Posts for Ticker ‘TRB’

Pre-Market Stock News (December 20, 2007) (ACN, ATVI, ALTU, ARRY, ATHX, BSC, BX, CAKE, ECHO, INTU, FDX, MLHR, IDEV, LDK, LEG, LOCM, NKE, ORCL, PIR, RIMM, RAD, RUTH, SMOD, SCS, DEEP, TRB)

This is not every bit of news on individual stocks but this is the major news affecting many shares in pre-market activity this Thursday morning:

  • Accenture (ACN) stock up 4% after posting $0.60 EPS vs. estimate of $0.56.
  • Activision (ATVI) again guided earnings higher.
  • Altus Pharmaceuticals (ALTU) traded down almost 20% after it reacquired ALTU-238 development and commercialization rights for North America from Genentech, an end to the development pact.
  • Array BioPharma (ARRY) traded down almost 20% after it announced initial results from a Phase II study comparing its monotherapy with temozolomide in the first-line treatment of advanced melanoma showed no apparent difference in efficacy for the primary endpoint.
  • Athersys (ATHX) and Angiotech announce authorization of Phase I stem cell trial for heart attacks.
  • Bear Stearns (BSC) expected to post first loss.
  • Blackstone (BX) plans to sell a $9 Billion CMBS offer backed by Hilton Hotels in Q1 2008.
  • Cheesecake Factory (CAKE) had a 10% stake taken by activist Nelson Peltz.
  • Electronic Clearing house (ECHO) getting acquired by intuit for $17.00 per share.
  • FedEx (FDX) $1.54 EPS vs. $1.50 estimates (had been lowered) but next quarter $1.15-1.30 vs. $1.38 est.; $6.40 to $6.70 for year bvs. $6.47 estimate.
  • Herman Miller (MLHR) $0.72EPS Vs. estimate of $0.59; stock rose about 10%.
  • Indevus Pharma (IDEV) trading down about 5% on a non-approvable letter from the FDA for VALSTAR NDA supplement (submitted May 2007).
  • Intuit (INTU) paying $131 Million for ECHO.
  • LDK Solar (LDK) $0.37 EPS on $157M revenues vs. $0.37/$143.22M est.; Q4 guidance $0.40-$0.41 on $180-$185M revenues vs. $0.41/$167.5M est.; stock indicated down 5%.
  • Leggett & Platt (LEG) stock down about 5% on lower guidance.
  • Local.com (LOCM) announced a strategic partnership with IAC/Interactive’s Citysearch; stock trading up 7% on news.
  • Nike (NKE) traded up 3% after $0.71 EPS on $4.3 Billion revenues vs. estimates $0.66/$4.3B.
  • Oracle (ORCL) traded up 6% after beating earnings and giving slightly higher guidance; sees enterprise spending lasting into 2008.
  • Pier 1 (PIR) -$0.11 EPS vs -$0.24 estimate.
  • Research-in-Motion (RIMM) reports earnings after the close today.
  • Rite Aid (RAD) indicated down about 5% after posting loss.
  • Ruths Chris (RUTH) gave an earnings warning.
  • Smart Modular Tech (SMOD) $0.18 EPS vs. $0.17 estimate.
  • Steelcase (SCS) $0.30 EPS vs. $0.28 estimate.
  • Superior Offshore (DEEP) signed a letter of intent with a strategic partner for ownership of a DP-III deepwater construction and dive support vessel expected to be delivered in late 2008.
  • Tribune (TRB) buyout supposedly set to close today.

Jon C. Ogg
December 20, 2007

Posted on: December 20, 2007 – 8:02 am in Pre-Market Activity, , , , , , , , , , , , , , , , , , , , , , , , , ,

Tribune (TRB) Deal In Trouble

The deal for a group, lead by investor Sam Zell, to buy The Tribune Company (TRB) may be in trouble. According to The Chicago Tribune "Tribune Co. executives were sweating out aggressive last-minute questioning Tuesday from bankers reluctant to fund the final portion of a debt-laden $8.2 billion deal."

If the deal breaks apart it will be a brutal blow to TRB shareholders. Shares are down 6% today, but the offer to take the company private has kept the stock fairly high. Over the last six month TRB shares are up 10%. Those of rival Gannett (GCI) are off 35%.

In the absence of a buy-out, it would not be hard to imagine a correction from the current price of $31.41 down to $20.

Douglas A. McIntyre

Posted on: December 19, 2007 – 10:47 am in Old Media, ,

Tribune (TRB) October Revenue Falls Over 9%, Where’s Zell?

In another sign that Sam Zell may not be able to fund his buy-out of The Tribune Company (TRB), October revenue at the company fell 9.3% to $383 million. Advertising revenue was off 10.6% to $222 million.

