Explaining Southern California's economy

Bankers talk to bankers about possible LA Times sale

Kevork Djansezian/AP

The Los Angeles Times building. Parent company Tribune could sell they newspaper on emerging from bankruptcy.

Bloomberg reported Tuesday that Tribune Co., owner of the L.A. Times along with the Chicago Tribune and six other newspapers, is "talking to bankers about a possible sale" of the newspaper properties. 

Media watchers swiftly named Rupert Murdoch as a potential buyer, as has already been widely speculated, here at the DeBord Report and pretty much everywhere else that's following the prospective new owernship of Tribune's newspapers.

What's interesting here is that Tribune Co. is effectively owned at this point by bankers. To be specific, J.P. Morgan Chase, L.A.-based Oaktree Capital Management (a private equity firm), and Angelo, Gordon & Co. (a specialist in distressed newspaper debt). So you have the unsurprising event of Tribune electing to put some or all of its newspapers up for sale to avoid the challenge of reviving that form of media from a long-term structural decline. That's happening right alongside the odd specter of bankers, at some level, talking to yet more bankers about how much the papers are worth and who might buy them.


Who is Revolution Capital, and what does it want with the Tampa Tribune?

Kevork Djansezian/AP

The Los Angeles Times building. The sale of a paper in Florida should remind Angelenos that the hometown paper could soon be for sale. Again.

It's the one paper that billionaire investor Warren Buffett didn't want: the Tampa Tribune. Buffett's Berkshire Hathaway made a counterintuitive deal back earlier this year — counterintuitive because observers tend to believe the newspaper business is not very good — shelling out $146 million for pretty much everything else that Tampa Trib owner Media General prints on paper.

Other investors couldn't help but notice Buffett's interest in newspapers. One of them, Boston greeting-card tycoon Aaron Kushner, bought the Orange Country Register and the remaining assets of Freedom Communications, for an as-yet undisclosed sum, in June. 

Now a private-equity firm based in Los Angeles has paid a fire-sale price of $9.5 million for the Tampa Trib. It's been on the losing end of a circulation battle with the Tampa Bay Times (daily circ for the Trib has declined by double digits since 2011). Revolution Capital appears to be something of a spinoff from Platinum Equity, the L.A. shop run by Tom Gores (number 15 on the L.A. Business Journal's ranking of the 50 Wealthiest Angelenos). Revolution's founder and managing director, Robert Loring, labored for a time at Platinum, in the M&A division. 


Orange Country Register sale to Boston-area investor closes


The Orange Country Register's parent company, Freedom Communications, has been officially acquired by 2100 Trust LLC, headed by Massachusetts businessman Aaron Kushner.

The last pieces of Freedom Communications, including the Orange Country Register, have been sold to 2100 Trust LLC, an investment group led by Aaron Kushner, a Boston-area business man who initiated the purchase last month.

I took a stab at figuring out how big a deal this was, but no confirmation of my back-of-the-envelope math is forthcoming, as the deal size wasn't disclosed by Freedom or Kusher's group. The OCR's Mary Ann Mibourn did confirm an aspect of the purchase:

As part of the deal, Freedom Communications will make an additional one-time contribution to the company's retirement plan. The amount of the contribution was not disclosed.

This contribution was reportedly a dealbreaker for U-T San Diego owners Doug Manchester's ambitions to own two papers in Southern California. It could be a significant amount of money, beyond what 2100 Trust paid for the remnants of Freedom. As I wrote last month:


Retirement fund, financing make OC Register sale more complex


The Orange Country Register's parent company, Freedom Communications, has been acquired by a Massachusetts investment group.

Last week, an investor group called 2100 Trust LLC announced that it was acquiring the remaining assets of Freedom Communications, consisting of the Orange Country Register and six other papers, the largest of which is the Colorado Springs Gazette. The terms of the deal haven't been disclosed, but I took a stab at figuring out how much greeting-card mogul Aaron Kushner and his team of investors at 2100 Trust are bringing to the transaction.

My number is $156 million.

I also broke down the financing, which on its face doesn't look all that risky.

But there are some wrinkles to this deal. 

First, the LA Times reported, based on unnamed sources at the O.C. Register, that Kushner and his investors plan to "spin off" the six smaller papers. They intend to use the proceeds from these sales to finance the OCR purchase. By my math, assuming no premiums — extra cash — added to the deals, 2100 Trust could garner $44.5 million from these sales. That would get them more than halfway to buying the OCR, which I have priced at about $111 million, including a $40-million premium — a "Manchester premium," given that Doug Manchester probably overpaid by at least that much to buy the San Diego U-T.


So how much did a private investor group pay for the OC Register?


The Orange Country Register's parent company, Freedom Communications, has been acquired by a Massachusetts investment group. The size of the deal remains a mystery.

On Monday, Boston greeting card mini-mogul Aaron Kushner, along with a group of investors, announced the acquisition of the remaining assets of Freedom Communications, whose flagship media property is the Orange County Register.

The price remains unknown. As does the financing on the deal. And in Boston, they're even asking out loud whether this means it's game over for Kusnher's effort to buy the Boston Globe from the New York Times. His rumored bid was $200 million, which seems pretty low. The New York Times Company's former CEO, Janet Robinson, departed late last year with a $23-million severance package in tow. She didn't want to sell the Globe. But it's entirely possible that the NYT Co. now does.

The Boston Herald spoke with an academic and former newspaper editor to get his take: