Tribune to Rupert Murdoch: We're Not Talking Sale

Media mogul Rupert Murdoch says Tribune Publishing, including the Chicago Tribune, is about to be sold.

Tribune says: “No, we’re not.”

On Friday afternoon, Nov. 27, Murdoch, the CEO of News Corp. and the man behind Fox News and the Wall St. Journal, dropped this nugget on Twitter: “Strong word Tribune newspaper group to be bought by big Wall St firm, LA Times to go to philanthropist Eli Broad and local group.”

The firm, Apollo Global Management, approached Tribune Publishing a month ago and also assembled a team of experts to plot strategy for the company, reports Ken Doctor, author of Newsonomics and an expert on the changing media business, on PoliticoMedia.

Spinning off the L.A. Times and other California assets, long coveted by local suitors, would be part of that strategy.

But Tribune has refused to engage with Apollo, according to Doctor’s report:

... Tribune Publishing has been “non-responsive,” unwilling to schedule meetings or provide deeper-than-public financials, I am told.

Given that the parties haven’t been negotiating, the odds on a Tribune Publishing agreement to sell are tough to gauge. The price would likely be in the range of $650 to $750 million, given the market capitalization and debt of Tribune.

Tribune Publishing declined to comment on Apollo’s interest, or why it would reject apparently bona fide interest in the public company, as did Apollo

Tribune Publishing stock closed Friday at $9.29 a share, pegging the company’s market capitalization at about $244 million.

On Monday, Tribune Publishing issued a wordy response to the speculation to reassure employees.

“Over the Thanksgiving weekend, a rumor was reported in social media and the press regarding a potential purchase of Tribune Publishing Company. While our policy is not to comment on rumors, given the source of this speculation and the fact that it has received considerable public attention, the company believes a statement to employees is warranted,” the statement read. “As our board of directors noted earlier this fall, and as we articulated in our November earnings call, Tribune Publishing remains committed to its strategy and transformation plan and is not engaged in discussions or a process to sell the company. As we finish the important fourth quarter, we appreciate the continued hard work and commitment of our employees.”

Reflecting the systemic and structural challenges generally facing the print newspaper business, the company lowered its 2015 revenue estimates earlier this year and since its August 2014 spinout the company has lost half its stock value.

Tribune CEO Jack Griffin suggested people in their 20s will eschew mobile devices for paper in their hands as they enter adulthood, telling re/code.net in September: “I use (a smartphone and iPad) to find stuff that I’m looking for, and I read the paper to find out things I don’t know.”

How will pressing ahead with its current strategy and not talking to potential suitors sit with stockholders? Doctor, who notes that Apollo would likely invest substantially in a digital future for the company, writes:

... a week ago, Oaktree Capital Management — with its 18% holding, the company’s largest shareholder — participated in a filing allowing the company to begin selling its “affiliate” shares, gained through the long and torturous five-year Tribune Company bankruptcy. Oaktree has not publicly pressured the Tribune board to put it for sale, or to actively consider offers of interest, such as Apollo’s, preferring to stay out of the fray. If the Tribune board were to further put off Apollo, or Broad, or other, interest, Oaktree’s hand might then be called.