Will Tribune deal miss the porch?
TEXT OF STORY
Scott Jagow: We could have another victim of the tight credit market today. The board of the Tribune company is holding a critical meeting. It’s supposed to approve an $8 billion deal to take the company private. Lisa Napoli looks at why that might not happen.
Lisa Napoli: First, there’s the increasingly lousy state of the newspaper industry, with disappearing ad revenues and dwindling circulation. Tribune’s operating profit has dipped 59 percent since the deal was announced.
Then, there’s the market plunge. Shareholders were promised $34 a share for stock trading at around $30 in April. Lately it’s been trading about $10 a share lower.
Newspaper industry analyst Ken Doctor says these things could derail the deal or at least force a reconfiguration.
Ken Doctor: You can make a pretty good case on the face of it that those assets were not worth what they were when the deal was agreed on April 2.
Oh, and then there’s the problem of debt. The company will have to borrow $4 billion — to start — to complete the complex deal as written.
Ken Doctor says whatever happens, there are sure to be more cutbacks and layoffs at Tribune properties.
In Los Angeles, I’m Lisa Napoli for Marketplace.
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