Analyst Suggests Tribune Co. 'Is Gone' -- Chess Game Underway

By: Jennifer Saba "It's gone," said Edward Atorino a managing director at Benchmark Equity Research. That was one of the pointed reactions to this morning's news that Tribune Co. is entertaining selling off individual assets after failing to secure noteworthy bids for the entire company, according to several press reports.

"Are you familiar with chess at all? It's a long end game," Atorino said.

A Bear Stearns analyst today is far more cautious. But according to Atorino's analysis, Tribune's fate is similar to Knight Ridder's: Dennis FitzSimons, Tribune's chief, is now the pawn of restive shareholders.

"If they do hold on to Tribune, they need a plan," Atorino says, "because the Chandlers and shareholders will do what they did to Tony Ridder. Wall Street will sell these guys down the river in a heartbeat. If FitzSimons doesn't do [a sale] it's going to get done for him."

Tribune's TV assets, especially Los Angeles, Chicago, and New York, will attract a lot of attention, since it?s rare that TV stations open up in the country's top three markets, said Atorino.

Finding buyers for Tribune's newspaper properties, including the recently troubled Newsday, should not be a problem. Atorino speculated that Rupert Murdoch, owner of the New York Post, or Mortimer Zuckerman, owner of the New York Daily News, could be very interested in locking in Long Island, i.e. Newsday.

"Money is not an issue," Atorino responded when asked if the company would have trouble selling off assets to make individual deals lucrative. The billions of private equity dollars and billionaires should make drumming up cash easy.

Meanwhile, Bear Stearns analyst Alexia Quadrani got on the phone yesterday to Tribune headquarters and reports back in a note that executives "continue to pursue negotiations and have not decided whether to pursue the sale of individual assets which they initially refused when this strategic review was first announced on Sept. 21."

Her concern with the possibility of Tribune selling individual properties: a whopping tax hit.

"We still believe there is a good likelihood that nothing may come of this review as management has reluctantly agreed to explore these options under shareholder pressure and when they turn up little to no incremental value the company may continue to operate independently," Quadrani wrote in note titled "well-telegraphed strategic review may be losing momentum.?

Lauren Rich Fine at Merrill Lynch still pegs the value of Tribune at $32 to $33 per share even if they company decided to sell off certain assets. She breaks out the value in a note this morning with newspapers fetching $27 per share, TV and entertainment at $17 per share, and $8.50 per share of its investments in assets like the Food Network stake and the Cubs.

Tribune's shares are trading down 53 cents late this morning to $32.10.