The Tribune Saga, Part 3: New Sale Talks

[Rusty Muck 4378]

Tribune needs to stop selling themselves! I swear.

It wasn’t their fault that the previous sale attempt cratered after the buyer acted in less than bad faith.

 

Starboard Value has an investment in Tribune for only one reason, to induce a sale of the company, no matter what.

[Rusty Muck 4378]

They won't sell anything. Hicks will want the group to grow and will be a buyer. At some point soon, the caps are going to be loosened up. That's the only reason Cerberus & Hicks would be getting into the broadcasting business again.

LOL. That’s not the case. The KKRs, George Gillettes and Bain Gocoms of the world will only be getting back in the game to cash out in a bigger way.

 

And depending on the date of the midterms, the ownership cap will remain at 39%. Make that, the ownership cap is remaining at 39%, no matter what.

 

So in other words, Fox won't get a single thing out of Tribune, not even a single Tribune station??? Ok then...

That’s not true. Fox has lusted after KCPQ for nearly a decade, and if a hedge fund buys Tribune with clear intent to sell for maximum value, the stage is more than set.

[dman748 1256]

That’s not true. Fox has lusted after KCPQ for nearly a decade, and if a hedge fund buys Tribune with clear intent to sell for maximum value, the stage is more than set.

Thank you this is why Tribune should not sell all at once, even though they will (most likely) do so

[Rusty Muck 4378]

Thank you this is why Tribune should not sell all at once, even though they will (most likely) do so

The people currently investing in Tribune want the company to sell itself right now, and after the Sinclair fiasco, can you blame them?

 

Problem is, there is no broadcast chain able to acquire the company in a singular transaction with the bare minimum of divestitures. Don’t think David Smith’s attempts to be cute with shelling out WGN-TV aren’t playing into this, they certainly did with Gray-Raycom, and they’ll affect future M&As for awhile.

[LouGrant 14]

Apologies if it's been mentioned already, but does anyone think Berkshire Hathaway could be a potential buyer? They certainly have the money, and could easily get under the cap by spinning off WPHL/KDAF/KIAH, etc. to Fox and/or Tegna.

 

Who knows whether they want to place a heavy bet on the future viability of broadcast TV, but at the right price maybe?

[dman748 1256]

The people currently investing in Tribune want the company to sell itself right now, and after the Sinclair fiasco, can you blame them?

 

Problem is, there is no broadcast chain able to acquire the company in a singular transaction with the bare minimum of divestitures. Don’t think David Smith’s attempts to be cute with shelling out WGN-TV aren’t playing into this, they certainly did with Gray-Raycom, and they’ll affect future M&As for awhile.

So not even the companies that are far below the cap (with and/or without the Discount) like Graham won't be able to acquire Tribune outright right?

[ColtFromGulfcoast 709]

I feel like we can't say this enough here.

 

NO company, whether your name is Nexstar, Graham, Hicks, Berkshire Hathaway or anyone else, will be able to acquire this whole company in one transaction. It is too big and to try to do that will just create more drama than there should be. Tribune should just sell piecemeal and take the cash they get. Better to do that than to waste everyone's precious time with all of this madness.

[Eat News 4745]

So in the end...

Tribune will not be too big to fail...

 

They are just too BIG to sell.

 

Oh the humanity!

[GoldenShine9 1513]

So not even the companies that are far below the cap (with and/or without the Discount) like Graham won't be able to acquire Tribune outright right?

 

Correct, since they are already over the cap without the UHF discount (which is in court), so even a company with zero assets would go over it by necessity. Many companies would go over the cap *even with* the discount.

[dman748 1256]

Correct, since they are already over the cap without the UHF discount (which is in court), so even a company with zero assets would go over it by necessity. Many companies would go over the cap *even with* the discount.

Then Starboard just doesn't care, because if they'd known that Tribune can't be swallowed up by one company we wouldn't be having this conversation. But they're all about the almighty dollar hence why we're having this conversation

[mre29 1537]

Fox stands to be at a better position getting all the stations they want, with a hedge fund buyer with no other investments keeping all the rest. It’s the only possible scenario with a truly clean outcome that’s in Fox’s favor.

 

So, let's see if I'm understanding this:

 

1) Starboard Value is pushing Tribune to sell ASAP, but won't let them sell piecemeal.

2) A hedge fund (Hicks or someone else) buys Tribune.

3) Said buyer immediately sells a number of the stations to Fox, including KCPQ, KSWB, WPHL, etc.).

4) The buyer falls far enough under the cap that it's no longer a concern.

5) The stations that don't get sold to Fox are run dirt cheap and are eventually sold to Nexstar, Tegna, etc.