Broadcast revenue fell 13.3% to $96 million

Douglas A. McIntyre

Posted on: November 27, 2007 – 8:16 am in Old Media,

Newspapers Will Try To Compete With Internet Portals

Big city newspapers want what they lost to portals like Yahoo! (YHOO) and MSN. They want their advertising back. According to The Chicago Tribune "sources close to the situation said Gannett Co (GCI)., Tribune Co (TRB)., Hearst Corp., Media News Group and Cox Newspapers may band together to form a common ad sales force that could offer national advertisers "one-stop shopping" for ad space on big-market Web sites across the nation.

Yahoo! and Google (GOOG) are also setting up newspaper networks, but if the large chains can get the papers in the ten largest markets to join their alliance, it may deal a blow to the attempts of online companies to sell advertising on behalf of the chains.

Why pay Yahoo! a piece of the action if the online advertisers will deal with papers directly?

Douglas A. McIntyre

Posted on: November 6, 2007 – 8:10 am in Internet, , , ,

Other In-Trouble Mergers After Affiliated Computer (ACS, TRB, CMLS, GCO, PPH, FINL, BX, COMS)

Yesterday morning 24/7 Wall St. covered how the buyout for Affiliated Computer Services (NYSE:ACS) was for all practical purposes looking like toast, and we wanted to see which other pending deals were at risk.  A much more detailed review went to our free email newsletter subscribers yesterday morning, and all of these spreads have widened out today.  The news from last night confirmed this buyout was dead and today the Chairman received notice that the independent directors would leave their posts as per his demands.

But there are many other mergers out there that have misleading merger-arb spreads that are indicative of potential trouble as far as a closing at all or at least a risk of the stated merger price being sent to a reduced buyout price. Almost all of these mergers are different than the ones from September that we deemed at risk.

Tribune (NYSE:TRB) $34 buyout from Sam Zell and employees….
Shares reached almost $30.50 yesterday and today’s $29.90 is representative of a 13.7% merger-arb spread for a merger that shareholders have already approved.  24/7 Wall St. has given our own prediction for a buyout price that Sam Zell would likely offer if financing gets tight in this LBO-OPM (leverage buyout, other peoples money) offer.  We are looking at updating this in our New Media/Old Media subscriber letter next week.

PHH Corp. (NYSE:PHH) $31.50 buyout……
With a near-50% merger-arb spread consider this one toast or revised far lower or maybe only even by one of the buyout partners.  The Blackstone (NYSE:BX) buyout is supposedly to be revisited momentarily, although JPMorgan and Lehman that were financing a portion of the deal have (as of last look) maintained a $750 million shortfall on the debt portion here.  General Electric (NYSE:GE) was Blackstone’s buyout partner and the deal as originally intended was going to send the fleet services group (corporate car and truck fleets) to GE and the mortgage business to Blackstone. 

Genesco (NYSE:GCO) $54.50 buyout……
The $1.5 billion footwear acquisition that had been agreed to in June was scheduled to close last month, but would-be acquirer Finish Line (NASDAQ:FINL) and investment bank UBS stalled on the deal because of concerns over Genesco’s financial performance after the $54.50 buyout deal was announced.  At $45.40 there is a 20% merger-arb spread.  24/7 Wall St.’s belief is that Finish Line is in no position to do the deal whether it "states uncomfort and concerns" or not.

3Com (NASDAQ:COMS) $5.30 buyout…..
3Com’s buyout is not at risk over shareholder revolts nor over financing.  This one is at risk over China’s Huawei holding a stake after the Bain Capital buyout over "national security concerns" because many US and partner government agencies still relying on 3Com’s communication equipment. Senators are reviewing the deal and saber rattling here.  Boy, those must be some old systems.  24/7 Wall St. is reviewing this one now for the Special Situation Investing Newsletter since at $4.86 this has only a 9% merger arb-spread for an at-risk deal on a company that management can’t fix on its own.

Cumulus Media (NASDAQ:CMLS) $11.75 management-led buyout…..
The $1.3 Billion MBO agreement announced on July 23, 2007 has been a quiet one.  When announced this was almost a 40% premium.  At $10.12 today, there is still a 16% merger-arb spread.  The Board of Directors approved the deal and recommended that shareholders vote for it, but the financing from Merrill Lynch Global Private Equity and Merrill Lynch Capital Corporation "could" be up for interpretation.  Jim Cramer actually called this a takeover candidate before the MBO was announced.  Cumulus is also a name 24/7 Wall St. has under review for its New Media Old Media subscriber newsletter.

