Media mogul Rupert Murdoch's Twitter account certainly got the attention of media folks here with a mid-day tweet on Friday suggesting that Eli Broad was close to getting control of the Los Angeles Times.
Strong word Tribune newspaper group to be bought by big Wall St firm, LA Times to go to philanthropist Eli Broad and local group.— Rupert Murdoch (@rupertmurdoch) November 27, 2015
That set off a scramble among media reporters to find out more. By the end of the day, Ken Doctor at Politico concluded that Murdoch was "talking about a deal that has been brewing for at least a month, and could well happen."
If Apollo were to buy Tribune Publishing, the move might be only the first of two, as Murdoch suggests. Under this already-discussed scenario, Apollo — a suitor earlier this year for Digital First Media — would then sell the LA Times and San Diego Union-Tribune to Eli Broad, who had pursued that acquisition three months ago. If these two deals were to occur, Tribune publishing assets, based in nine metro areas, would be split essentially in half. Further, two new experiments in the transformation of print-to-digital newspaper publishing would be set to take flight.
Such a scenario might be a logical conclusion to a quarter of quite public turmoil for Tribune Publishing. Further, an Apollo buy of the whole company with a subsequent sale to Eli Broad would be the most advantageous to all parties from a tax perspective.
But there's one problem.
Apollo Global Management first approached Tribune Publishing about a month ago, telling board chair Eddy Hartenstein of its interest in buying the company, as confirmed by confidential sources. After receiving that expression, 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.
Apollo also wouldn't talk, but according to Doctor, has "engaged a small group of less than a half-dozen newspaper veterans to plot its next strategy," suggesting an interest in the business. Broad declined to comment through a spokesman, so another way of looking at that is he didn't deny it. Los Angeles investment banker Lloyd Greif suggested that the time has come for such a deal.
“I think Tribune Publishing is dead in the water, and they need to do something,” he said….“I think you are seeing the beginning of the end of Tribune Publishing, and a rebirth for the L.A. Times.”
The Hollywood trades all cobbled together stories because Murdoch and what happens to the LA Times are on their watch lists. "Murdoch's 'strong word' matches industry speculation about a pending transaction involving the Tribune and is sure to trigger even more speculation about it," media reporter Brian Stelter reported for CNN Money. The Orange County Register's Margot Roosevelt found more reason to view Murdoch's utterance skeptically.
Murdoch’s tweet “doesn’t strike me as plausible,” said Barry Lucas, senior vice president for research at New York-based Gabelli & Co. “I’m not saying it can’t happen, but a Wall Street firm is not going to [buy Tribune] philanthropically. It would put debt on the company and would need to be paid back.”
Nor would spinning off the Los Angeles Times be “particularly smart,” he added. “Tribune has sold itself to advertisers on the fact it has a national footprint. If you get rid of the L.A. Times, then it is a much tougher sell.”
The question that immediately came up among LA media people is whether the talk of an Eli Broad takeover, which would possibly mean a return of Austin Beutner as publisher, changes anything with the current brain drain-by-buyout decimating the ranks of senior journalists at the Los Angeles Times? This is all speculation, but the news conceivably could lead some of those whose exit date is still in the future to reconsider — most left on Wednesday — but since the rush to take buyouts is largely a vote of no confidence in the newsroom conditions, anyone thinking of rescinding their buyout would have to make a complicated calculation.
If Beutner returned as publisher, without former publisher and current Tribune Publishing chairman Eddy Hartenstein around, would Beutner make a change at the top? There's reason to think so, and to think not. Newsroom morale under editor Davan Maharaj has sagged pretty low, the print edition of the Times is barely worth bringing in from the driveway anymore, and the digital presentation of the Times is often a jumble that confounds readers. It's a common belief in the Times newsroom that Maharaj is Hartenstein's guy, and that Beutner had held conversations with or about potential new editors, as he also had with candidates for other senior newsroom jobs. Recruiting newsroom talent below the top job is not the usual role of a newspaper publisher, but Beutner didn't shy away from one-on-one meetings with potential candidates and others in the news business. Hollywood coverage was one of the areas Beutner showed an interest in; one of the revelations hidden deep in the hacked Sony emails showed Beutner meeting with a potential Times hire on the entertainment side referred to him by a top studio executive. On the other hand, Beutner was publisher for about a year without making changes in his top editors, and he said after being fired that it was the business side of the Times organization that needed the most revamping.
Beutner was pointedly critical of Tribune Publishing's buyout strategy after he was fired as publisher, saying that driving away top talent was exactly the wrong way to go about building a stronger digital news operation. But if he did come back following a Broad purchase, there's no reason to think there would suddenly be the money available to expand by hiring more journalists.
Meanwhile, with the current buyouts depleting many desks at the Times, some departments reportedly have gotten approval to start hiring. Expect to see job postings going up before the chairs are even cold on the ongoing buyouts.