Tribune Co. Chairman and CEO Dennis FitzSimons is resisting suggesting that it’s time for the company to start selling assets. John Miller, who manages a portfolio that holds about three percent of Trib’s shares he views as undervalued, raises the possibility of selling off the broadcasting properties and going private with the rest. Others suggest non-cores assets like the profitable Cubs or 31-percent share of Food Network or the one-third stake in soon-to-be-profitable CareerBuilder.com. But FitzSimons tells the Journal: “To sell at the bottom, when potential buyers aren’t necessarily willing to pay a premium price that would make up for the tax hit, wouldn’t be wise.”
Most sobering factoid: “Tribune paid $8.3 billion for Times Mirror in 2000, including the assumption of debt. Today, that is the market value of both companies combined.”
Update: FitzSimons told employees in an internal message that the Journal article was what he expected “given the reporter’s questions … Considering the overall industry environment, the recent sale of Knight Ridder and the price of TRB shares, a more balanced story was not in the cards.” (Note: the piece was a “Heard on the Street” column.) He prefers a James Surowiecki column in the New Yorker this week “which recognizes, as we do, that newspapers are a solid business and highly valued by consumers and advertisers.”
Surowiecki makes the case against papers we’ve all been hearing then rebuts it: “… McClatchy’s gamble depends on a simple, if often overlooked, fact: newspapers remain a surprisingly robust business and generate tremendous amounts of cash every year. Most of them have profit margins that dwarf those of the average company; McClatchy’s operating margin last year was twenty-eight per cent, while ExxonMobil’s was around sixteen per cent, and the typical supermarket’s is around four per cent.” And this about the net effect: “… while the Net has eroded newspapers’ advantage in disseminating news, it has expanded their reach and influence.” Both make interesting reads.