Tribune Auction Draws Private-Equity Interest (Dinosaur Media DeathWatch™)

Groups of private-equity firms are beginning to wade into the auction for media concern Tribune Co., and likely stand the best hope for a company trying to sell itself amid weak financial results, an uncertain future and a divided board of directors.

The company -- with a market capitalization of $8.3 billion -- has asked that bidders submit nonbinding indications of interest by the end of the month, say people familiar with the matter. So far, three main contenders have emerged, these people say. One group consists of Madison Dearborn Partners, Providence Equity Partners and Apollo Management. A second is an alliance of Thomas H. Lee Partners and Texas Pacific Group. Carlyle Group is also active in the process, though it is unclear whether it will participate on its own or jump into a different bidding camp.

Similarly, these groupings could change or expand as the potential bidders do more investigation into Chicago-based Tribune, which counts the Los Angeles Times, Chicago Tribune and Newsday among its newspaper holdings. The company also owns 25 television stations, the Chicago Cubs, and a number of other media holdings. The company's hope is to conclude its sales process by year's end, though like any auction, it is subject to the vagaries of market and financing conditions. And its preference is to sell off the company as a whole, though it may be willing to break off pieces if those pieces can fetch prices that would cover any resulting tax bills.

Tribune reported declines in both publishing and broadcast revenue for the third quarter. Circulation has been declining at its main newspapers, particularly the Los Angeles Times and Newsday, and advertising trends are weakening in the face of competition from the Internet.

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http://www.latimes.com/business/la-fi-ariel23oct23,1,1450907.story?coll=la-headlines-business
Tribune investor could be pivotal
Ariel Capital has ties to the firm, whose stock is languishing, as well as to mogul David Geffen.
By Thomas S. Mulligan
Times Staff Writer

October 23, 2006

CHICAGO — John W. Rogers Jr., the founder, chairman and chief investment officer of mutual fund company Ariel Capital Management, is an avowed admirer of investing superstar Warren E. Buffett, who once described his average holding period for a stock as "forever."

Patience is the prime virtue at Ariel, whose company slogan is "slow and steady" and whose "deep-value" investing style involves seeking out-of-favor companies in out-of-favor industries, buying stock at a bargain price and holding on until the rest of the market figures it out. Rogers, 48, had patience drilled into him on the basketball court, as team captain at Princeton University under legendary coach Pete Carril, who took a highly disciplined, grind-it-out approach to the game.

"It is uncanny how his investing style mirrored Pete Carril's offense," said Alexander Wolff, a writer at Sports Illustrated who was a year ahead of Rogers at Princeton. He recalled that Rogers "had a campus-wide rep as a precocious stock picker" even then.

But patience has its limits, and Ariel's patience has been tested by one of its largest holdings, Tribune Co., parent of the Los Angeles Times, the Chicago Tribune and other newspapers; broadcast properties including KTLA-TV Channel 5; and the Chicago Cubs baseball franchise.

Tribune's stock has lost nearly half its value since the 2000 acquisition of The Times' former parent, Times Mirror Co. The anemic performance has helped drag down Ariel's recent results, in turn causing some big Ariel investors to pull their money out. As of last week, the flagship Ariel Fund ranked 308th out of 321 funds in its peer group, with a one-year total return of 10.3%, as compared with a peer average of 17.03%, according to fund tracker Lipper Inc.

Although Tribune is by no means the worst laggard in his portfolio, Rogers may be in a unique position to do something about that investment.

Rogers' office on the 29th floor of the lakefront Aon Center here is a five-minute walk from Tribune's headquarters in the iconic Tribune Tower downtown. In his business and civic roles, the lifelong Chicagoan has ties with Tribune management and its board. Ariel also has more than a casual connection to David Geffen, one of three Los Angeles billionaires who has voiced an interest in buying The Times.

In a recent interview, Rogers acknowledged that he has been working behind the scenes to keep information flowing.

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