Jon C. Ogg
November 1, 2007

Jon Ogg produces the subscriber-based Special Situation Investing Newsletter where we cover buyout candidates, restructurings, spin-offs, and more.  We recently issued our "Small Cap Internet Watch List" PART 1 of 2 that showed a list of smaller web related properties we think could be acquired under the right circumstances, and we even listed which predator companies could or would acquire them under the right circumstances.

Posted on: November 1, 2007 – 2:44 pm in Mergers and Buy Outs, Private Equity, , , , , , , , ,

Earnings May Help Tribune (TRB) LBO

The Tribune Company (TRB) reported earnings, and anyone who thought they would bolster the case for Sam Zell taking the company private might have had a positive surprise.

Net income attributable to common shareholders fell 5.8 percent to $152.8 million from $162.2 million a year ago.

Revenue fell 4.1 percent to $1.28 billion. Publishing division ad revenue dropped 9 percent because of a slowdown in real estate, national and classified ad sales.

Those numbers would appear to be bad, but perhaps not bad enough to drive off the TRB buyers.

The shares are up over 3% at $28.44.

Douglas A. McIntyre

Get a Free Subscription to the 24/7 Wall St. New Media Newsletter and follow investment views on companies like Google, The Tribune, AT&T, Comcast, News Corp and others.

Posted on: October 24, 2007 – 9:47 am in Earnings,

24/7 Wall St.’s Take on Scripps & Media Break-Ups (SSP, BLC, TRB, JRC)

EW Scripps Co. (NYSE:SSP) is following the media trend of separating its operations into more pure play media sectors.  The good news here is that the valuable interactive unit will no longer have to be tied to newspapers.  The bad news is that the stations have to go with the paper unit, but arguably that might be construed well by some.  Scripps will split operations and become "Scripps Networks Interactive" and "The E.W. Scripps Company."

Scripps Networks Interactive will have an estimated $1.4 Billion in annual revenues with some 2,100 employees and will consist of:

  • National lifestyle media brands and associated enterprises that operate collectively as Scripps Networks, including television’s HGTV, Food Network, DIY Network, the Fine Living Television Network and Great American Country and their category-leading Internet businesses.
  • The new company also would include online comparison shopping services Shopzilla and uSwitch and their associated Web sites.

The E. W. Scripps Company will have combined annual revenues of $1.1 Billion and some 7,100 employees and will include:

  • Daily and community newspapers in 17 U.S. markets;
  • 10 broadcast television stations clustered among the nation’s largest 50 markets, including six ABC affiliates, three NBC affiliates and one independent station;
  • The character licensing and feature syndication businesses operated by United Media;
  • Scripps Media Center in Washington D.C., which includes the Scripps Howard News Service.

If you have seen 24/7 Wall St. for very long, or if you have read all the reports out there on what is happening with newspapers, you’ll know that the media sector is looking for ways to get away from newspaper revenues.  Unfortunately, old fashioned newspaper readers are dropping off at a faster clip than smokers.  The next wave of cuts the industry will feel is when newspapers get cut more from many hotel chains that leave them at the front door of each occupied room.

If you enjoy reading about break-ups and other special situations we produce our own "Special Situation Investing Newsletter" for subscribers.  We will be reviewing this for subscribers as the break-up gets closer.  Unfortunately, the company believes this tax-free spin-off will not be completed until the end of the second quarter of 2008.  There is a lot of calendar between now and then, and many more months of bad news out of newspaper companies.  One thing may help papers in 2008: the presidential election.  Depending upon how the valuations are laid out, it is even conceivable that the interactive content unit might have predators looking at it right out of the gate.

The market is reacting with enthusiasm to the Scripps plan.  Shares are up almost 8% at $45.50, back in the middle of its $37.89 to $53.39 trading range over the last 52-weeks.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 11:16 am in Media, Mergers and Buy Outs, , , , ,

Will McClatchy (MNI) Miss Debt Payments?

Just a year ago, it would have been unthinkable that a major newspaper chain could miss its debt payments, But, that has now become a possibility at two of the larger public companies in the industry, McClatchy (MNI) and Journal Register (JRC). A third troubled company, The Tribune (TRB), may be private by the time it faces the same problem.

In the recent past, extending debt or getting better terms often worked. Debt-laden companies like Level 3 (LVLT) and Charter (CHTR) did a good job of it. But, with the credit markets feeling impoverished, refinancing is easier said than done.

McClatchy (MNI) took on a lot of debt to buy rival Knight-Ridder. It did sell off some properties to cut that debt, In its last 10-Q, the company listed almost $2.7 billion in long-term debt. On revenue of $580 million, MNI had operating income of $117 million. Interest expense was just shy of $50.

