Isn't this fun? Perhaps it's because the company owns the Chicago Cubs, but just when you think the intrigue surrounding Tribune (NYSE: TRB ) is beginning to wane, something comes out of left field to create some new excitement. Now with a decision on a pending restructuring and buyout plants apparently getting closer, Chicago billionaire real-estate entrepreneur Sam Zell has entered the fray with a new proposal of his own.
Not that Tribune has suffered from a shortage of billionaires interested in its future. Among the offers that have been on the table since mid-January is a proposal by a pair of well-heeled Los Angeles types -- grocery-store magnate Ron Burkle and former homebuilder Eli Broad -- who would inject $500 million of cash into the company, arrange a new debt package for Tribune, and distribute a special $27-per-share dividend to shareholders. That proposal joined another offer by the Chandler family, which has a 20% interest in the company, following its sale of Times Mirror to Tribune in 2000. Under the family's offer, the Chandlers would own 51% of the company, with the remaining 49% going to two private-equity firms.
The Zell proposal, which was disclosed over the weekend, would involve an employee stock-ownership plan (ESOP) at the company, and it would permit Tribune to avail itself of federal tax breaks available to ESOPs. The apparent result would be a highly leveraged private company that would return considerable value to current Tribune shareholders.
Yet another offer being considered by a special committee of Tribune's board reportedly came from a private-equity firm and would result in the sale of Tribune's 23 television stations. That plan, which reportedly has sparked little interest with the committee, would then leave the company with its 11 daily newspapers and its ownership of the Cubs, along with its interests in the Food Network and the CareerBuilder online job search firm. The special committee is said to have met over several Saturdays to consider the offers, and its recommendation is expected by the end of March.
Nevertheless, the difficulty of making a go of it in the daily newspaper and broadcast business was reinforced Friday, when Tribune also reported a 5% decline in its January revenue, with the figure for the 2007 month falling to $442 million, from $465 million a year earlier. Publishing revenue was down 6% to $345 million, while advertising contributed 7.3% less the last year, in part because of an 11.9% reduction in the contribution from classified ads. At the same time, circulation revenues fell 5.2% in January.
Tribune's day-to-day dilemma is one that most of the nation's major publishing and broadcasting companies share, including industry giant Gannett (NYSE: GCI ) , New York Times (NYSE: NYT ) , McClatchy (NYSE: MNI ) , and Media General (NYSE: MCG ) . On that basis, I suggest that Fools watch the unfolding events at the company but cast their investments elsewhere.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your comments and questions.
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