This one is tough to make heads or tails out of. First we heard that Rupert Murdoch had made a bid on the Long Island newspaper, owned by Tribune Co. Then there was word that NY Daily News owner Mort Zuckerman was interested - and maybe James Dolan of Cablevision. After that were the doubters who questioned whether the paper was even for sale (why would Tribune give up such a cash cow?). The latest word comes from Newsday itself, which reports that Zuckerman is aggressively preparing a bid for the paper. The riddle could provide clues on how far Tribune chieftain Sam Zell is prepared to go in trying to make payments on all that debt. Jake Newman, a debt analyst with CreditSights, says that most everything is on the table, including the LAT. Based on Zell's agreements with lenders, he needs to repay $650 million in December 2008 and $750 million in May 2009. "The company has no other visible means of repaying that," Newman told Fortune. One alternative to dumping Newsday or the LAT is to sell Tribune's 31 percent stake in the Food Network to majority owner E.W. Scripps. That could be worth $1 billion right there.
"That would reduce leverage for Tribune the most among all the assets Tribune has," says Newman. John Miller, senior vice president of Ariel Capital Management in Chicago, agrees. "I wouldn't be surprised if Sam Zell sold his part of the Food Network." Hinting that informal talks may already be underway between Scripps and Tribune, Miller says that "Scripps wants to pay one price for the piece, and Tribune is a seller at a higher price."