May 6, 2016 Last Updated 10:43 am

Tribune Publishing, hoping to shore up shareholder support, releases ‘Investor Fact Sheet’

Morning Brief: Las Vegas Review Journal back in the news for firing of features editor, and now its owner’s endorsement of Donald Trump for President

With the acquisition bid from Gannett formally reject4ed, Tribune Publishing is now preparing for a fight at the shareholders meeting on June 2. Unless Gannett sweetens it $815 million offer, it is likely that current TPUB management should be able to hold off an attempt by Gannett to convince shareholders to ‘withhold’ approval for the new board of directors, but Tribune is not taking any chances.

Today Tribune Publishing made available an Investor Fact Sheet which spells out their case why Gannett’s offer is too low.

Filing-strTitled Setting the Record Straight, the filing lays out its counterarguments to what it sees as the seven arguments for the Gannett deal: 1) that Gannett’s offer is a higher per share price than what current chairman Michael Ferro paid when he investment $44.4 million in the company earlier this year – Tribune argues that Ferro also came with a plan for the company; 2) that the combination of Gannett and Tribune Publishing would ‘yield tremendous benefits’ – Tribune argues that they have big plans for the LA Times brand; 3) Gannett’s offer is compelling – Tribune argues that Gannett’s offer is ‘opportunistic and understates Tribune’s true value’; 4) Tribune refused to engage with Gannett – Tribune argues ‘na na na t’ain’t true; 5) Gannett is trying to send a message to Tribune shareholders – Tribune argues that ‘Gannett is acting in desperation’; 6) Tribune management is acting in its own self-interest – Tribune argues the ‘vision’ thing again; and 7) Tribune is suddenly changing the Board structure – Tribune argues that it had previously announced changes to the Board.

The filing is a bit strange, almost as if coming up with three arguments that take up a single page someone said it would look better if there were at least two pages and more reasons for shareholders to reject Gannett’s unsolicited bid.

The reality is that Gannett’s $12.25 per share offer is a premium over what the stock was at the time was offered, and is still over 10 percent more than the current share price of just over $11. It is, however, based on share price, not a multiple of EBITDA or revenue. Tribune Publishing reported a loss in Q1 and revenue of $398 million. As someone who has done a fair bit of M&A work myself, one could easily claim that Gannett’s offer is low based on revenue (it should probably be higher by 50 percent), but hard to judge when it is understood that the company is, at best, breakeven. But then, looking at the share price, you could come to a different conclusion (and a big reason that at times like this being a public company has huge disadvantages). Ken Doctor feels the numbers are on Gannett’s side, I think the picture is less clear.

So, the battle continues. Oaktree Capital Management, Tribune’s second largest shareholder, says it is inclined to support a sale. But unless Gannett is willing to sweeten its deal – and it might be willing to do so just prior to the June 2 meeting – Ferro probably has the support to once again prevail (but we’ll see in four weeks).

Things remain definitely not well at the Las Vegas Review Journal. The paper, if you recall, was bought early last year by New Media Investment Group (GateHouse), then promptly sold off again at a huge profit to a mystery buyer who turned out to be casino mogul Sheldon Adelson. Since then, the paper has had a new publisher and editor brought in, and with it an environment of distrust and paranoia appears to have developed.

LVRJ-5-6-16That the paper was purchased to promoted Adelson’s political leanings is something that most everyone knows but won’t really talk about. After all, if we admitted that today many newspapers are only owned for whatever power they give the ownership, a lot of journalists might look at their jobs a bit differently. But readers get it, they see the endorsements being handed out – overwhelmingly for John Kasich and Hillary Clinton – and see that newspaper ownership has its point of view, and it may well be very different than theirs.

Most journalists understand where the ownership of their paper stands. No one who works for the NY Post or WSJ is under any illusions that the papers will be promoting a Republican agenda. And no one who works at The Washington Post should be confused when the paper slowly moves towards a mixed view of the world, one reflecting the ownership change that occurred a while back.

At the Review Journal, the ownership change has led to several resignations, and yesterday the firing of the papers features editor. At issue was the editor’s live tweeting of a transparency meeting.

Then yesterday Grimes was fired.

“I’m an obvious, high-profile pick to make an example of, but it wouldn’t be fair of me to blame all of this on my “disloyalty” to the RJ,” Grimes wrote on Medium.

“I’ve known this was coming from day one. A hyper-conservative middle-aged white man walks into a newsroom and finds a 26-year-old mixed-race woman in charge of an entire department? The humanity!”

This morning the paper published a story, under the byline of Las Vegas Review Journal Wire Services, of Adelson’s endorsement of Donald Trump.

Las Vegas Sands Chairman and CEO Sheldon Adelson said Thursday he will support Donald Trump now that the billionaire businessman has become the Republican Party’s presumptive nominee.

“Yes, I’m a Republican, he’s a Republican,” Adelson said in a brief interview with the New York Times. “He’s our nominee. Whoever the nominee would turn out to be, any one of the 17 — he was one of the 17. He won fair and square.”

Up until today, the only newspapers to formally endorse Trump have been Rupert Murdoch’s NY Post and the National Enquirer, run by Trump’s long time friend American Media CEO David Pecker. This new endorsement is from the Review-Journal’s owner, not officially the paper’s editorial board, but one assumes the message has now been received loud and clear.

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