Tribune sale looking unlikely

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CHICAGO -- Days before a deadline for final bids for Tribune Co., speculation is increasing that a sale of the entire media company may not take place.

The outcome of the company's nearly four-month-old strategic review remained cloaked in uncertainty Friday, with a still-lagging stock price reflecting Wall Street's lack of anticipation that a deal is imminent.

Analysts said there's no outward sign Tribune is any closer to a deal to sell the company for a premium price than it was in November, when it extended the bidding deadline after initial offers were deemed subpar. That would leave Tribune's next move a subject for further speculation.

Tribune said in September that it was willing to sell all or part of its assets following pressure from some of its largest shareholders, including the Chandler family, who were disappointed with the company's lagging stock price and slumping fortunes.

The company remained tightlipped about offers and would not even confirm the widely reported Wednesday bidding deadline. "The process continues," spokesman Gary Weitman said Friday.

Merrill Lynch analyst Lauren Rich Fine wrote in a note to investors that there is a "distinct possibility" there will be no sale, which she said investors seem to anticipate.

"While we place little possibility on a strategic buyer acquiring all of Tribune, there could be a surprise as in the case of the sale of Knight Ridder where the victor, McClatchy Co., bought the company and then sold off certain assets," Fine said. "In passing, we heard there might be an interested private equity bidder but at a very modest premium making it tough to know if Tribune would accept the offer."

The auction process at the nation's third-largest newspaper company comes at a time when papers are still losing readers and advertisers to the Internet, making it difficult for potential bidders to accurately gauge the company's future cash flow. Tribune owns 11 daily newspapers, including the Chicago Tribune and the Los Angeles Times, along with 23 television stations and the Chicago Cubs baseball team.

Edward Atorino of the Benchmark Co. said it's clear there aren't a lot of interested buyers for the whole company right now.

"It's like trying to sell your house at the bottom of the market," he said. "You can't do it, so you paint the house, fix the garage, and two years later you try to sell it again."

But he said Tribune would be better off selling itself in pieces in light of the extensive interest in its TV stations, the Los Angeles Times and the Cubs. "I think they'd have a much easier time doing that than getting somebody to write a check for $14 billion" -- the analyst's estimate of the company's value -- he said.

Preliminary bidders, according to various newspaper reports, included media rival Gannett Co. and Los Angeles billionaires Eli Broad and Ron Burkle along with multiple private-equity firms: a team of Chicago's Madison Dearborn Partners, New York's Apollo Management and Providence Equity Partners of Providence, R.I.; another team of Texas Pacific Group and Thomas H. Lee Partners; the Carlyle Group of Washington, D.C.; and Boston's Bain & Co.

But the extent and amount of final bids are unclear.

Apollo, Bain, Broad, Carlyle, Gannett, Thomas H. Lee and Texas Pacific all declined comment Friday, as did a spokeswoman for the Chandler Trusts, who have been reported to be working on their own bid in tandem with an undisclosed private-equity group. Madison Dearborn and Providence Equity did not return telephone calls.

Tribune's stock closed up 5 cents a share at $30.60 on the New York Stock Exchange. That's down 33% from $45.46 when Dennis FitzSimons took over as CEO in January 2003 and just below where it was when the company announced the potential sale of the company in September.
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