 

So, what's stopping Tribune from selling a bunch of stations to Fox and then selling the rest in one transaction? Two transactions. That's it.

[TSSZNews 1051]

So, what's stopping Tribune from selling a bunch of stations to Fox and then selling the rest in one transaction? Two transactions. That's it.

 

For all we know, the next hedge fund that gets it - whether it's Hicks or another one - may not want to do it piecemeal either. Lessens the chance of a maximum ROI.

[Rusty Muck 4378]

I feel like we can't say this enough here.

 

NO company, whether your name is Nexstar, Graham, Hicks, Berkshire Hathaway or anyone else, will be able to acquire this whole company in one transaction. It is too big and to try to do that will just create more drama than there should be. Tribune should just sell piecemeal and take the cash they get. Better to do that than to waste everyone's precious time with all of this madness.

But that's not what's going to happen. It is very much clear that Starboard Value wants a singular transaction to divest itself of Tribune. Nothing less. If they were selling piecemeal, Fox would have grabbed the stations they wanted already for over $1B.

 

It's also apparent that Starboard is hoping for the GOP to retain both the House and Senate after the midterms. But if either of those - or possibly both - flip to Democrat control, say bye-bye to any hope of further ownership dereg.

[dman748 1256]

But that's not what's going to happen. It is very much clear that Starboard Value wants a singular transaction to divest itself of Tribune. Nothing less. If they were selling piecemeal, Fox would have grabbed the stations they wanted already for over $1B.

 

It's also apparent that Starboard is hoping for the GOP to retain both the House and Senate after the midterms. But if either of those - or possibly both - flip to Democrat control, say bye-bye to any hope of further ownership dereg.

What's Starboard gonna do if the House and/or Senate flips from Red to Blue? Then they'll have no choice but to go piecemeal. But then again, Starboard doesn't give a crap about what we say on this board, all they care about is the almighty $$$$

[Rusty Muck 4378]

What's Starboard gonna do if the House and/or Senate flips from Red to Blue? Then they'll have no choice but to go piecemeal.

Or they pull Tribune off the market entirely, do nothing and let the company atrophy under all the debt, while doing mass layoffs on a regular basis. See Bain Capital’s ten-year treatment of Clear Channel/iHeart.

 

Either that or sell themselves to Tom Hicks, which I haven’t heard anyone say CAN’T happen (as he has NO stations). Sure, he’d have to make divestments to get under the 39% cap, but that’s his dealings, not Tribune’s. (And unlike Sinclair, Tom would actually honor those divestment requests and be upfront with the FCC, like virtually every other broadcast company in existence.)

But then again, Starboard doesn't give a crap about what we say on this board, all they care about is the almighty $$$$

That’s 110% stating the obvious lol.

 

Every broadcast chain cares about revenue more than anything else, and don’t let anyone tell you otherwise. It’s why the M&A spree has never abated.

[GoldenShine9 1513]

Then Starboard just doesn't care, because if they'd known that Tribune can't be swallowed up by one company we wouldn't be having this conversation. But they're all about the almighty dollar hence why we're having this conversation

 

Ignoring conflicts (so the reach will be lower), Tribune reaches 26.7% WITH the UHF discount. That means that any company with more than 12.5% national reach MUST sell down, regardless of conflicts.

 

In addition to Sinclair, that includes all the networks, Nexstar, TEGNA, Gray (post-Raycom) and Hearst (barely). Scripps just squeaks in.

 

However, ignoring the UHF discount, no group can acquire Tribune whole, since it is already over the cap. If a 50% (no discount) rule was applied, then all the larger groups would blow way past the cap with a purchase, but some small companies can fit them in. But they would blow their budgets...

[dman748 1256]

Ignoring conflicts (so the reach will be lower), Tribune reaches 26.7% WITH the UHF discount. That means that any company with more than 12.5% national reach MUST sell down, regardless of conflicts.

 

In addition to Sinclair, that includes all the networks, Nexstar, TEGNA, Gray (post-Raycom) and Hearst (barely). Scripps just squeaks in.

 

However, ignoring the UHF discount, no group can acquire Tribune whole, since it is already over the cap. If a 50% (no discount) rule was applied, then all the larger groups would blow way past the cap with a purchase, but some small companies can fit them in. But they would blow their budgets...

How would Meredith, Graham and BH Media each fit in with a potential Tribune purchase with and without the UHF Discount?

[Rusty Muck 4378]

How would Meredith, Graham and BH Media each fit in with a potential Tribune purchase with and without the UHF Discount?

BH Media might be the only group off the top of my head that could buy Tribune and still be under the cap, as it’s only consisting of WPLG (hell, a WPLG/WSFL duop is very plausible) but the thing is, neither of those three companies are close to be a possible buyer for Tribune.

