Thursday, November 02, 2006

Tribune Moves One Step Closer To Possible Sale

A tentative hurrah. The inept Tribune Co. has moved one step closer to sale of the L.A. Times and/or other former Times-Mirror papers in Baltimore, New York, Hartford and elsewhere by letting out the word that it will accept offers for individual pieces of the company.

This comes after preliminary bids from several private equity firms for the entire company were disappointingly low, although given Tribune performance this was only to be expected, and the stock price dipped again to the $32 level.

Now is the time for David Geffen, Eli Broad, Ron Burkle and any other possible local buyers of the L.A. Times to come forward and show enough real interest to make a nonbinding, preliminary bid.

The trouble is, however, that while the Tribune Co. has dithered, the value of the Times has probably declined. Since the Tribune began talking about selling assets, circulation of all the former Times-Mirror newspapers has dropped, with the L.A. Times taking an 8% hit. And besides that, the Times has adopted an unpopular redesign that has further alienated its readership.

There was talk a few months ago that Geffen might be prepared to put up $3 billion to buy the Times. Now, that figure is said to be $2 billion.

You can't have people like David Hiller and Joe Hutchinson in charge of a paper for long without its value being diminished.

So we'll have to see what offers now actually come in.

Not all American newspapers are down in circulation. In New York, where Rupert Murdoch has been ambitious, his New York Post is up considerably and its competitor, the Daily News, is up slightly. But during the same six-month period, the better paper, the New York Times, was down 3.5%.

There has been so much poor mouthing of newspaper prospects in general, in the age of the Internet, that all offers for Tribune Co. assets may be less than originally expected.

On the other hand, the ideas of Tribune CEO Dennis FitzSimons, specifically his stock buyback and cost cutting, layoffs, etc., have failed miserably, spinning the company into ever greater difficulties. All that FitzSimons has accumulated is more debt.

FitzSimons, Scott Smith, Hiller, Hutchinson and the rest of this motley crew may, in short, be at the end of their tether. In that case, sales of some assets are certainly in prospect, and we can only hope the L.A. Times is among them.

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Ominous reports this morning from the Horn of Africa say that Somali fundamentalists who have taken over part of Somalia are now threatening war and suicide attacks against both Kenya and Ethiopia. This is only to be expected when Muslim extremists take over. If war does result from a collapse of talks, then it might well be necessary for Somalia to be taken over as a colony. We see in this area what would likely happen were U.S. forces to withdraw from Iraq and other parts of the Middle East.

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