News Corp. founder Rupert Murdoch’s potential involvement in a joint bid for Tribune Co. by the Chandler family doesn’t alter the fact that no acceptable takeover offer has yet surfaced after months of the company soliciting proposals, analysts said.
Murdoch’s interest in a minority stake in Tribune emerged after the media conglomerate received the largest offer to date for its assets, an estimated $7.6 billion proposal by the Chandlers to buy the company and spin off its broadcast division to shareholders.
The family is the largest holder of Tribune stock, a legacy of their sale of the Los Angeles Times and other Times Mirror Co. properties to Tribune in 2000.
A person familiar with News Corp.’s thinking told The Associated Press the company would be interested in contributing a low hundreds of millions of dollars in equity as a minority partner in the Chandler bid, but has not made a commitment to do so.
The goal for News Corp. would be to reduce costs on the business side of the New York Post, a money-losing but prominent tabloid newspaper, by combining some back-office functions such as production and delivery with Tribune’s Newsday newspaper on neighboring Long Island, according to the person, who asked for anonymity because the negotiations were private.
Tribune declined comment on News Corp.’s reported interest, as did a spokeswoman for the Chandler Trusts, which forced the company to launch the current review process by putting public pressure on management last June to boost its lagging stock price.
The Chandlers said in a recent regulatory filing that they would contribute their Tribune shares, which they valued at $672.3 million, as part of the equity portion of their buyout bid and said they were in discussions with strategic investors about adding another $645.9 million in equity. The remainder of their buyout bid’s value would come from debt financing and the TV station unit spinoff, and the filing said they had already lined up loan commitments from units of Merrill Lynch, Goldman Sachs and Citigroup.
What wasn’t clear was whether the News Corp. funds would in essence be new money that would allow the Chandlers to boost their bid or if it would be part of the already promised funding from strategic investors.
Tribune also has received a joint proposal from Los Angeles billionaires Eli Broad and Ronald Burkle to sponsor a recapitalization of the company that would leave them in control after the payout of a big dividend to shareholders financed by the assumption of billions of dollars of new debt and a $500 million investment on their part. A third offer, for Tribune’s television stations only, reportedly was submitted by the Carlyle Group private-equity firm.
The consensus on Wall Street remains that none is sufficient for the company to accept, with a small investment by Murdoch unlikely to influence that.
James Goss, an analyst for Chicago-based Barrington Research Associates, said limited involvement by Murdoch isn’t likely to “significantly change the game.”
“I think we’re at a stalemate until we see a higher price,” said Dave Novosel of the bond research firm Gimme Credit.
That leaves other shareholders and outsiders to continue speculating on whether Tribune will ultimately sell off individual newspapers, television stations or the Chicago Cubs piecemeal, a process which would likely result in a significant tax burden for the company.
“I think it’s going to get broken up and sold in two pieces at least,” said Benchmark Co. analyst Edward Atorino.
Although the recent bids by the Chandlers and the Broad-Burkle team both reportedly expire in January, a final decision still may not be imminent. Tribune Chief Executive Dennis FitzSimons reportedly reiterated in an e-mail to Tribune employees that the board expects to make a decision by March 31.
Tribune owns 11 papers, including the Chicago Tribune and The (Baltimore) Sun, along with 23 television stations and the Cubs.