All of that does not sound so bad. But, in August, the company said that advertising revenue fell 9.2% and total revenue was down 8.4%. To make matters worse. online revenue fell. At most newspaper companies that is the one segment that is moving.up. The August drop was also worse than the year-to-date numbers, which means that the problem could be getting worse.

An 8% drop in revenue would have taken MNI’s revenue in Q2 from $580 million to about $533 million. If costs remained the same in the quarter, operating income would have dropped to $70 million. At that number, the margin for error on a $50 million per quarter interest load looks much worse.

Is a default in the cards? The company does have investments in unconsolidated companies. That could buy some time. But, the company does have debentures due this year.

McClatchy cannot get out from under that fact that newspaper revenues are going to keep falling, whether it is 5% per year or 10% per year. At $19.66, the stock is pennies from its 52-week low. The 52-week high was $44.95.

With the shares trading at less than 70%, some of the trouble is already built into the stock. but, perhaps not all of it.

Douglas A. McIntyre

Posted on: September 27, 2007 – 9:58 am in Media, , , , ,

Which Private Equity Deal Fails Next: Tribune, Acxiom, Penn Gaming?

Now that Goldman Sachs (GS) and KKR have walked away from Harman (HAR), the question is which private equity deal will fail next.

Here is a short list of the deals that 24/7 Wall St. still think could be in trouble. These deals could be killed or, at least, be renegotiated to a lower price.

Sallie Mae (SLM), which originates and holds student loans is an obvious candidate. Against an offer price of $60, the shares now trade at $48. The New York Times has written that private equity firm J.C. Flowers & Co. plans to seek a lower price. Congress has sent the President a bill which could cut about $20 billion in government subsidies to banks that make student loans, according to the AP. Flowers and its banks could cansider that a "material adverse effect."

Acxiom (ACXM) The database management company has an offer from Silver Lake and ValueAct Capital in which the firms would pay Acxiom shareholders $27.10 a share to take the company private. The shares trade at $22. The company announced an 88% decrease in income from operations last quarter. Earlier this month, the company cut 265 people.

PHH (PHH) Blackstone (BX) said it is working with investment banks in an effort to seek more debt funding for the buyout. But, the deal is in trouble since banks sent revised terms for the takeover. The stock is trading at under $25. When the deal was announced, it hit $31.52.

The Tribune Company (TRB) Sam Zell, the leader of this buy-out, keeps insisting that the deal will close. But, the company’s revenue keeps falling and was off over 5% in August. The buyout, for $8.2 billion, will leave the company awash in debt, even though it is selling non-core assets like the Chicago Cubs to improve the balance sheet. The shares trade at $28, after hitting $34.28 when the purchase plan was announced.

Myers (MYE)  The rubber and plastic manufacturer recently said its $1.1 billion acquisition by a private equity arm of investment bank Goldman Sachs will likely be delayed until the fourth quarter. Income from operations dropped in the June quarter from $7.1 million last year to $2.5 million in 2007. Shares trade at $19.75 against a post-deal announcement high of $22.73.

Reddy Ice (FRZ) Shares now trading at $26.50 after hitting $32.31 on buyout news. The AP wrote that Reddy Ice planned $1.1 billion buyout by GSO Capital Partners LP encountered turbulence, when Morgan Stanley objected to amendments to the deal saying they violated conditions of the bank’s loans.The Fool wrote that the company’s recent weak results, coupled with the tightening credit markets, led GSO to renegotiate parts of the transaction already.

Penn National Gaming (PENN) The racetrack and casino operator agreed in June to a $67-a-share buyout by Fortress. The Wall Street Journal recently pointed out that shares of several buyout targets are also reflecting an increased degree of caution, including Penn. Net income and EPS at the company both fell in the June quarter. With the stock at $59, investors are not indicating much confidence in an offer that is $8 higher.

United Rental (URI) The equipment rental company agreed to to sell itself to affiliates of private equity firm Cerberus Capital Management for $4 billion. But, the SEC is investigating the company over accounting issues. Operating income rose 12% in the June quarter, but the SEC issue could allow Cerberus a way out. Shares trade at $31.45 against a post buy-out high of $35.56.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: September 23, 2007 – 2:26 pm in Mergers and Buy Outs, , , , , , , , , ,

Tribune Monthlies Show Neverending Carnage (TRB)

Tribune’s (NYSE:TRB) consolidated revenues for the July (7th) period were $467 million, Down 5.9% from last year’s $496 million.  As youread through the numbers you’ll see that there is really only one bright spot, and that bright spot will have to grow mush faster to offset the rest of the carnage: Interactive.  Publishing revenues in July were down 8.6% to $319 million. Advertising revenues Fell 10.3% to $247 million.  Here is a breakdown:

Retail advertising revenues decreased 6.0% with the largest declines in the department stores and home furnishings categories, partially offset by improvements in the health care and restaurants.

