Tribune Split Rumors Aren’t Going Away

The very boost of the Tribune Co.’s stock — powered initially by last week’s buyback announcement and now split-up rumors aided by dissent from the Chandler faction — appears to be fueling even more speculation, particularly about the possibility of spinning off or selling the broadcast properties. Variations have the company then going private. Chairman and CEO Dennis FitzSimons has downplayed those possibilities in interviews but the company has acknowledged them in SEC filings. Meanwhile, the increase in share price to a Friday close of $31.96, just shy of the $32.50 high-end for the buyback, puts that program in doubt.
Phil Rosenthal, Chicago Tribune: “I’m sure Dennis figured you roll this [buyback] thing out, everybody applauds, you do the deal, over and done,” observed longtime publishing industry analyst Ed Atorino, managing director of Benchmark Co. That was the scripted ending. Vaughn and Aniston shot a second ending to “The Break Up” when test audiences rejected the original. FitzSimons may have to do the same.
MKTW: Goldman Sachs analyst Peter Appert “says it’s unlikely that many strategic buyers would be interested in Tribune in its current form, with its 26 television stations and such newspapers as the Chicago Tribune, Newsday and the Los Angeles Times. He added that a sale of the broadcast division might not create ‘meaningful value creation’ … In Appert’s view, the most likely possibility is that Tribune pursues further financial restructurings, along the lines of the Dutch tender.”
Jon Fine, BW: “Tribune today may best illustrate the limitations of simply buying big brands and squeezing out costs. Here’s a crazy idea: a conglomerate tries investing in its properties instead of hacking at costs. If quality is the last argument traditional media can offer, slashing staff is a strange way to get there.”

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