Friday, April 25, 2008

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.

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Wednesday, April 23, 2008

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.
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.

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Tuesday, April 22, 2008

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.
"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?

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Thursday, April 17, 2008

'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 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."

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Friday, April 11, 2008

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.

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Monday, April 7, 2008


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.

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