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Offer for Buying LA Times and Chicago Tribune made by USA Today Publisher Gannett for $815 Million

Offer for Buying LA Times and Chicago Tribune made by USA Today Publisher Gannett for $815 Million
In an effort to consolidate brands and drive cost savings that can improve the financial standing of print and digital newsrooms nationwide, there has been an offer to buy Tribune Publishing, owner of the Los Angeles Times and Chicago Tribune by Gannett, publisher of USA Today and dozens of other regional newspapers.
As publishers seek new investors and corporate structures to weather changing consumer reading habits, and an upending of the print and digital advertising market by tech giants like Google and Facebook, the unsolicited takeover effort comes amid a flurry of merger and acquisition activity in the media industry. Uncovering stronger sources of capital to give brands the flexibility to negotiate industry change or increasing scale are the main aims of much of the recent boom in media M&A.
While digital first brands like BuzzFeed and Mashable have all recently raised new funding, business publications like The Economist, The Financial Times and Business Insider have been sold to new strategic owners over the past year. snapping up a well-respected programmatic digital ad platform, in addition to a portfolio of brands including TechCrunch and Huffington Post, last June, Verizon acquired AOL for $4.4 billion. It is now in talks to acquire Yahoo’s highly trafficked core media business. Amazon’s Jeff Bezos acquired the Washington Post for $250 million and quickly integrated it within the Kindle ecosystem in October 2013.
Forcing them to come up with viable financial structures as independent public companies, Gannett, Tribune Publishing and Time Inc. have also been separated from larger broadcast media conglomerates in recent years.

While it comes with a strong strategic rationale, there is no flare in Gannett’s bid for Tribune Publishing as was there for the Bezos-led push into the newspaper business, or the financial firepower of Verizon’s recent digital media full press.
Owner of a number of local television stations, Tribune Publishing has struggled since being spun from Tribune Media in mid-2014. Amidst falling financial forecasts and sharp layoffs, particularly at its strongest brands like the LA Times, its share price has fallen roughly 60% amid management change over the past year.
While freeing up new resources, Gannett believes that consolidation can put Tribune Publishing in more stable hands. For an enterprise value of $85 million when counting its $390 million in debt outstanding, it is offering to pay $12.25 a share for Tribune Publishing. Furthermore, after being split from local broadcast powerhouse Tenga in mid-2015, Gannett has shown an ability to negotiate life as an independent company.
Gannett forecast in a press release Monday morning that a merger may generate $50 million a year in annual cost savings. while helping to maintain journalistic standards, it noted, those projected savings could open up resources to invest in promising brands or technologies.
 “We believe Gannett is uniquely willing and able to propel Tribune into the position of strength that will allow its beloved and historic publications and other assets to survive and thrive in this challenging environment. By combining, we would create a company with the financial stability and flexibility equipped to preserve journalistic integrity, high standards and excellence for years to come,” said Gannett CEO Robert Dickey.


Christopher J. Mitchell

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