National advertising revenues fell 3.7%, with declines in auto, financial and resorts.

Classified advertising revenues decreased 18.2% total. Read these and you know they have to hate Craig’s List:  Real estate -24%; Help wanted -19%; automotive -14%.  The only bright spot was, of course, Interactive Revenues at $22 million and up 11%.

Circulation revenues were Down 5.4% due to single-copy declines and continued selective discounting in home delivery.

Broadcasting and entertainment group revenues in July were flat at $147 million as a decrease in television revenues was offset by increased revenues at the Chicago Cubs and Tribune Entertainment.  Television revenues fell 3.7%, with lower automotive, movie and political advertising, partially offset by strength in the telecom/wireless and health care categories.

What is puzzling is just why on earth Sam Zell even wants to buy (or actually invest in controlling interest) Tribune.  We noted earlier this week that even with shareholders approving the deal that Sam Zell will likely lower his offering price.  It won’t necessarily be by choice either, because if you were a banker would you loan that vast sum of cash to finance a deal when the underlying business is eroding this fast? 

The carnage continues across the board and as small as Interactive revenues are they cannot offset the onslaught against print media.  This company better go out and start buying up more ‘interactive’ plays where it can.  The long hard truth is that newspaper readers are falling off faster than smokers in nursing homes.  Sad, but true.

Jon C. Ogg
August 24, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: August 24, 2007 – 7:56 am in Media, , , ,

Shareholders Approved The Deal, But What Will Tribune Really Fetch? (TRB, GCI, NYT)

Shares of Tribune Corp. (NYSE:TRB) are trading up higher by about 3% today after shareholders approved the transaction with Same Zell.  That was not really a question.  If you were in a troubled industry that is going to face a steady secular onslaught ahead and may not be able to keep your stock above $30.00, of course the $34.00 transaction would be approved.  Sam Zell first gave the formal terms on April 2, 2007 at the height of the private equity boom.

Here is the first problem: Zell was getting the most influential voice in the company with what was going to be $315 million investment.  Tribune’s total equity deal would value the stock at nearly $4 Billion.  He got the company to approve the Employee Stock Option Plan to hold the outstanding stock and Zell holding a subordinated note and a warrant giving him the right to buy 40% of the stock.  He also gets the chairman seat.  Employees will finance a huge portion, but they all have to know who they will ultimately be answering to.

The real problem is that a cash tender for 126 million shares at $34.00 per share was to be funded with incremental borrowings and a $250 million investment from Sam Zell.  In a credit-tight environment it is hard to imagine that there would not be financing concerns. It will be able to sell off assets to pay down the debt, and it seems no one believes that Zell won’t try to renegotiate terms.  Wouldn’t you? 

Our prediction: A new offer would seem to still be fair around $31.00 on the low-end and the need to pay above $32.50 just doesn’t seem merited if the credit markets are going to actually make you prove you have real worth.  We noted some risks to the merger last week and before.

Incidentally, Options out to January 2008 seem to give an indicated price range of $31.50 to $32.40.  That is a highly subjective number, but that’s what the tea leaves are signaling today after the 3% gain in the stock.  The future of newspapers and broadcast stations still has a value, but it is a decreasing value and far lower than just a few years ago.

Gannett (NYSE:GCI) shares are down over 15% since early April.  New York Times (NYSE:NYT) shares are off less than 10% from early April,  but those shares are down more than 15% since the June highs.  Neither is a fair comparison since they don’t have as broad of assets, but a company reliant upon newspaper sales is going to be compared to other newspaper companies.

Jon C. Ogg
August 21, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers

Posted on: August 21, 2007 – 12:25 pm in Media, Mergers and Buy Outs, , , , ,

Media Digest 8/21/2007

According to Reuters, Countrywide (CFC) sought to calm investors about it future as it laid of mortgage workers.

Reuters reports that Nasdaq’s (NDAQ) failure to buy the London Stock Exchange makes it deal to buy the OMX crucial.

Reuters writes that Nokia (NOK) launched it new 3G handset, the 6555.

The Wall Street Journal reports that Bershire Hathaway may be interested in buying some parts of Countrywide.

The Wall Street Journal writes that KKR said that in a worst-case scenario it would put $100 million into KKR Financial, a real estate operation in which it has a minority piece.

The Wall Street Journal writes that Paramount and Dreamworks will drop the Blu-ray DVD format and only release HD movies on the HD DVD format backed by Toshiba and Microsoft (MSFT). The move is a blow to Sony (SNE), Blu-ray’s biggest supporter.

