Murdoch, Carlyle Group Battle For Big Paper Control
Financial Times | January 24, 2007
Matthew Garrahan and Aline van Duyn
Rupert Murdoch's News Corporation has joined the Chandler family in its bid for Tribune Company, with an eye to taking a stake in New York's Newsday newspaper.
Newsday, which is based in Long Island, is one of Tribune's largest newspapers, along with the Los Angeles Times and Chicago Tribune. The media group, which put itself up for sale in September, also includes 23 television stations and the Chicago Cubs baseball team.
A person familiar with the situation said Mr Murdoch wanted to combine back office and operational functions at Newsday with those of the New York Post, the News Corp tabloid that has made big circulation gains in recent years but continues to rack up losses.
Mr Murdoch would likely take a minority stake in a consortium owning the Tribune's newspapers, rather than attempting to buy outright control of Newsday, the person added. Given News Corp's television and newspapers interests in the New York market, the company would be constrained my media ownership rules.
Any deal for Newsday would also hinge on the success of the Chandler consortium's bid for Tribune, although Mr Murdoch's interest identify him as a potential partner if future bidders emerge for parts of the Tribune group.
The Chandler family, which owns 20 per cent of Tribune and whose forebears built up the Los Angeles Times, pushed the board to consider a sale amid a slump in newspaper shares as readers and advertisers shift to the web.
News Corp declined to comment. In a recent filing with the Securities and Exchange Commission, the Chandlers said they were in discussions with strategic investors about joining the bid.
Tribune, which has a market value of about $7.3bn, put itself up for sale last year after pressure from the Chandler family, one of its largest shareholders. In addition to the Chandlers, Ron Burkle and Eli Broad, two southern California-based billionaires, have also submitted an offer for the company.
Neither bid represented a substantial premium to Tribune shares. At $31.70, the Chandler's offer made last Wednesday was equivalent to a 4.5 per cent increase on the trading price the previous day. On Tuesday, Tribune shares were trading at $30.22 reflecting market uncertainty about the chances of the company being sold at a higher price.
Tribune's board said this week it was "carefully considering all alternatives", including "potential transactions with third parties as well as actions the company may take alone".
While the board has stated that it would prefer an offer for the entire company, some potential bidders have focused on its various parts.
Carlyle Group, the private equity firm, has expressed interest in Tribune's television stations, while David Geffen, the Hollywood media mogul, made a separate $2bn all cash bid for the Los Angeles Times, which Tribune rejected.
Should the company decide to break itself up, Mr Geffen's bid for the Times is expected to remain valid. Mr Geffen declined to comment.
Additional reporting by Joshua Chaffin in New York and Stephanie Kirchgaessner in Washington
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