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May 29, 2008 / Toby Dayton

Tribune Places Another Unit On The Sales Block; Cubs Might Be Zell’s Only Hope

Even after generating a slightly higher-than-expected price for Newsday, the Tribune Co. has placed its Tribune Media Services business on the sales block. The division, which distributes news and entertainment listings, generates about $25M in annual EBITDA, could sell for up to $200M. But as the Financial Times points out, every time Tribune sells off an asset for less than 9x EBITDA, its leverage ratio rises and the company increases the risk of violating its debt covenants. As many have seen from the day Sam Zell’s acquisition was announced, the deal is almost guaranteed to result in the complete dismantling of the entire company, with little to no value left once the majority of assets have been sold off and the employees, who got stuck owning most of the company, left with nothing. The only way this debacle has the slightest chance of generating a positive outcome is if the Cubs win the World Series something like 3 years in a row and Zell can cash-flow his way out of a ridiculously high debt load. Not a likely scenario. I haven’t looked into who holds all that debt, but whoever it is, they’re going to end up owning a whole bunch of newspapers, a loser baseball team, and a terrific ballpark in short order.

[tags]Tribune Company, Chicago Tribune, Sam Zell, Chicago Cubs, Tribune Media Services, Newsday, Wrigley Field, You Know Things Are Bad When A Newspaper Company’s Only Hope Rests On The Cubs Winning The Series[/tags]