The Wall Street Journal writes that Viacom’s (VIA) MTV and RealNetworks (RNWK) will combine online music efforts to challenge the Apple (AAPL) iPod. Verizon Wireless and Vodafone (VOD) have agreed to offer mobile distribution.

The FT writes that GE (GE) plans to sell its Japanese finance unit.

The FT reports that the debt in The Tribune Company (TRB) was downgraded ahead of its LBO.

Barron’s writes that McAdams Wright intiated Clearwire (CLWR) as a buy with a price target of $36.

Douglas A. McIntyre

Posted on: August 21, 2007 – 2:57 am in Press Digest, , , , , , , , , , , ,

Merger Arb Spreads Remain (TXU, TRB,SLM, CEN)

There are over 150 pending mergers out there that have not yet closed.  After last week’s Fed actions, there are still some deals out there that are perceived to be at risk as far as the deals closing or if the deals can close at the announced buyout price. Some of these spreads have tightened in merger-arb scenarios, but there are quite wide spreads on many pending deals.   We’ll be sending out a few selected deals we expect to go through without issue before Labor Day to our Special Situation Investing Newsletter subscribers.  Earlier we covered ACS, URI, FDC & CCU merger-arb spreads.

The buyout of student loan giant SLM Corp, or Sallie Mae (NYSE:SLM), is alsostill at risk. Sallie Mae holders have already approved the $25 Billiondeal for $60.00/share last week, but the buyout by J.C. Flowers still faces regulatory and credit market risks.With shares trading down again and under $48.00 today, this wouldrepresent a 25% gain for merger-arbs now if the deal is able to close.Shares traded close to $60.00 on their own back in early 2006.

The $5.3 Billion buyout of Ceridian (NYSE:CEN) by Thomas H. LeePartners has a wide enough merger-arb spread to make you scratch yourhead. The $36.00/share buyout for Ceridian is now seeing shares tradeunder $33.00, giving roughly an 8% merger-arb spread.

Sam Zell’s $8.2 Billion buyout of Tribune Co. (NYSE:TRB) is still ahighly leveraged deal that in fact is only a quasi-buyout and one thatmany are not giving the highest marks.  Shareholders are set to votetomorrow.  With shares at $26.50, they are at least higher and closerto that $34.00 buyout price.  The prevailing thought here seems to be that this buyout price may be lowered.

There also remains speculation that the near-$45 Billion (afterdebt) acquisition led by KKR& TPG of TXU (NYSE: TXU) may still not becompletely done.  TXU is an interesting one, because the company hastelegraphed that it will split into three units if this merger fails.Shareholders vote September 7 for the $69.25 buyout price, and some keyshareholders have already signaled they are against the merger.  Withshares at $64.00, that is a 7.5% discount.  The good news here is thatbefore the Fed intervened with a discount rate cut, shares got as lowas about $61.00 last Thursday. Here was a large list of competitors that were thought at the time it was announced that could also be under review.

Maybe Warren Buffett will finally get off his wallet and do that whale of a deal he said he’d love to do.

Jon C. Ogg
August 20, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he is editor of the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Posted on: August 20, 2007 – 1:16 pm in Mergers and Buy Outs, , , ,

Top Ten US Newspaper Websites

Below are the top 10 US newspaper websites based on Nielsen NetRatings figures for July. Several are owned by public companies including The New York Times (NYT), Gannett (GCI), Washington Post (WPO), and Tribune Company (TRB). WIth print advertising falling sharply, these web properties have become the most valuable asset of the companies.

NYTimes.com             14.15 million unique visitors

USAToday.com           10.61 million

Washingtonpost.com    9.16 million   

LATimes.com               5.27 million

WSJ.com                    4.49 million

Boston.com                4.03 million

NYPost.com               3.95 million

Chron.com (Houston)   3.64 million

SFGate.com               3.59 million

ChicagoTribune.com    3.21 million

Douglas A. McIntyre

Posted on: August 19, 2007 – 8:58 am in Uncategorized, , , ,

Is Tribune (TRB) LBO Dying?

Shares in The Tribune Company (TRB) are off almost 4% today to $24.57. The price promised for an LBO lead by Sam Zell is $34.

The deal is now likely to die, in which case the public shareholders can hang onto the company, probably with the stock falling further.

Or, Zell can renegotiate in much the same way the the buyers of Home Depot (HD) Supply have. The debt needs to deal of this kind has simply gotten too expensive.

Zell’s best bet may be to walk. Dow Jones (DJ) announced yesterday that ad lineage at The Wall Street Journal  fell almost 21%.

And, Zell can read the papers.

