11.30pm UPDATE: The giant US media company, Tribune, has agreed to an $8.2bn (£4.1bn) sale to Chicago billionaire real-estate entrepreneur Sam Zell, who is ranked as America's 52nd richest man. It therefore means that the public company will become private.
Tribune, owner of the Los Angeles Times, the Chicago Tribune, seven more newspapers, 23 TV stations and the Chicago Cubs baseball team has spent six months seeking a buyer. Zell will sell off the Cubs, along with its 25% stake in the Comcast SportsNet cable network, to reduce debt. That could raise as much as $700m (£350m).
But that will hardly dent the enormous level of debt. Tribune has been constrained by $4.5bn of debt amassed over the years by aggressive stock repurchasing programmes and a further $1bn tax bill it inherited with the purchase of the Times Mirror company seven years ago. This deal is said to add a further $11.2bn to the debt mountain.
Analysts generally greeted the deal, though it's not worth much more than the $8bn that Tribune paid to acquire the LA Times and its parent, Times-Mirror. "This looks to be about as good as Tribune was going to get," said John Morton, an independent newspaper analyst in speaking of investors being "relieved.''
On the other hand, it may not be over yet. Until shareholders approve the transaction, two other bidders - Los Angeles billionaires Ron Burkle and Eli Broad - will have the chance to submit a higher bid. If so, Zell would receive a $25m (£12.5m) buyout fee.
If there is no counter bid, which does seem unlikely, then Zell will become chairman and invest $315m (£160m) of his own money, giving him a warrant to buy 40% percent of the company. An employee stock ownership plan will then be created, which will own all the shares, Tribune announced. But, effectively, Zell emerges as a new media mogul.
The deal will certainly result in a big payday for senior Tribune executives, according to an assessment by Editor & Publisher's editor-at-large Mark Fitzgerald. He points out that the directors amended the company's rules last October in the event of a change of ownership. So they will be paid out swiftly and handsomely. Also, Dennis FitzSimons, who is staying on as president and ceo, will receive about $21.3m for his shares, while publishing president Scott Smith will have holdings worth a cash value of $9.2m.
How, then, do Tribune's journalists feel about the deal? Well, they won't be happy about the likely impact on jobs as Zell's managers try to cope with the debt. There may be some clues in the news stories about the deal run by the Chicago Tribune and the LA Times. The Trib's story called Zell a "motorcycle riding, epithet slinging multibillionaire" and "a risk-taking financier with no background in journalism". It's also running a video on its website in which David Greising pays tribute to Zell as a "witty, smart, savvy contrarian investor". Meanwhile, the LA Times news story refers to him as "a quirky businessman... a maverick who fancies Ducati motorcyles, leather jackets and rousing games of paintball."
That's not the warmest of greetings, but it's not entirely negative either. Good or bad, Zell - who has enjoyed a relatively low public profile - is about to discover that owning newspapers will earn him much more publicity than he might have expected.
