons wins Zell's nod, both face DOJ antitrust reviews. But Zuckerman thinks he can argue that his bid "is more attractive because it does not have the potential to fall into regulatory limbo."

Faced with $1B in debt service costs this year, Tribune is looking for cash. Fast. In a quick deal (21 days) the company closed Tuesday on a $30M sale of the buildings that are home to the Stamford Advocate and Greenwich Times, papers Tribune sold last November.

Timing – if not terms – may favor Zuckerman.

Read More......

Smoke? Use your best judgement

You should quit, of course. But if you can't — or won't — at least the new Tribune has determined that the old Tribune's policy of charging you an additional $100 a month for health insurance is "inconsistent" with the new culture it's developing. From today's Tribune memo posted at Reuters Blogs:

While well-intentioned, we think the tobacco-use fee implemented by the previous management team is inconsistent with the new culture we’re developing-we’d rather you use your own judgment when it comes to tobacco use, not impose ours upon you.
[snip]
If you’re still being charged the fee, it will stop and Tribune will reimburse you 100 percent for the fees you have paid. This reimbursement will occur in late May.

No change on the spousal medical fee.

Read More......

An agreement in principle

Reports are that Newsday will be become a "joint venture" with the New York Post. Terms aren't yet final of the complex deal that will give Murdoch a majority ownership of Tribune-owned Newsday and Zell the smaller stake and about $560 million in cash. From the Chicago Tribune:

One source said there was only "clean-up work" remaining and expected an official announcement soon. Another said it could be weeks before a contract is signed and was concerned about requisite regulatory approval, pointing out: "It's one thing for Rupert and Sam to work out an agreement. It's still up to the battery of lawyers to work out the finer points."

Other than the price, the media moguls have reportedly come to an informal agreement on structure and governance. More at WSJ

Newsday's union members were speculating about sale a couple of months ago when unionized workers at the New York Post alerted them to a possible deal.

Dennis Grabhorn, president of Local 406, which represents many Newsday employees, said members have been discussing several possible configurations under which the Post could partner with Newsday, which already distributes the Post on its trucks.
[snip]
"I'll take any of the three" bidders named in Friday's news reports," said Grabhorn, but "the only one that is a real newspaper person is Rupert Murdoch."

Who would have ever thought newspaper workers would look to Murdoch as their top choice for employer?

Read More......

'Breath-of-fresh-air' Zell forced to consider sale of assets

The company's solvency is threatened as a result of advertising declines. In the conference call with today with bankers and journalists, Zell said the "significant erosion of revenue" has forced the company "to consider the divestiture of some of our assets."

So now that Tribune has divested itself of people assets through a long series of buyouts (and rumors are circulating that layoffs may be on the horizon even as more executive assets are being hired) properties are next: Newsday could be let go in a non-cash asset swap deal that could save hundreds of millions in capital gains taxes.

Jeff Bercovici at Portfolio.com reports "Zell says his underlings love his attitude".

"In the 3,000 emails I've received, all of which I read all of which I answered, perhaps the most common phrase in those emails is, quote, a breath of fresh air," he said. "We are changing the culture, we are changing the environment, and we are changing everyone's goals."

Read More......

Is Geffen still in the picture?

Nikke Finke at Deadline Hollywood has a source that says Geffen and Zell are “in serious discussions” regarding a sale of the Los Angeles Times. “It's all very hush-hush,” Finke writes on her blog, “but my source tells me: ‘Cash flow is not being met for the bankers, revenue is in freefall, and the potential liability on the Combs story is huge. Sam feels he bought a bill of goods. Geffen is back in the mix and he's going to get it for a deep discount. They're in serious discussions.’ ”

Could be Geffen is following up on last April's dinner with Zell.

Read More......

Trib-ulations

Last year when Zell bought Tribune he said he didn't buy the company "to figure out what to get rid of." But things have gone from bad to worse in our industry since the completed Zell Deal tied up your retirement funds without asking you.

The company struggles under $12.8 billion in debt, faces risk of credit default and according to today's NYT story, analysts say Zell needs to get rid of "both the Cubs and another major asset like Newsday, and relatively soon, to remain solvent."

