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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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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Things are getting tense in the municipal bond market

Residents make their way in and out of t

Frederic J. Brown/AFP/Getty Images

San Bernardino is the latest California city to declare bankruptcy. Is this the beginning of the end of the once-sleepy, rock-solid municipal bond market?

It's hard to tell if this is just general nervousness after a rally or a legitimate reason to worry about an impending wave of defaults on municipal bond debt — something that has basically never happened. But in the span of a few days, billionaire investor Warren Buffett has unloaded $8.25-billion in credit default swaps on muni debt.

Buffett's Berkshire Hathaway sold the CDS to Lehman Brothers prior to the investment bank's epic bankruptcy four years ago, a Chapter 11 for the ages considered by many to be the thing that kicked off the Great Recession. Buffett's CDS amounted to a bet that cities wouldn't default on their debts — a prediction that for the most part has turned out the be true.

However, over the past few months, three California cities — Stockton, Mammoth Lakes, and San Bernardino — have declared bankruptcy. The ratings agency Moody's has stressed that muni defaults are exceptionally rare (as long as the bonds are rated; the Federal Reserve Bank of New York recently noted that unrated defaults happen more frequently, although they're far from common). But Moody's has also announced that it's conducting a review of the debt of cities in California, in light of recent events.

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Who is Dan Loeb, the hedge fund guy out for Yahoo CEO's head?

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Yahoo!'s Santa Monica location. Embattled CEO Scott Thompson was caught faking his resume and could resign this week.

It's unclear whether Scott Thompson, the Yahoo CEO who was caught faking his resume last week by activist hedge-fund investor Dan Loeb of Third Point, will stay or go as the latest leader of the embattled Internet giant. The Guardian suggests he could be gone this week. But it also fudges a bit, quoting Colin Gills of BGC Financial, who says that canning Thompson would be a major setback for Yahoo's turnaround plans.

In any case, who is this Dan Loeb, owner of almost 6 percent of Yahoo and a perpetual thorn in the side of the company's management and board?

He's a man who's unafraid to express his outrage, as it turns out. But his vehicle is so old-fashioned that it's almost charming. Last week, he attacked Thompson using the form of communication that predates the Internet, search engines, hedge funds, iPhones, automobiles, indoor plumbing, the United States of America, and sea voyages under sail. That's right, he wrote a...letter.

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Warren Buffett is counting on 'hormones' to cure the housing market

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Scott Olson/Getty Images

Warren Buffett, chairman of Berkshire Hathaway, attends the Allen & Company Sun Valley Conference.

Billionaire investor Warren Buffett released his annual Berkshire Hathaway shareholder letter over the weekend. As Marketplace's Heidi N. Moore reported on Monday, this is a much-anticipated and closely studied document. And as one of her sources pointed out, sometimes it's more interesting to focus on what went wrong in Buffett-land than on what went right — because Buffett provides engaging details on both outcomes.

For this letter, you want to zero in on the housing market, which in early 2011 Buffett figured would begin to recover in a "year or so." Wrong! Or to quote the Great Man himself: "dead wrong." Berkshire Hathaway has several housing-related companies in its portfolio, so Buffett would ultimately like to see the long-expected bounce-back. He's optimistic — because you can't fight human nature! Or more accurately, randy human hormones:

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