As The Stock Market Turns

Two big articles in the last few days about the Trib's tribulations:

By now many of you have read this article in Crains' Chicago Business about Ernie Banks being a frontman for investor groups buying the Cubs:

(Banks) says two groups have approached him about participating in a bid: Giuliani Partners LLC, headed by former New York Mayor Rudolph Giuliani, and Los Angeles-based buyout firm Comstock Capital Partners LLC.

Mr. Banks says discussions didn't cover what, if any, financial backing he would provide or what stake he would have in the team.
...
Mr. Banks would lend star power to any buyout offer. He already serves as a Cubs ambassador at games and other team events.

Why Ernie Banks? Simple. The buyers are serious. They need to put a positive, public face on their bid to get people interested. Who better than Ernie Banks to get the fans behind a sale? The buyers also need to give the Trib a little push to talk about a sale. Who would be better than the Trib's own Cub ambassador to get the Trib to the negotiating table?

Selling to Ernie (and the real investors) also offers the Trib an honorable way to save face making the sale. "How could we refuse Ernie? Who better to entrust the franchise?" would be the first words from Denis FitzSimons.

The article also has this this interesting graphic.

Gee. Ariel Capital suggesting that the Trib gets more value selling the Cubs. Whoda thunk it? They go on to say:

If Tribune is broken up, it's unclear whether the Cubs would be included in any sale or spin-off of the company assets. One of Tribune's arguments for owning the team has been that it provides free content to WGN-TV. That synergy has diminished in recent years as fewer games are aired on the station.

A separate sale of the Cubs could bring Tribune shareholders more cash than they would net as part of a broadcast package, and Mr. Banks and his backers would surely face competing bidders if the team is auctioned.

"It's a trophy property with a scarcity value," says John Rogers, CEO of Ariel Capital Management LLC, the Tribune's sixth-largest investor, with 10.3 million shares.

Another article was in the Trib. This article was essentially a profile of Trib CEO Denis FitzSimons with some detail on why the Chandler's are balking at the planned stock buyback.

The key in this article is an explanation of the Chandler's motivations. In short, they want the Trib to be broken up to maximize the possibility of a takeover of the Trib. See, the Chandler's don't want to sell their Trib stock because that would create huge tax liabilities. Instead, if someone high growth company would acquire the Trib in a stock-for-stock sale, the Chandler's could unload the stagnant Trib stock tax free for something with real growth possibilities.

Then, you look at part of the reason FitzSimons wants to add all this debt tot the Trib?

Corporate governance experts said the plan had another ramification: By adding $2 billion in debt to Tribune's balance sheet, it would act as a "poison pill" to fend off raiders.

That's the LAST thing the Chandler's want.

The article concludes with another estimation of the Trib's breakup value. They, like Ariel, estimate the Trib is worth about 35% more in pieces than it is trading for right now.

Conclusion: The sale of the Cubs is going to happen, one way or another. Soon. As the Trib article notes:

But at this point, FitzSimons may need more than a firm hand to fight off unwanted suitors.

"There's obviously another shoe that is going to drop," said a large private-equity investor with no stake in Tribune shares. "Private-equity investors are interested in anything that crawls. I'm sure all the usual suspects have their investment banks working overtime."

The doofuses out there in denial can get ready for new owners sooner rather than later. And they won't have to worry about Wrigley being torn down and their source of fun being taken away.