By: E&P Staff and The Associated Press Insiders confirmed today that billionaire businessman Eli Broad and supermarket magnate Ron Burkle have indeed teamed up to submit a bid for the Tribune Co. Meanwhile, another mogul, David Geffen, remains interested in making his own bid.
Details of the offer by the two businessmen and their companies were not disclosed, but the Los Angdeles Times reports today that the bid was "competitive" with at least four offers made for Tribune last week, according to a person who was familiar with the proposal.
Broad and Burkle had been expected to bid for the Los Angeles Times, the Tribune's largest property. The joint bid for the entire company came as a surprise.
Broad declined to comment on the report. A call to Burkle's office was not immediately returned.
The Los Angeles Times reports today, "Geffen remains intensely interested in buying the newspaper, associates say, but he believes that Tribune may expect too high a price. The creator of Geffen Records and co-founder of the DreamWorks SKG studio has told these people that he thinks The Times is worth $1.75 billion to $2 billion.
"Broad and Geffen's mutual dislike has been well-known in the city's power circles, and that animosity appears to be fueling a competition over The Times. Each side has questioned the seriousness of the other's attempts to acquire the paper, say those who have spoken to the men independently. Geffen's backers tout his fortune, estimated by Forbes magazine at $4.6 billion, and suggest that a cash purchase would avoid the complications that come with partners and bank loans."
The bid from Burkle and Broad came a day after Chicago-based Tribune Co. replaced Dean Baquet as editor of the Los Angeles Times because he refused to make mandated cost cuts at the paper.
Broad and Burkle have long said they would be interested in returning the Times to local ownership.
Tribune Co. spokesman Gary Weitman declined to comment on the bid.
The Wall Street Journal reports today: "Tribune was expected to continue discussions with private-equity groups interested in the entire company even as it considered offers for individual assets. People familiar with the process said last week that soliciting offers for specific properties may be a way to flush out higher prices from the private-equity bidders."
Tribune's holdings include 11 daily newspapers, 25 TV stations, the Chicago Cubs baseball team, Internet ventures and sizable stakes in the Food Network and the online classified advertising venture CareerBuilder.
Along with the Times and the Chicago Tribune, the company owns Newsday in New York, The Baltimore Sun, South Florida Sun-Sentinel, Orlando Sentinel and The Hartford Courant.
Tribune tried selling the company after being pressured by discontented shareholders amid plunging circulation and a decrease in advertising revenue at its newspapers.
When bids for the mammoth media company came in far lower than expected, Tribune told prospective bidders that individual pieces were available for sale.
No major media groups bid for Tribune in the last round. Instead, the company received nonbinding preliminary offers from three investor groups.
One group consisted of Fort Worth, Texas-based Texas Pacific Group and Boston-based Thomas H. Lee Partners.
Other bids came from Boston-based Bain Capital and an alliance made up of Chicago's Madison Dearborn Partners, New York-based Apollo Management and Rhode Island-based Providence Equity Partners.
Wall Street has had difficulty gauging the value of Tribune Co., in part because of all the uncertainties surrounding its media assets during a turbulent time for the industry.
Analyst Edward Atorino of the Benchmark Co. thinks the company could fetch about $40 a share, or roughly 25 percent above where it was trading Wednesday.
Including its more than $5 billion in debt, that would mean a price of about $15 billion.
"It's certainly worth that, but whether they get it is something else," Atorino said. "This is going to be a long endgame. We'll see how it plays out."
Shares of Tribune rose 86 cents, or 2.7 percent, to close at $32.48 on the New York Stock Exchange.
Earlier this year, McClatchy Co. paid $4 billion in cash and stock for Knight Ridder Inc., the newspaper publisher that, like Tribune, ran into trouble with investors over a slumping stock price.
Returning the Times to local ownership won't necessarily secure jobs or lead to increased investment.
Wednesday, the Philadelphia Inquirer replaced its editor, as the private group that bought the paper from McClatchy in June said falling circulation and ad revenue would mean deep newsroom cuts.
Philadelphia Media Holdings initially said it wanted to invest
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