 

Meredith tried to merge into MediaGeneral but that’s the only time they’ve ever attempted such an M&A of that magnitude (the Koch brothers had to give them money to buy Time, Inc, if that’s any indication); Graham is family-owned and just doesn’t buy companies as big as Tribune; and Warren Buffet has the money, but has stood pat with WPLG while the M&As continue.

[dman748 1256]

BH Media might be the only group off the top of my head that could buy Tribune and still be under the cap, as it’s only consisting of WPLG (hell, a WPLG/WSFL duop is very plausible) but the thing is, neither of those three companies are close to be a possible buyer for Tribune.

 

Meredith tried to merge into MediaGeneral but that’s the only time they’ve ever attempted such an M&A of that magnitude (the Koch brothers had to give them money to buy Time, Inc, if that’s any indication); Graham is family-owned and just doesn’t buy companies as big as Tribune; and Warren Buffet has the money, but has stood pat with WPLG while the M&As continue.

And really the only plausible scenario where I see all 3 involved in purchasing Tribune is if Tribune sold its stations piecemeal (and we all know that ain't happening)

[MetroCity 248]

Consider this: Tribune doesn’t care what the buyer does after the sale: keep them all; sell some; sell all; turn them into yogurt shops. What happens post-sale is someone else’s problem.

 

So, why does Tribune insist on only selling in its entirety? It’s easier for Tribune. They’ll only have one buyer to negotiate with and one set of hoops to jump through. Imagine the boondoggle of having to deal with ten potential piecemeal buyers, ten individual negotiations with ten different groups of lawyers and ten sets of FCC filings. Working to integrate technical and personnel systems with ten different buyers, with who knows how many deadlines and closing dates. And that’s not even mentioning the countless number of investors to be satisfied with different deals on both sides of the bargaining tables. That’s Crazytown. The potential piecemeal headaches mean finding one single buyer is worth the wait.

[dman748 1256]

Consider this: Tribune doesn’t care what the buyer does after the sale: keep them all; sell some; sell all; turn them into yogurt shops. What happens post-sale is someone else’s problem.

 

So, why does Tribune insist on only selling in its entirety? It’s easier for Tribune. They’ll only have one buyer to negotiate with and one set of hoops to jump through. Imagine the boondoggle of having to deal with ten potential piecemeal buyers, ten individual negotiations with ten different groups of lawyers and ten sets of FCC filings. Working to integrate technical and personnel systems with ten different buyers, with who knows how many deadlines and closing dates. And that’s not even mentioning the countless number of investors to be satisfied with different deals on both sides of the bargaining tables. That’s Crazytown. The potential piecemeal headaches mean finding one single buyer is worth the wait.

Could Tribune just sell off 6 to 10 stations to Fox and then the rest to another company or would that too be considered going "piecemeal"?

[Rusty Muck 4378]

Could Tribune just sell off 6 to 10 stations to Fox and then the rest to another company or would that too be considered going "piecemeal"?

You’re absolutely missing the point.

 

Tribune wants a single sale, and whatever other deals will take place at the hands of the buyer, not Tribune. Fox will deal with the buyer of the stations, not Tribune itself.

 

There are no piecemeal deals going on. Zip, zero, nada. So please stop bringing up an impossibility.

[dman748 1256]

You’re absolutely missing the point.

 

Tribune wants a single sale, and whatever other deals will take place at the hands of the buyer, not Tribune. Fox will deal with the buyer of the stations, not Tribune itself.

 

There are no piecemeal deals going on. Zip, zero, nada. So please stop bringing up an impossibility.

Short answer, no. Have a good evening sir.

[CalItalian2 163]

LOL. That’s not the case. The KKRs, George Gillettes and Bain Gocoms of the world will only be getting back in the game to cash out in a bigger way.

 

And depending on the date of the midterms, the ownership cap will remain at 39%. Make that, the ownership cap is remaining at 39%, no matter what.

I worked for the Hicks at Capstar Radio. You obviously don't know them. They plan on buying more than just Tribune before they sell or merge or take it public. The cap will NOT remain 39%. I expect it will be the same is radio is, unlimited. It doesn't matter who is in the WH or controls Congress. Remember who signed the Telecommunications Act of 1996 that basically ruined local terrestrial radio.

[DonDonP1 118]

You know who really wants a Tom Hicks hedge fund buyout of Tribune to go through? This guy.

 

 

Fox stands to be at a better position getting all the stations they want, with a hedge fund buyer with no other investments keeping all the rest. It’s the only possible scenario with a truly clean outcome that’s in Fox’s favor.

 

Agreed.