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THE STATE

Gannett in talks with Tribune Co.

The media giant could bid on newspapers belonging to the Los Angeles Times' parent company.

November 12, 2006|Michael Oneal and Phil Rosenthal | Chicago Tribune

Turning up the heat on the already simmering auction for the assets of Chicago-based Tribune Co., Gannett Co., the nation's largest newspaper publisher, has emerged as a possible bidder for Tribune's newspaper properties, the Chicago Tribune learned Saturday.

Executives from the McLean, Va.-based media giant, which publishes 90 U.S. newspapers, including top-read USA Today, were in Chicago last week to hear presentations on Tribune's financial condition, two sources close to the situation said.

Tribune, which owns the Los Angeles Times, has been hosting bidders as part of a process it put in place in September to enhance shareholder value by possibly selling all of the company's television and newspaper assets.

But the emergence of a potential buyer with the resources and clout of Gannett could significantly change the complexion of the bidding process.

Representatives for Tribune and Gannett on Saturday declined to comment.

The sources noted that the Tribune sell-off was in its early stages and that Gannett had participated in newspaper auctions before without pulling the trigger. Most recently, Gannett expressed formal interest in Knight Ridder Inc. before eventually backing away.

If Gannett proceeds, it would be the first so-called "strategic buyer" -- Wall Street parlance for a suitor in the same industry -- to jump into the fray.

Until now, bidding for Tribune assets had been thought to be limited to financial buyers: several large private equity firms and a handful of wealthy entrepreneurs. But, unhappy with bids that valued the whole company close to the current stock price of about $32 a share, Tribune began asking for bids on its parts -- newspapers such as The Times and the Chicago Tribune and television stations such as WGN-Channel 9, among other properties.

Sources said that opening up the bidding increased the level of interest among potential buyers in recent days. Last week, Los Angeles billionaires Eli Broad and Ron Burkle, who had expressed interest in The Times, instead put in a bid for the entire company.

That may have induced others to move off the sidelines. At least one other media company, Denver-based MediaNews, is also interested in some of Tribune's newspapers, most notably those in Connecticut and Pennsylvania, another source said. It's not clear, however, whether MediaNews has officially joined the bidding.

Gannett, which also owns 23 television stations, earned $1.2 billion last year on revenue of $7.6 billion. Earlier this year it paid $180 million in cash for WATL-TV, Tribune's television station in Atlanta.

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