Douglas A. McIntyre

Posted on: August 14, 2007 – 11:01 am in Uncategorized, , ,

The 52-Week Low Club

Thornburg Mortgage Asset (TMA) Mortgage company and real estate investment trust gets downgraded by S&P. Falls to $13.81 from 52-week high of $28.40.

Pope & Talbot (POP) Forest products company has big Q2 loss and freezes hiring. Down to $.45 from 52-week high of $8.44.

Tribune Company (TRB) Tough time to do a newspaper LBO. Share price shows it. Down ot $25.57 from 52-week high of $33.99.

SCO Group (SCOX) Lost copyright battle over key Unix operating system to Novell (NOVL). Drops to $.35 from 52-week high of $3.11.

Movie Gallery (MOVI) No. 2 movie rental chain has too much debt. May not make it. Shares off to $.26 from 52-week high of $5.29.

Beacon Roofing Supply  (BECN) Company hurt by residential building. Down to $11.98 from 52-week high of $23.58.

Douglas A. McIntyre

Posted on: August 13, 2007 – 3:21 pm in Uncategorized, , , , , , ,

The Tribune’s (TRB) Default Risk: The Future Of Newspapers

Some newspaper companies simply have too much debt now. Journal Register (JRC) is an example. And, The Tribune Company (TRB) may be joining the list.

Accoding to Bloomberg, trading in credit-default swaps put the market’s guess that The Tribune may not be able to pay interest on some of its $13 billion debt at better than 50/50. Based on Bloomberg intelligence: "Tribune swaps prices imply investors consider the company the fourth-riskiest debt issuer among the almost 1,200 worldwide whose credit-default swaps were quoted this week by London-based CMA "

The data indicates the danger of newspaper buy-outs by private equity interests and may be why so few of the large paper chains have been approached in a buy-out crazy market. As cash flow falls, the ability to take on enough to debt cash-out public shareholders disappears.

Two newspaper companies appear to have a particularly high risk. One is Journal Register. The other is McClatchy (MNI).

An industry without private equity interest? How odd.

Douglas A. McIntyre

Posted on: July 22, 2007 – 7:15 am in Uncategorized, , ,

Is Tribune (TRB) But-Out In Trouble?

The publisher of the Los Angeles Times, part of The Tribune Company, has issued an internal memo saying that the newspaper’s cash flow dropped 27% during that last quarter, according to Bloomberg. The paper is the largest in the company’s chain.

Based on figures put out earlier by the Tribune,  ad sales could be off as much as 10% for the quarter.

Sam Zell has put together a deal valued at $8.2 billion to take the company public. The deal is highly leveraged so that any drop in cash flow would make that firm’s ability to keep up with debt service more uncertain.

Zell is bound to look at forecasts for the third quarter to see if the situation is getting worse with time.

If so, the deal could easily die.

Douglas A. McIntyre

Posted on: July 14, 2007 – 5:50 pm in Uncategorized,

Short Sellers Attack Restructure & Re-Org Stocks (June 2007)

Stock Tickers: TYC, MS, F, CY, SPWR, TRB, KFT, MO, HB, ASD, EMC, DJ, AA, WY

It is always interesting to see how short sellers treat shares of stocks that are undergoing a spin-off, a restructuring, or an organizational change.  Frequently you see large changes upand down as shareholder initiatives such as a spin-off, a corporate break-up, a questionable acquisition breaking apart, or a recapitalization can affect the street perception.  These also often take months or longer to come to fruition.  These are not all of the restructurings and spin-offs in NYSE-listed stocks, but these are a sample of the more watched deals.

Those with increased short selling…..

Tyco International (TYC), as it gets closer to its near-forever break-up into 3 units next week.  Tyco short interest grew from 20.89 million in May to 21.81 million in June.  Short sellers must not be seeing value just like we don’t.

Morgan Stanley (MS) as it gets ready to dump the poorest image image credit card in the country, Discover Card.  Morgan Stanley saw a 9% gain from May’s 10.2 million shares in the short interest grow to 11.16 million shares.

Ford (F), which is likely selling two units of Rover and Jaguar and might sell its finance business.  Ford saw a huge jump in short selling from 208.8 million in May to 214.1 million in June.  Ford shares are actually up 50% from the 52-week lows. believe it or not.

Cypress Semiconductor (CY) as some recent hope has come out for the company to unlock more value by unloading more of its holdings in SunPower Corp. (SPWR).  CY shares have seen an increased short selling from 13.89 million in May to 15.495 million in June, a gain of 10.3%.

Tribune (TRB) now that the Sam Zell privatization pilfering is closer.  The 6.1 million shares in May has grown to 6.88 million shares, a gain of more than 10% in short selling.