Last year, the company had earnings (before interest, tax, depreciation and amortization) of about $1.2 billion. But 2008 is expected to be more difficult, and the company’s bond covenants require it to have earnings around $1.1 billion or risk being declared in default — even if it has the cash to make its interest payments.

Tribune’s credit rating has slipped several notches below investment grade, and its bonds are trading far below their face value, signaling that the market sees a high risk of default. The company’s long-term, unsecured debt can be bought for less than 50 cents on the dollar.

The company has scheduled a conference call with bankers on April 17 to discuss Tribune's finances. You should be on that call, too. It's your company, your money and your retirement fund at risk.

Read More......

Parting shots

Some use their farewell emails to tell Zell things they didn't tell him on "Talk to Sam" – maybe because they have more class than he? At LAObserved:

... Mr. Zell, please don't confuse arrogance with a commitment to something grander than the real estate in which we're housed or to the dollars in our ESOP. You want people to "Talk to Sam" but not to "Talkback to Sam." Perhaps that's a closer definition of arrogance.

Politics desk researcher Nona Yates nailed it:

The value in "this product" is produced right here, in the newsroom. It's the reporters, editors, photographers, researchers, librarians, artists and all the others who bring value to this paper and make it one of the best in the country. And that's in spite of the turmoil foisted upon us for the last several years. It's not the flash, not the investment bankers, or wall street or some yahoo sitting in a corporate office. People buy and read this newspaper for the news, the content that is created and distributed each and every day in whatever medium. Anyone who thinks otherwise is an idiot and screw 'em."

Amen.

Read More......

Forget silly pep talks – how about ESOP info?

Despite the recent LAT reporting controversey, former Times city editor Bill Boyarsky blogging at LAObserved defends an LAT staff he thinks is "incredibly dedicated not only for slogging along but for doing some fine work for a paper that once seemed indestructible but now looks like a house of cards." Referring to Zell's own claim to be Viagra the 126-year-old LAT needs, Boyarsky writes:

I don't know about Sam, but the Times doesn't need Viagra. It needs journalists who can go to work each day without worrying about looking for a new job or whether they'll wind up with any money in the Employee Stock Ownership Program that Zell used to buy Tribune Co.

[snip]

Instead of silly pep talks, Sam ought to fire off some e-mails providing transparency on the ESOP deal.

Fat chance. The Zell Deal uses their money and gambles with their futures, but most employees didn't have a choice and don't have a voice in the ESOP. With $10 billion in debt hanging over Tribune employee heads, is it any wonder some Newsday staffers hope Murdoch takes over their paper?

Read More......

Murdoch wants Newsday * **

Is a bid for the Long Island paper in play? Will the two media barons make a deal?

Crain's NY has this: "Mr. Murdoch has long had an interest in Newsday. A year ago, around the time that Tribune was exploring a sale of the entire company, he tried to establish a joint operating agreement between the Tribune paper and News Corp.’s New York Post. He told analysts and others that the agreement would create “a very, very powerful combination for advertisers” and turn the money-losing Post into a viable business “in five minutes.”

*Update: Insiders say Murdoch has competition for the buy: media mogul Mort Zuckerman (Daily News) and James L. Dolan (Cablevision). No word on the price, but analysts say Newsday could be worth $350-$400 million. NYT

** Representatives from Rupert Murdoch's New York Post discussed a possible acquisition of Newsday from the debt-laden Tribune Co. as early as late February or early March, sources said Friday. Newsday

Read More......

$79M 4Q loss

The full 2007 details are in this Tribune report in which Zell said in part, "In addition, we have begun a strategic review of certain Tribune assets to determine whether capital can be more effectively redeployed into our core operations or toward reducing our outstanding leverage."

Selling assets is part of Zell's strategy to turn the highly-leveraged company around: The old Tribune sold the Stamford Advocate and the Greenwich Times last November, but the offices and production plants weren't part of the deal. They're on the block now. Price tag unknown at this time.

Read More......