Tribune Company (TRBAA) Could Be a Buyout Target

Long-term prospects and outlook

One key aspect of Tribune Company’s post-reorganization path has already fallen into place: the company’s selection of Peter Liguori as its new chief executive. Since the bulk of Liguori’s managerial and executive experience lies in the television industry, the choice is somewhat controversial. Many industry analysts speculate that the move is designed to telegraph Tribune Company’s intention to dispose of its eight remaining newspaper assets. However, the sale of its namesake brand would be fraught with emotional significance. After all, the paper has been in the company’s portfolio for more than 150 years.

In keeping with the unmistakable trend towards print media consolidation, there are two obvious suitors for the Chicago Tribune and Los Angeles Times: The New York Times Company (NYSE:NYT) and the print media arm of the newly-split News Corp (NASDAQ:NWS). Other suitors could include McLean, Virginia-based Gannett Co., Inc. (NYSE:GCI) and Washington, D.C.-based The Washington Post Company (NYSE:WPO).

However, it is unclear whether big-city papers would fit into either company’s small-market approach to the newspaper business. It remains to be seen whether Gannett or Washington Post would be willing and able to shoulder responsibility for buying out two of the United States’ largest daily newspapers. The Washington Post does have a healthy net income and over $700 million in cash so they may not want to mess with a decent situation in the newspaper world. At the moment, Rupert Murdoch’s company looks to be a slight favorite in any theoretical leveraged-buyout situation. News Corp has over $12 billion in cash and is making over $2.5 billion annually so they could certainly do it financially.

If Tribune Company does choose to redouble its efforts to focus on television, it will do so primarily through its portfolio of network affiliates. It owns several major-market CBS Corporation (NYSE:CBS) and FOX (NWS) affiliates in addition to its CW and Food Network stakes. Should it choose to raise cash by selling off some of its newspaper properties, it might be able to make additional targeted acquisitions in the space.

Although its success is by no means guaranteed, Tribune Company has emerged from reorganization as a stronger, leaner company. If it can maintain its focus on growing its television and digital-media businesses, it could provide investors with solid returns. If it cannot, it may quickly become the target of a buyout that might produce a different set of opportunities.

The article Re-Listed Newspaper Company Could Be a Buyout Target originally appeared on Fool.com and is written by Mike Thiessen.

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