Assessing the Tribune mess

So now what do they do? The so-called auction has wound up with some crazy, jerry-rigged proposals - starting with the Broad/Burkle idea of essentially buying control of the Tribune for $500 million cash, plus $10.5 billion of borrowed money that would be used to pay shareholders a $27 a share dividend. That dividend, plus the $7 a share they say the company would be worth, post-dividend, adds up to $34, which is an OK premium over the $30+ the stock has been trading at. Actually, it's a pretty ingenious way of keeping the company intact and avoiding the nasty tax issues in an outright purchase. One interesting nugget in this morning's papers is that Broad and Burkle would become co-chairman of the company and keep current management. Well, that's what they're saying now anyway. Nikki Finke offers another tidbit: that Broad and Burkle have already met with LAT publisher David Hiller and apparently like the guy (well, that's what those unnamed sources are saying). We also have former LAT editor Dean Baquet hanging around, just in case things get interesting.

Meanwhile, there are the Chandlers, offering up a plan that would have them, along with an unnamed private equity group, buy the newspapers, but have Tribune spin off the broadcast operations. The Chandlers would then sell off the newspapers individually. This proposal, which seems more like a defensive maneuver aimed at propping up their Tribune investment, has Scotch tape all over it (they're still trying to find more investors). Yes, it would provide tax benefits the family could use, but the Chandlers would have to own at least 51 percent of the new operation, and there would be all kinds of restrictions on when they could start selling off assets. Sounds like they're just trading one headache for another.

If all this sounds a tad unclear and indefinite... well, just remember that yesterday's deadline wasn't truly a deadline because anybody else can come forward with a better plan, which wouldn't take much doing (interested Roderick? I've got a few bucks I could plunk down). Might a better plan include some sort of management-led deal? Perhaps, but when the board meets over the weekend to untangle all this non-interest, it's entirely possible that directors will say "no thanks" to the new offers and get on with the business of unloading the TV properties, which had been talked about early last year, before the Chandlers - Tribune's biggest shareholder - began making noises about value.

As we've said many times around here, any deal still revolves around the price of the stock. (For what it's worth, it's up more than 2 percent this morning, to $31.) The second-biggest shareholder, the McCormick Tribune Foundation, made it clear yesterday that the company shouldn't accept an offer that didn't provide a significant premium (and this isn't just a big shareholder; the foundation is controlled by Tribune management). One of the interesting questions centers on that $7 a share estimate Broad and Burkle are throwing out - the estimated equity value after the $27 dividend gets paid. Is that a realistic number? Anything less and the offer becomes less and less attractive, especially with the stock moving up. Oh, and don't forget private equity outfit Madison Dearborn Partners. True, the firm decided not to bid yesterday, but there's nothing to stop those guys from re-entering the picture (keep in mind that Madison's ties to Tribune are pretty deep). Is it just remotely possible that the McCormick Foundation might try to align itself with Madison and other private equity firms on a bid? Oh, to have a company that somebody would actually want to buy - really buy. LAT WSJ Chicago Tribune