Friday, March 30, 2007

Weekend Wonder: Who Buys TribCo?

Going to be lots of buzz this weekend about the fate of the Tribune Co., which is now weighing two buyout offers. The Tribune committee that's evaluating the bids may give itself a little more time to contrast and compare the bids. The committee hoped to have a decision by Saturday. We'll see.
In one corner there's the old grave dancer Sam Zell (see post below). His challengers are two Los Angeles-based billionaires, Eli Broad and Ron Burkle. Right now, the Broad-Burkle bid is offering $34 a share, a buck higher than Zell.
Neither group is putting a ton of their own money into the bids--especially when you considered the total value of the deal may hit $12 billion. Zell is offering $300 million; Broad/Burkle offer $500 million cash.
Let's face it, the bulk of the risk will be borne by the newly-created Employee Stock Ownership Plan (aka the Tribune Co. employees.) The ESOP is the primary vehicle to make the buyout whether Zell or the other guys buy it. And the financing fun doesn't end there because management may have to ante up some cash to play, as may the Tribune charitable trust or a private equity fund.
If Zell wants to make a deal, he'll likely have to sweeten the pot by matching or exceeding the West Coast cash offer.
All things being equal, I suspect Tribune's braintrust would rather go with a more patient Zell--who obviously believes that, at the right price, there's longterm value in most of TribCo.'s brands and assets. Broad and Burkle are most interested in the LA Times, making the rest of the company ripe for fast spin-offs, sales and wholesale slaughter.
At the end of the day, TribCo brass may decide to cut this baby in two by agreeing to spin off the LA Times to Broad/Burkle and give Zell and his ESOP the rest.
Stranger things have happened.

By the way, if you have the time check out tonight's (Friday) version of Chicago Week in Review with Joel Weisman. Fun panel that includes Sport Illustrated's Lester Munson, Channel 7's Charles Thomas, Sun-Times newsman Abdon Pallasch and me (had to throw that in).
Ah yes, the lively art of conversation. Panel touches on the Tribune sale, current Chicago Police scandal, Cubs and Sox, and much more! Check it out at 7 P.M. (CST) tonight on Channel 11.
Until next time, have a great weekend.

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