AP Photo/Kiichiro Sato
Newspaper publisher Gannett said Monday that it wants to buy Tribune Publishing for more than $388 million.
A few things to think about on reading
that Gannett Company is making a run at Tribune Publishing, offering $12.25 a share—63 percent above last Friday's closing price.
What a terrible thing to happen to the Tribune
! I head for the complimentary breakfast in chain motels with my heart in my mouth— will there be only a stack of USA Todays
on the lobby counter, or will the New York Times
be offered as well? Usually it's just USA Today
. You might as well pick it up. You've got to do something to occupy your mind while you eat the waffle you just heated up yourself. And you don't want to be at the mercy of Fox News on the wall TV.
isn't the Times
. But if the hotel across the street gave away the Tribune
along with USA Today
and cost $10 more, I'd head over there. I'd figure the breakfast was better too.
At the invitation of its then CEO, Jack Griffin, Chicago financier Michael Ferro paid more than $44 million in February to buy a controlling stake in Tribune Publishing. The idea was that Ferro's stake would give the company the wherewithal to add the bankrupt Orange County Register
to the LA Times
and San Diego Union-Tribune
and establish an overwhelming position in southern California. Surrounding himself with his idea of an A team, Ferro almost immediately fired Griffin
. Alas, the Justice Department kiboshed the sale
of the Register
on antitrust grounds.
But now, if the Gannett deal goes through (Tribune Publishing is thinking it over) and Ferro sells his shares for what Gannett is offering, he'll walk away with $19.5 million in profit
. If he doesn't sell them, he's in bed with a business that seems to see the same future he does—a future where the smart move is to bundle newspapers bought for a song and commodify the vast stores of information they represent.
Why wouldn't Ferro think that? Eight months ago IBM spent a billion dollars
buying Merge Healthcare for its vast medical database. Ferro owned about a quarter of the company—which he'd brought back from the dead a few years earlier—and made about $170 million on the sale. There's got to be money in information: it's finite and it's actually useful.
Here's something else to think about! If the Gannett deal with Tribune Publishing goes through, Gannett estimates some $50 million a year
in savings through "synergies." Synergies are usually greatest while they're hypothetical and a lot more modest once the deal is done, but such as they are, they come from maneuvers such as removing the ten-plus pages of USA Today
that the Sun-Times
now carries daily and stuffing them in the Tribune
. I know what I just said above about USA Today
, but those pages actually look pretty good in the Sun-Times,
turning a product held together with hairpins into a more or less complete paper. Losing them to the Trib
would be a horrendous loss for the Sun-Times
and it would make the Tribune
look shabbier too.
So I guess that's likely.
Finally, there's this: if Gannett winds up with Tribune Publishing, it'll own Chicago
magazine. Ferro just installed his friend
Susanna Homan as editor. If he's not around any longer, will she be?