Tribune Publishing, owner of the some of the country’s best known newspapers, is under pressure to accept an offer to purchase for “about $185 million.” Gannett Company, Inc, wants to buy Tribune, which publishes the Los Angeles Times, the Chicago Tribune, and the Baltimore Sun, among other titles.
According to the Los Angeles Times, Gannett is pulling out all the stops to acquire Tribune Publishing and will assume the company’s “$390 million in debt.” Gannett is not only willing to pay big bucks for the legendary publisher, but it’s persistent, too. In a statement, “Gannett said that it first made overtures to Tribune Publishing’s board on April 12 and followed up several times in phone calls to Chairman Michael Ferro.”
The Virginia-based company’s keenness on Tribune is not reciprocated, however. Tribune Publishing Chief Executive Justin Dearborn said that his “company did not seek or encourage Gannett’s proposal and has not been trying to sell.”
” ‘As a public company, our Board is obligated to evaluate any proposal of this nature and we take this responsibility seriously,’ Dearborn said, adding that the company planned to ‘respond to Gannett promptly.’ “
The offer “translates to $12.25 a share, represents a 63% premium over Friday’s $7.52 a share closing price, as well as a premium over the $8.50 share price at which Tribune recently issued common shares.” In addition, Tribune “jumped in early trading to $11.97, nearly 60%, on news of the offer.” Dearborn might not want the Gannett offer, but Wall Street certainly does.
Why is Gannett so desperate for Tribune Publishing? In this day and age, most people would assume that digital media has the edge over print. However, the Tribune name carries a lot of nostalgia and an excellent reputation for quality journalism. Gannett CEO Robert Dickey send a pleading letter to the Tribune in an effort to sway Dearborn.
“We believe the financial and strategic logic of a combination of our two companies is clear… we believe Gannett is uniquely willing and able to propel Tribune into the position of strength that will allow its beloved and historic publications and other assets to survive and thrive in this challenging environment. By combining, we would create a company with the financial stability and flexibility equipped to preserve journalistic integrity, high standards and excellence for years to come. We would be able to both empower our journalists and facilitate the creation of exceptional content while delivering stockholder value.”
Tribune Publishing isn’t the only big player in the potential deal. Gannett knows what it’s doing with regard to publishing. It’s the biggest company of its kind in the United States. USA Today, which takes pride of place in the Gannett stable, is the biggest-selling newspaper in the country. Dickey’s company also owns many large regional papers, including the Tennessean, the Cincinnati Enquirer, and the Detroit Free Press.
The Tribune Publishing offer is “about 5.6 times Tribune’s estimated 2016 earnings before interest, taxes and other items,” reports USA Today. Also, “Gannett estimates about $50 million a year in ‘synergies’ savings.” The nature these savings will take, i.e. how many jobs will be lost, is the primary concern for Tribune employees.
Tribune Publishing is the natural next step for Gannett. USA Today notes that “Dickey made it clear that his strategy amid the turbulent print advertising market involved consolidating more media properties to strengthen its position on local reporting and local marketing and advertising.” Gannett recently completed the “$280 million acquisition of Journal Media Group,” which brought around 15 regional titles to the Gannett group.
To be fair, Dickey is doing his best to reassure Tribune staff. Promises made before a buyout aren’t often worth that much, but if the deal goes through, it might be all the employees have to rely on.
“We have tremendous respect for the employees of Tribune Publishing. Our goal is to write great journalism at every location. And you can’t do that without having proper resources. I’m committed to investigative, public service journalism. We will always be efficient at our job. I focus on areas that don’t impact journalism…”
Tribune Publishing “fills a number of geographical gaps for us,” according to Dickey. However the Tribune cachet is probably just as important to Gannett. Tribune “owns some of the most august brands in journalism,” but reported “a net loss of $2.8 million in 2015, swinging from a profit of $42.3 million a year earlier.” With numbers like that, no amount of sentimentality will pay the bills.
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