Merger Mogul, Cross-Border M&A News, Private Equity Real Estate Alert and Post-Merger Integration News, our free email news alerts
Baltimore Sun an Orphan?
Zell could sell Baltimore Sun to cover loans in near term, but low valuation could nix a sale.
February 8, 2008
A source familiar with the Tribune Co. tells MergersUnleashed that Sam Zell, who recently acquired the company, may divest multiple print operations in 2008.
Zell, who, the source said, may face pressure this year to pay off loans he incurred in making the $8.2 billion deal, could sell The [Baltimore] Sun assets as part of that effort. If the timeliness of repaying loans is not a priority, however, he has the option of holding onto the property until valuation multiples improve.
With that said, potential bidders are keeping an eye on the assets. Baltimore Media Group, a gathering of local investors, is said to be among those interested. The group includes executives from A.S. Abell, which sold the Sun to the Times-Mirror Company back in 1986, which was in turn bought in 2000 by the Tribune.
Led by president and former Baltimore County Executive Ted Venetoulis, Baltimore Media Group is at this point the lone local player seeking to buy the Sun, and has been interested for years, according to Venetoulis.
"Mr. Zell knows that [Baltimore Media Group aims to purchase the Sun]," Venetoulis said. "We’re very patient," he said, adding that Zell still has yet to provide any "indication" that Zell will sell the Sun in the near term.
Venetoulis suggested that Zell could maximize on the Sun's value by selling the property where its printing presses are based, in Port Covington. The real estate sits outside of Baltimore within eyeshot of Interstate 95 and could be considered waterfront property. Venetoulis added that it's possible the paper and the Port Covington property could even be divested in two separate sales.
While Venetoulis' group remains the only party actively pursuing the Sun, other bidders could surface if and when Zell moves the assets to the auction block. Advance/Newhouse, the Gannett Co., the Hearst Corp. and even the Washington Post Co. were all mentioned as possible bidders.
John Morton, president of Morton Research Inc., cautioned that changes in the newspaper industry, which are ongoing, could stifle interest from both the buy side and the sell side. Citing weakness in advertising sales, Morton notes, "Right now is not a good time to buy or sell a newspaper."
RELATED ARTICLES
Jonathan Marino quotes sources who say Randy Michaels will be named next Tribune CEO.
For more information on related topics, visit the following:
