Published on Thursday, 14 June 2012 14:27
In less than a month, U.S. Bankruptcy Judge Kevin Carey is expected to rule on allowing Tribune Company to go ahead with a reorganization plan that will allow the company to finally exit the bankruptcy it has been mired in for 3.5 years, costing over $400 million in legal fees. It will also assign ownership to the largest creditors -- Oaktree Capital Management, JPMorgan Chase, and Angelo, Gordon & Co. It is expected that the new Tribune creditor owners will then begin to sell off Tribune properties for quick cash. The question is... how easy of a task will that be?
Variety looked at that very question today in a report by reporter Jill Goldsmith
Nobody doubts that Tribune Company will be ripped apart and auctioned off by its new ownership, as none of the creditors wish to be in the sagging media business. (One creditor, Oaktree Capital Management, does own portions of other media outlets, which include Cumulus Media, Townsquare Media and Dial Global, due to acquisitions of struggling corporations' stocks and debt. Running media companies is not part of the financial/investment institution's long-term plans, though.) With Tribune Broadcasting's 23 television stations currently valued at around $3 billion, Variety's Goldsmith says that it will be very difficult to sell the entire division to one buyer, especially in the current market.
Variety estimates that the television stations will most likely be sold off piecemeal or in groups to various buyers. Achieving the estimated $3 billion total value will be tough, based on recent television station transactions, however, which have driven down the going rate for stations, and FCC restrictions which will not allow owners to have too many stations in the same market.
Additionally, Variety suggests that the Tribune's new creditor owners may want to hold on to the valuable television properties until a more favorable selling market kicks in. That suggestion seems highly unlikely to be followed, though, as most believe the creditors will do whatever it takes to unload the properties as fast as possible.
Not mentioned in Variety's report is Tribune Broadcasting's lone radio station, WGN-AM. Chicago's top-rated heritage radio station will undoubtedly go for many millions of dollars. Although not yet on the market, potential buyers have already been rumored. Among the possibilities are Merlin Media, run by Randy Michaels, the former Tribune Company CEO who helped orchestrate the corporation's current bankruptcy mess along with Sam Zell, and Hubbard Broadcasting, who would look to purchase WGN-AM along with WGN-TV and few other Tribune-owned television stations in a package deal. The name of Cumulus Media has been brought up repeatedly as a potential buyer, but with the company still trying to recover financially from last year's major purchase of Citadel Broadcasting, it is unlikely that the company would be able to pull together the financing for the asking price that WGN-AM will surely command. Townsquare Media, which was taken over by creditor Oaktree Capital Management, is a long shot possibility as a buyer. While it is still extremely
early to be speculating on a buyer, most believe that Hubbard Broadcasting, with its package deal of purchasing a few of the Tribune-owned television stations along with the radio station, seems the most likely future owner of WGN-AM.
The many Tribune-owned newspapers and periodicals would also look to be sold off piecemeal. One possible buyer for the Chicago Tribune and the local periodicals could be Wrapports, LLC, the group of local investors who purchased the Chicago Sun-Times in December. This would allow for a more economical combining of all major Chicago print news operations, but also leave Chicago with only one company monopolizing those news operations. If not Wrapports, the most likely buyer for the Chicago Tribune would come from a media corporation outside of the market.
Chicago's Tribune Company is the country's biggest media corporation in bankruptcy. It filed for bankruptcy in December 2008, with approximately $13 billion in debt, just one year after real estate developer Sam Zell completed the $8.2 billion leveraged buyout of the corporation.
Tribune Company owns thirteen newspapers, various magazines and periodicals, twenty-three local television stations, one local cable-only television station, two national television networks, one radio station, as well as numerous other websites and companies. Among the company's Chicagoland properties include the Chicago Tribune, RedEye, Hoy, Chicago Magazine, Naperville Magazine, WGN-AM, WGN-TV, and CLTV.