A possible complication has arisen in Tribune Co.’s timeline to consider a sale of all or parts of the company: Many of the potential bidders for the Chicago-based media business have also begun eyeing Clear Channel Communications Inc. assets that have been put on the block in recent days.
The potential hitch is that there are federal regulations governing media ownership. That may force bidders–expected to include private-equity firms–to choose between considering deals for Tribune’s properties, which include newspapers and television stations, and Clear Channel’s radio and television stations.
At the least, it appears to be causing some head-scratching among potential bidders.
“If you look at the players named as being interested in Clear Channel, there may be regulatory overlap, which would complicate the Tribune process,” said a person close to the situation.
“I think it’s fair to say that may impact people’s ability or willingness to indicate interest [in Tribune] at this point,” possibly affecting the timeline for Tribune to begin allowing potential buyers to do more serious due diligence, the individual said.
Tribune declined to comment Friday.
Tribune, owner of the Chicago Tribune, the Los Angeles Times, WGN-Ch. 9, various other media properties and the Chicago Cubs, was expected on Friday to receive non-binding expressions of interest from potential bidders, mostly private-equity firms that have been raising record amounts of cash from investors.
Four groups have been expected to take a serious look at Tribune.
One group is expected to consist of New York-based Apollo Management, Providence, R.I.-based Providence Equity Partners Inc. and Chicago-based Madison Dearborn Partners LLC.
But Providence, which manages more than $9 billion in investor commitments, has been named as part of a three-member consortium to buy Clear Channel, one of the nation’s largest owners of radio stations and billboards.
A second group considering a Tribune bid is expected to include Ft. Worth-based Texas Pacific Group and Boston-based Thomas H. Lee Partners LP.
A third player, Boston-based Bain Capital, which has $38 billion in assets under management, also was expected on Friday to indicate its interest in Tribune.
But all three of those firms–Texas Pacific, Thomas H. Lee and Bain–are said to be teaming up to consider a bid for Clear Channel.
The specific concerns about bidding for both Tribune and Clear Channel assets aren’t known, but one potential issue would be ownership of Clear Channel’s radio assets and Tribune’s newspapers. Cross-ownership rules restrict ownership of broadcast and newspaper properties within a single market.
In Chicago, Tribune Co.’s ownership of a newspaper along with a television and radio station are grandfathered exemptions because their ownership structure predates current restrictions.
Those restrictions are under review by the Federal Communications Commission.
One prominent Chicago investment banker said he didn’t expect competing interest in Clear Channel to delay the Tribune process for long–assuming there’s enough real enthusiasm for Tribune.
“This is an either you want to buy the Tribune assets or you don’t kind of deal,” he said.
If one member of a club can’t do it because it wants Clear Channel and that would raise regulatory issues, the other members could find another partner.
“These private-equity guys are fungible,” he said. “They can find another partner or step up and do it themselves. There’s just so much money sloshing around.”
A fourth player, Washington-based Carlyle Group, has also expressed interest in Tribune.
Tribune announced in September its intention to restructure the company and said it hopes to have a strategy in hand by year’s end.
Because the expressions of interest in Tribune were non-binding, most of the four groups were expected to throw their hats into the ring, making it to the next round. At that point they would receive access to management and more financial information, including tax exposure.
As of late Friday afternoon, Bain Capital was expected to have expressed interest in Tribune, but at least one person close to the situation said the preliminary process for others could slide into the weekend, if not Monday.
“This is a deadline without any real meaning,” one individual close to the situation said. “If you miss it, it doesn’t really matter.”
Tribune stock closed Friday at $33.47, down nearly 1 percent, on the New York Stock Exchange.
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byerak@tribune.com
mdoneal@tribune.com
