Four years after the last group of investors, led by billionaire Sam Zell, extended years of asset extraction from the Los Angeles Times parent Tribune Co. by filing for bankruptcy, the company has emerged from Chapter 11 and is back in the marketplace.
Tribune is securing a new $1.1 billion loan and a $330 million revolving credit line while its new corporate owners (mostly banks and hedge funds), board of directors and CEO map the way forward, which includes shedding many, if not all, its corporate assets.
“It’s all for sale,” Lance Vitanza, managing director at CRT Capital Group LLC, told Bloomberg. “If they reorganize around anything it will be the TV assets, but we wouldn’t be surprised if they sell those too.”
Tribune’s California assets are substantial. The Los Angeles Times and the TV station KTLA are among its most prized assets. It also owns Fox stations KSWB in San Diego and KTXL in Sacramento. Most analysts think it is a foregone conclusion that the newspapers will be sold, either as a group or individually, before the year is out. Tribune sources have talked about rebuilding the company around its broadcast holdings and its new CEO is Peter Liguori, former Fox Broadcasting Co. chairman.
While the Chicago Tribune has always been Tribune’s flagship newspaper, the L.A. Times has been its most valuable print property since being acquired in 2000. Tribune’s total assets have been valued at $4.5 billion and the newspapers at $623 million. The corporation had a $2.54 billion cash balance as of November 18.
Over the years, the Times cut its newsroom staff in half, abandoned its suburban and inner-city subscribers and outsourced its circulation department to a foreign country. It has been accused of failing to establish a functional sales force and prostituting its news pages to advertisers. It remains profitable and, although diminished, one of the best newspapers in the country.
Newspaper analyst John Morton estimated the Times might currently sell for $130 million. Before Zell bought Tribune, media mogul David Geffen reportedly made a $2 billion all-cash offer for just the Times but was turned down. Los Angeles billionaires Ron Burkle and Eli Broad were also rumored to be interested.
None of those names are currently mentioned as serious potential suitors for the Times. They have been replaced by News Corp Chairman and CEO Rupert Murdoch, former venture capitalist Austin Beutner, ex-greeting card executive and Orange County Register owner Aaron Kushner, and San Diego real estate magnate and local Union-Tribune newspaper owner Doug Manchester.
Tribune filed for bankruptcy in 2008, a year after Zell’s $8.3 billion leveraged buyout put debt service strains on a corporation whose constituent parts continued to be profitable. Creditors and debtors, some of whom entered the fray after the company entered Chapter 11, battled for years over who would get dinged for the mismanagement. They include JPMorgan Chase & Co., Oaktree Capital Management LP and Angelo, Gordon & Co.
Most of that has been sorted out, although law suits still threaten to extract more money from former Tribune shareholders who owned stock before the bankruptcy. Many of those people continuing to receive regular notices that legal action looms are employees or former employees who have since been laid off.
–Ken Broder
To Learn More:
Publisher Tribune Emerges from Four-Year Bankruptcy (by Liana B. Baker and Ashutosh Pandey, Reuters)
Tribune Co. Emerges From Bankruptcy (by Edmund Lee and Alex Sherman, Bloomberg)
Tribune Co. Looks to Television after Bankruptcy (by Joe Flint, Meg James and Walter Hamilton, Los Angeles Times)