Although it's impossible to say for sure, since things keep changing, Tribune's (NYSE: TRB) ongoing intrigue regarding the shape of its future may finally reach an end this week. A "self-help" approach seemed the company's most likely route, but a potential deal with Chicago real estate mogul Sam Zell is now shaping up as a possibility.
After months of lurching from one potential direction to another, with stories involving various forms of buyouts and restructurings, the company appeared to be headed toward taking a "self-help" route, by way of a special committee of its board of directors. Now, however, the lurching appears to favor a potential deal with Zell, a latecomer to the list of bidders for the company.
The Zell plan, which continues to take shape, was first proposed after a January deadline in which a pair of Los Angeles billionaires, Eli Broad and Ron Burkle, along with a private-equity firm and a group led by the company's management, all submitted proposals regarding Tribune's future.
After several weeks, however, the so-called self-help plan appeared ready to win out. It would have required the company to sell its 23 television stations, its Chicago Cubs baseball team, and its partial ownership of the Food Network. Tribune would also have increased its debt to pay shareholders a special dividend. In turn, that dividend would have provided cash for the company's second-largest shareholder -- a charity with ties to management -- to purchase of a portion of the position now held by Tribune's largest shareholder, the Chandler family.
The Zell proposal involves the formation of an employee stock-ownership plan at Tribune, creating an ownership bloc in concert with Zell. Still to be determined under this plan are the amount of debt incurred, and the amount of cash that would come from Zell, who recently sold his Equity Office Properties Trust to the Blackstone Group for $23 billion.
As with other companies involved in newspaper publishing, including New York Times (NYSE: NYT), McClatchy (NYSE: MNI), Lee (NYSE: LEE), and Gannett (NYSE: GCI), Tribune has been plagued by eroding circulation and advertising revenue numbers. As a result, the company's share price has fallen. The slide led the Chandlers to push the company to examine options for its future. That examination has taken most of the past six months.
Now, Fools, I realize that the company's shares rose $1.03 to $30.53 on Friday, as some investors apparently gained an inkling that the Zell deal might have gained traction. For the same reason, those shares might strengthen this week. In the final analysis, however, this is still largely a newspaper publisher, and so I'd urge you to funnel your investment funds in other directions.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments.
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