?6:12 p.m. | Updated
Analysts and prospective buyers are preparing for horse trading to begin over the Tribune Company?s newspapers now that the company, whose holdings include The Los Angeles Times and The Chicago Tribune, has emerged from bankruptcy protection.
Tribune, which completed its bankruptcy paperwork on Monday, has not announced the sale of any assets, but it is likely to do so in the next several months so it can streamline its business, said Reed Phillips, managing partner of DeSilva & Phillips, a media banking firm.
The troubled state of the newspaper industry makes those assets most likely to be sold, he added. Less clear, however, is whether the company will sell them all at once or by region, for example selling The Chicago Tribune with Chicago magazine.
?The company is too large and complex right now, coming out of bankruptcy,? Mr. Phillips said. ?What?s needed is a more focused strategy.?
Aaron Kushner, chief executive of Freedom Communications and publisher of The Orange County Register in California, confirmed on Monday that he was eager to buy Tribune?s newspapers. He would not say whether he had had any specific conversations with Tribune Company executives.
He said that from what he had gleaned from bankruptcy court filings and public pension documents, it seemed likely that Tribune would sell its newspapers as a group. That is because the company has such enormous and complex pension obligations and corporate overhead that it would be difficult to untangle them and sell properties individually.
?We?re interested in all of the papers, though obviously, from an outside perspective, we have not seen the numbers,? Mr. Kushner. ?If papers are sold, someone has to be responsible for the pensions.?
The company?s reorganization plan was approved in July by the United States Bankruptcy Court in Delaware. It received final approval from the Federal Communications Commission in November.
The announcement on Monday ended a four-year process for the company. Its assets were tied up in court while the media industry continued its digital transformation. In a letter to employees, Eddy Hartenstein, the company?s chief executive, acknowledged that the last four years ?have been a challenging period.?
?You have been resilient, dedicated to serving the company, our customers and your fellow employees,? he said. ?You are what sets Tribune apart from our competitors.?
The company also announced a seven-member board. The directors include Mr. Hartenstein and Peter Liguori, a former chief operating officer of Discovery Communications, who is expected to be named chief executive. Bruce Karsh, a founder of Oaktree Capital Management, which is a major shareholder in the company, also sits on the board, as does Ross Levinsohn, a former interim chief at Yahoo.
Tribune said it expected to resolve details about board members? responsibilities at its first meeting in the next few weeks. The company is emerging from bankruptcy protection with a $300 million loan to finance its continuing operations, as well as a $1.1 billion loan to finance its reorganization. According to a company statement, Tribune plans to give former creditors 100 million shares of new class A common stock and new class B common stock.
The end of the bankruptcy has led to plenty of speculation about who might buy Tribune?s newspapers, with names like Rupert Murdoch and David Geffen floated as contenders. Mr. Phillips said he was skeptical that Mr. Murdoch would be a serious bidder because his company had so much else on its plate.
?I would think they would take a look,? said Mr. Phillips. ?But when it comes to stepping up and making a substantial offer, I would be surprised. They?re already splitting off the publishing business from the entertainment business.?
He said that Mr. Geffen, too, would probably not acquire Tribune properties ?unless the price is really attractive, because he?s not someone who has run a newspaper company previously. So I think it will be more of a challenge. The price he?s probably willing to pay based on advice from his advisers is going to be lower than what someone else is willing to pay.?
Mr. Kushner praised Tribune?s board and said he expected that ?one of the first things that they?ll be trying to figure out is how the different parts of the Tribune company really work well together or separately.?
Mr. Kushner, who bought The Orange County Register last summer, said he was focused on buying large metropolitan newspapers. He said that while Tribune newspapers appeared to be profitable, how they would remain profitable was unclear, as with many newspapers.
At The Register, Mr. Kushner said, he tried to increase revenue by strengthening relationships with subscribers.
For example, he said, the newspaper gave its readers more value by increasing its pages 40 percent in the last year. It also spent $12.4 million sending $100 checks to its subscribers that they could in turn make payable to favorite local nonprofit groups. He said enhancing a paper?s relationship with subscribers would help drive subscriptions and, ultimately, advertising.
?Our basic view is that we add more value,? said Mr. Kushner. ?This is the only path that we can have revenue grow.?
Source: http://mediadecoder.blogs.nytimes.com/2012/12/31/tribune-co-emerges-from-bankruptcy/
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