Trib stations on the block?
According to the Chicago Tribune, the board of the beleaguered Tribune Corporation has apparently come up with a solution that will please its biggest shareholder, California’s Chandler family. It involves selling most of its TV stations.
Sources with knowledge of the company’s thinking say management’s favored solution would be to spin off many of Tribune’s roughly two dozen television stations in a tax-advantaged transaction, unload several of the smaller papers and take the rest of the company private in a leveraged buyout.One way to lower taxes in such a deal, said an executive at another media company, would be to take some or all of Tribune’s $4.9 billion in corporate debt and put it into the television transaction, thereby reducing the taxable gain. That would have the added benefit of unburdening the balance sheet of the remaining company so it could support the debt required for a buyout of the public shareholders–presumably including the Chandlers, who currently own a 19.6 percent stake in the company.
Whether Tribune can get a deal done during such a dismal time in the local media business is hard to predict, analysts said. They noted that buyers for local TV station groups aren’t plentiful. And sliding circulation and ad revenue make it difficult to determine how much newspaper assets are worth and how much debt they can support.
One of my 2006 predictions was that we would see media companies attempt to take their businesses private again, because they can be much more flexible in so doing. I hope the Trib can pull it off, because their effort will likely be duplicated elsewhere. These are dangerous times for local media companies, and not all will survive.
(Tip to Lost Remote)
