|
New interest in Tribune
(Newsday (Melville, NY) (KRT) Via Thomson Dialog NewsEdge) Feb. 8--Tribune Co., the owner of Newsday, has been approached by another billionaire -- Chicago real estate mogul Samuel Zell -- offering to salvage the lackluster auction for the company, sources said yesterday.
Zell, often called the nation's largest office landlord, is the fifth mega-rich individual to express an interest in purchasing either all of Chicago-based Tribune, one of its 11 newspapers or a minority stake in exchange for a substantial cash infusion. Los Angeles billionaires Eli Broad and Ron Burkle filed plans last month to buy the entire company, and entertainment titan David Geffen has said he wants to own the Los Angeles Times, the company's largest paper.
In addition, New York Post owner Rupert Murdoch yesterday confirmed his interest in joining one of two bids for Tribune. In a teleconference with stock analysts, he said he wants to combine some of the business operations of the money-losing Post and profitable Newsday, a plan some experts described as a "nonstarter" with Tribune executives and federal regulators.
Still, Zell's entry fueled speculation on Wall Street and elsewhere that a viable buyout of the media conglomerate finally could be at hand after a prolonged bidding process. Tribune will report its fourth-quarter earnings this morning.
"I think you have to take this seriously because he's from Chicago, and Tribune is a Chicago institution," said one source familiar with the auction. "[Tribune] management and the board also don't want to see the company sold to people from outside the Midwest."
Spokesmen for Zell and Tribune declined to comment.
But sources with knowledge of the deliberations confirmed that Zell told Tribune of his "general interest" but provided no formal proposal. The sources also stressed that Zell was among a number of wealthy individuals and private equity firms that had either approached the company or been contacted by company representatives about participating in a possible buyout.
The Chicago Tribune, citing sources, said yesterday that Zell was armed "with a complicated proposal that may include taking an equity stake in the company while adding debt to fund a large dividend for shareholders."
Zell, 65, built a real estate empire with a college fraternity brother, the late Robert Lurie, that amassed millions of dollars by gobbling up distressed properties nationwide, starting in the late 1960s. The strategy earned Zell the moniker "vulture investor," but the return from his investments demonstrated to Wall Street that real estate companies could go public and be successful.
Zell's apparent interest in Tribune, which was put in play last summer by its largest shareholder, is ironic because his Equity Office Properties Trust is the subject of a takeover that he didn't initially welcome. The Blackstone Group made an unsolicited, $39-billion offer for Equity Office that was accepted yesterday by shareholders.
In addition to office buildings and apartments, Zell has invested in river barges, wineries, compressors and financial opportunities in South America and Russia. About 65 percent of his wealth, estimated by Forbes to be $4.5 billion, is in non-real estate holdings.
Zell's only known foray into newspapers was his purchase of the old Chicago Daily News building, whose vaulted ceiling once was adorned with a mural tribute to journalism. A leaky roof forced the mural to be removed in 1993 for restoration work that was never done because Zell allegedly balked at the price tag.
Some industry observers yesterday welcomed the interest of Zell and other billionaires. Veteran analyst John Morton of Spencerville, Md., said, "This shows people recognize that newspapers are cash-flow businesses, they are still very strong in their markets. ... That much interest on the part of billionaires is sort of a positive sign."
Newspaper stocks have been depressed for the past couple of years as revenue has been squeezed by increased competition from the Internet for readers and advertisers. Shares of Tribune have fallen for three years, leading the Chandler family of Los Angeles, the largest shareholder, to agitate for bold action.
The family pushed for the auction and submitted a bid to purchase Tribune's papers for $4.7 billion and take them private. They also would spin off the 23 television stations, including WPIX/11 in New York City, into a new public company.
Spokesmen for the Chandlers and the Broad-Burkle team declined to comment.
Murdoch, chief executive of News Corp., yesterday explained the rational behind his interest in Tribune.
"If we could do something -- not too expensive -- but which led to a joint operating agreement between the New York Post and Newsday ... We think it'd be a very, very powerful combination for advertisers [and] to take us out of loss at the Post and into a shared-profit situation," Murdoch said. "That is pretty much the limit of our interest" in Tribune.
Federal antitrust regulations bar Murdoch from owning Newsday because he already owns TV stations and papers in the same geographic area.
Morton doubted Tribune would want to share its profits with a rival. He said, "I think management's intention is to retain ownership and possibly do a leveraged buyout with the help of some private equity partners."
TYCOONS IN THE MIX: Several billionaires have expressed interest, or are reported to be interested, in buying the Tribune Co. or parts of it. They include:
--Eli Broad
Background: A philanthropist who has made his fortune in real estate and finance; his family-owned investment firm is Broad Investment Co., has been a leading fundraiser for civic projects in Los Angeles. Forbes magazine estimated his net worth at $5.8 billion. Founder-chairman of SunAmerica Inc. and KB Home.
Interest in Tribune: See Burkle.
--Ron Burkle
Background: Founder and managing partner of the investment firm Yucaipa Cos. Forbes estimates his wealth at $2.5 billion. He has done leveraged buyouts of grocery stores and has made major investments in Wild Oats Markets, Kroger Stores and Pathmark Stores. He is a majority owner of the National Hockey League's Pittsburgh Penguins, and a friend and fundraiser for Bill Clinton.
Interest in Tribune: Teamed with Broad to bid for the entire company. They propose leaving it intact and gaining an ownership stake of more than 30 percent for $500 million in cash and $10.8 billion in debt financing through a leveraged buyout.
--Rupert Murdoch
Background: Media tycoon; chairman and chief executive of News Corp., owner of the New York Post, Fox television; has awarded an estimated $600 million worth of News Corp. shares to his six children. He is chairman of 20th Century Fox Movie studios, Sky Television Plc of London, cable television networks FX, Fox Sports, Fox Family Channel and more than 20 regional sports networks.
Interest in Tribune: Expressed an interest in a joint operation between the Post and Newsday, which would be limited to combining the advertising and administrative functions of the newspapers.
--David Geffen
Background: Part owner, with Steven Spielberg and Jeffrey Katzenberg, of DreamWorks SKG, which produced such films as "American Beauty," "Saving Private Ryan," "War of the Worlds" and "Road Trip"; DreamWorks Animation is creator of "Shrek," "Shrek 2," "Shark Tale" and "Over the Hedge"; founder of Geffen Records and DGC Records; said to be worth $1.2 billion; producer of Broadway and Off-Broadway shows, including "Dream Girls," "Little Shop of Horrors" and "Cats."
Interest in Tribune: Bid $2 billion for one Tribune-owned newspaper, the Los Angeles Times.
--Sam Zell
Background: Chairman and largest shareholder of Equity Office Properties Trust, with latest SEC filing showing him with 4.8million shares and options in the company, a stake worth $264 million; his net worth is estimated by Forbes at $4.5 billion; now focused on international development.
Interest in Tribune: Expressed an interest in the company but has not made a formal proposal.
To see more of Newsday, or to subscribe to the newspaper, go to http://www.newsday.com
Copyright (c) 2007, Newsday, Melville, N.Y.
Distributed by McClatchy-Tribune Business News.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
[ Back To TMCnet.com's Homepage ]
|
SUBSCRIPTIONS
Activate Email 
TMCnet LOGIN
Find Solutions for Enterprises, SMBs & Service Providers at the INTERNET TELEPHONY Conference and EXPO West, October 4-6, 2010. Los Angeles, CA.
