Tax liability and government regulations pose obstacles to Tribune Co.'s potential sale of the whole company or individual pieces.
As Chicago-based Tribune began soliciting bids for individual properties this week, a reminder of its vulnerability on the regulatory front came in the form of a challenge to its license-renewal application for KTLA-TV Channel 5.
Media Access Project, a Washington-based public policy law firm, filed a petition late Wednesday with the Federal Communications Commission to block renewal of the eight-year license, which expires Dec. 1, on grounds that Tribune is violating a 1975 rule barring ownership of a newspaper and a TV station in the same market. Tribune also owns The Times.
Similar situations exist in New York, where Tribune owns Newsday and WPIX-TV, and in Hartford, Conn., where it owns the Courant and WTIC-TV. Licenses for WPIX and WTIC expire June 1 and April 1, respectively.
In a filing in August to renew its license for KTLA, Tribune asked the FCC for a permanent waiver of the cross-ownership rule or, failing that, a temporary waiver until the agency finished its review of the rule. Without a waiver, any buyer of Tribune would be in potential violation of cross-ownership rules.
Meanwhile, the tax issue was highlighted in a report Thursday by a Merrill Lynch analyst who said that even if there were a robust market for each of Tribune's 11 newspapers, 25 TV stations, Chicago Cubs baseball team and other assets, taxes would lop off as much as $5 billion -- about $20 a share. At her estimate of $57 a share, that would leave the total value at about where the stock is trading now.
Tribune shares closed Thursday at $32.26, down 36 cents, the fifth consecutive decline.
Since Tribune announced a strategic review of its options for boosting the stock price Sept. 21, four groups of private-equity companies have emerged as potential bidders for the whole company, according to sources familiar with the process who asked not to be named because the process was private. No media companies made bids.
The bidding ended Friday, and sources said the nonbinding offers were in the low to mid-$30s a share, close to the current stock price.
Consequently, these sources said, Tribune's investment bankers began inviting people who had expressed interest in individual properties to bid.
