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.

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Could Rupert Murdoch buy both the LA Times and the Financial Times?

Rupert Murdoch Delivers Keynote At The National Summit On Education Reform

Justin Sullivan/Getty Images

Rupert Murdoch at the National Summit on Education Reform on Oct. 14, 2011 in San Francisco. Could he buy both the Wall Street Journal of England and the L.A. Times?

Bloomberg reported Tuesday that the Financial Times — the Wall Street Journal of England — was being put up for sale, with a price tag of $1.6 billion. The way things are going for newspapers these days, that was an eye-popping number and immediately set off speculation about who might have the deep enough pockets to buy the FT (but not its sister publication in its corporate stable, The Economist). 

Given that News Corp. just reported great quarterly earnings and has $10 billion in cash on hand, Rupert Murdoch's name rose to the top of the list. Murdoch already controls the Wall Street Journal and has been talked about as a buyer for the Los Angeles Times and the Chicago Tribune, both owned by Tribune Co.

Tribune is in the process of emerging from bankruptcy and it's expected that the new owners, a group of private-equity funds and investors including L.A.-based Oaktree Capital Management, will want to sell off the newspapers along with their challenged, although not necessarily desperate, economics and concentrate on broadcast operations.

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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. 

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Judge in Tribune bankruptcy could issue opinion today

Kevork Djansezian/AP

The Los Angeles Times building. Parent company Tribune Co. could begin the process of emerging from bankruptcy this week.

UPDATE: Judge Kevin Carey has issued his opinion. Oaktree, Angelo Gordon & Co., and JPMorgan Chase will now be able move toward assuming full ownership of Tribune's assets, under an accepted plan of reorganization. But Aurelius will fight on. This is from the Chicago Tribune:

Even if Tribune Co. emerges from bankruptcy in short order, the legacy of the Zell deal is likely to live on in the courts for years to come. Under the plan Carey approved, a group of junior creditors led by New York hedge fund Aurelius Capital Management will receive payments of $431 million to settle legal claims related to the buyout, including charges that the deal left the company insolvent from the start.

I reached out to Aurelius' Mark Brodsky for comment, but I haven't heard anything yet.

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The lengthy bankruptcy of the Tribune Co. — it filed in December of 2008 — could be drawing to a close. There have been reports all this week that Judge Kevin Carey will okay a restructuring plan that will end a drawn-out battle between the senior and junior creditors of the company that owns the Los Angeles Times.

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If Eli Broad wants the L.A. Times, he'll need to go through Aurelius' Mark Brodsky

Kevork Djansezian/AP

The Los Angeles Times building. L.A. billionaire Eli Broad is once against interested in buying the struggling newspaper.

Yep, it could be Broad versus Brodsky for the future of the L.A. Times, which is currently embroiled in the never-ending Tribune Co. bankruptcy. The L.A. billionaire philanthropist against the bankruptcy lawyer turned hedge-fund CEO. 

Brodsky's Aurelius Capital Management, based in New York, is fighting hard for its piece of Tribune's liabilities, basically forcing the company's senior creditors, including Oaktree Capital Management, to delay their hopes that they could get the viable parts of the media giant out of Chapter 11, leaving the junior creditors to tussle over the scraps. But Brodsky doesn't play that game, and he's no stranger to pressing his case and pressing it hard.

This can create some controversy. During the bankruptcy of what was left of Washington Mutual after the FDIC sold its banking business to JP Morgan Chase in 2008, Aurelius was accused by a single shareholder of insider trading because the hedge fund, along with three others, wouldn't back a reorganization plan. However, the bankruptcy judge eventually decided to "vacate" a ruling that would have enabled the shareholders to sue the hedge funds, effectively erasing the accusation from the legal record.

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