Kraft (KFT) and Altria (MO), now that the Kraft (KFT) spin-out has finally occurred and some more time has passed on the calendar.  MO saw a drop of 11% from 53.2 million shares down to 47.2 million shares, which could have been expected; and you saw the inverse move in KFT with may’s short interest of 32.14 million shares growing to 39.2 million shares in June.

Hillenbrand (HB) as it gets ready to split the medical products and beds from the casket unit.  Hillenbrand saw May’s short interest of 1.43 million shares grow 2% to 1.459 million shares in June.

The decliners….Not as active as the increases…..

American Standard (ASD), after its spin-off of WABCO. ASD saw a drop in its short short interest of 30% from 7.46 million shares down to 5.15 million shares in June.

EMC (EMC) as the company is closer to the spin-off date for VMWare, which is expected to be a hot IPO or spin-off issue.  EMC short interest was actually a decline of 6.5% from 38.93 million in May to 36.37 million in June.

Dow Jones (DJ) saw a drop in its shares in the short interest with May’s 5.78 million shares drop down to 4.94 million shares as financial betters didn’t want to increase their bets that the company would stay private.

Alcoa (AA), as prey or bait? Short sellers don’t want to find out.  May’s 16.8 million shares in the short interest fell to 14.68 million shares in June.

Weyerhaeuser (WY) saw its 9.16 million shares in its short interest drop to 7.76 million as investors are still thinking the value will unlock as a potential break-up, REIT-Conversion, or asset sales.

Jon C. Ogg
June 22, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 22, 2007 – 12:23 pm in Shareholder Issues, Short Interest, , , , , , , , , , , , , ,

Newspaper Carnage Continues, But…. (NWS, DJ, TRB, MNI, GHS, JRN, NYT, GCI, SSP, BLC, LEE )

There has been a solid recovery in newspaper and media plays in recent weeks, for some obvious merger reasons.  But the continuously deteriorating fundamentals in the sector lend a credence that the sector is just getting a reprieve that is masking the obvious trend.

Despite the mini-rally seen of late in newspaper stocks, Goldman Sachs remains unchanged and suggests selling into strength in the newspaper sector.  The purchase of Tribune (TRB) at 10-times EBITDA by Sam Zell and the major premium buyout offer from News Corp. (NWS) to Dow Jones (DJ) are fueling the speculative fire for more deals in the sector. Goldman thinks the ad revenues in Q2 will be down in the 5% range for newspapers, which is the second worse performance since the recession impacted Q1 2002.

What is interesting is that Goldman notes that there ‘undoubtedly will be further consolidation’ in the sector, but expresses a ‘remain underweight’ stance because of downward revenue trends, operating margin pressure, and downward earnings revision bias.  It also notes that valuations are not enticing for a declining fundamental basis.

So how far off of lows are these companies? 

Company (Ticker)        Price Today    52-Week Range
Gannett (GCI)                   $58.75         $51.65-$63.50
McClatchy (MNI)               $27.90         $27.42-$45.29
EW Scripps (SSP)            $46.00        $40.86-$53.39
New York Times (NYT)    $25.85        $21.54-$26.90
Belo Corp. (BLC)              $22.30         $14.93-$22.94
Lee Entrprs. (LEE)            $24.92        $22.98-$25.13
Journal Comms. (JRN)    $13.80        $10.05-$14.00

If you read media publications in the sector, the trend has been that major metro publications are the ones that have been experiencing the rapid drop-off.  The rural and small city papers is where the mergers have been and where the strength has been.  It isn’t so much that these areas are just full of non-webby bumpkins because that isn’t the case.  It’s just that the farther and farther you get away from major population centers the live and daily information becomes decentralized and it easier to keep it focused in a newpaper and ‘weeklies’ type of local publication.  That lends credibility to GateHouse Media Inc. (GHS-NYSE), still a fairly recent IPO.

With some of the trends continuing and an economy that is slowing, it is hard to fall back in love with the sector.  But there has been so much damage and the ‘undoubted consolidation’ just makes it harder and harder to consider putting new funds to work in the companies that have not recovered.  Sure, there will be more carnage in the sector and there will probably be some extra erosion in the stocks of the ones that have less value. 

A year from now it is likely we’ll still be discussing the carnage in newpaper and print media trends.  But we might be discussing the trends of companies that have either merged or been taken private, or at least fewer public companies.  With an election in 2008, its still a toss-up if newspapers will stabilize or if the new-media will steal away so much that even a larger market may not help.  If you have read our work frequently you will probably recallreferences to "Less Bad Is Good," and this may be a trend to watch for (or maybe just hope for) inthe sector.  Perhaps digital paper will take newspapers to a new realm.

The verdict is still out, for now.

Jon C. Ogg
June 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 6, 2007 – 11:09 am in Media, , , , , , , , , , ,