KPCC's business analyst Mark Lacter says price will be a major factor when it comes to selling the Times.
Susanne Whatley: The owner of the L.A. Times is selling all its newspapers. We heard Warren Buffett say yesterday he is NOT interested. So, business analyst Mark Lacter, who is?
Mark Lacter: Plenty of people, Susanne – the question, as always, is at what price. And that's why Tribune Co., which owns the Times, along with the Chicago Tribune and a bunch of smaller papers, has hired financial advisors to determine the level of interest. Now, just to recap, Tribune Co. recently came out of bankruptcy protection, and the company is now owned by a group of bankers and investment firms that were the major creditors from that bankruptcy. There's a new board and a new chief executive that seem more interested in the company's TV stations than in its newspapers. And, strangely enough, the market for newspapers has been heating up: last year, 84 daily papers were sold in the U.S. – that's the highest number of sales since 2007. So, maybe the Tribune people figure this would be a good time to unload these properties.
Whatley: But I thought newspapers were dying?
Lacter: Well, not entirely – operating profits are way down from two or three decades ago, though the L.A. Times and other major papers continue to make money, which certainly attracts potential buyers. And, newspapers are a bargain these days compared with before the recession.
Whatley: Bloomberg has reported that Tribune wants to sell the papers to a single buyer or group...
Lacter: That's right, even though several potential bidders have shown an interest in only specific papers. We've heard a few names of folks who might be interested in buying only the Times. Rupert Murdoch is one. Also, L.A.’s former deputy mayor Austin Beutner is trying to put together a group of wealthy Angelenos to make an offer. I'm sure there are others. Just know that it's very early in the process, and in the end these things rarely have anything to do with the quality of the buyer but rather the quality of the price. If the Times does get sold, the new owner is going to have a newspaper that's significantly smaller than in its heyday. The newsroom has just over 500 people – that's down from the peak of 1,300 people, according to the LA Weekly.
Whatley: There’s another big sale of an L.A. company – Anschutz Entertainment Group. What's up with that one?
Lacter: Well, even ridiculously rich people are willing to pay only so much. AEG is a single company that's made up of a grab bag of properties, including the L.A. Kings, the L.A. Galaxy, a minority stake in the Lakers, Staples Center, the Nokia Theater, and dozens of concert venues all over the world. It also might include a downtown football stadium, if and when an NFL franchise expresses any interest in coming to L.A. The Colorado billionaire Philip Anschutz was apparently hoping to sell AEG for around $10 billion, but none of the bidders are coming close to that price (at least according to news reports). At this point, it looks as if two or three groups of investors have made offers in the $7 billion range.
Whatley: That’s quite a difference. Could Anshutz just take it off the market?
Lacter: He might, though at this point that would seem unlikely. But if a deal is struck, it's likely to be quite messy: lots of owners with varying stakes trying to sort through all those assets. It wouldn’t be surprising if the eventual owner sells off part of that portfolio.
Whatley: Mark, very quickly, gasoline prices rose a good deal over a month – but they're coming down again?
Lacter: Yeah, well don't spend all your savings in one place, Susanne. An average gallon of regular in the L.A. area is down a couple of pennies from last week, but still up more than 50 cents from January. Prices normally jump in the first half of the year – it's just that they went up a little earlier than usual, and the hikes were sharper. We’ll probably see lower numbers in the coming weeks, though they always drop a lot slower than they increase.
Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.