Wall St. applauds merger of Tribune, Times Mirror

Analysts note strength of new media giant in top U.S. markets

March 14, 2000|By Bill Atkinson | Bill Atkinson,SUN STAFF

Analysts enthusiastically greeted the proposed acquisition of Times Mirror Co. by the Tribune Co., combining two of the country's oldest newspaper publishers, saying the deal announced yesterday would create a national media firm reaching more than half of the nation's top 30 markets and propel it into the multimedia world of the 21st century.

Yesterday, directors of the two companies approved the sale -- valued at $8 billion in cash, stock and debt -- although it is subject to shareholder and federal regulatory approvals.

When finalized, the acquisition would bring together two giants of journalism -- Los Angeles-based Times Mirror, which dates to 1881, and Chicago-based Tribune, founded in 1847.

The new company would retain the Tribune Co. name and headquarters in Chicago. It would employ about 30,000 people -- about 1,600 of them in Baltimore -- and own 11 daily newspapers, 22 television stations and four radio stations. Annual revenue would double, to $7 billion.

But analysts were more impressed yesterday by the potential of the combined company: It would operate in 18 of the nation's top 30 markets, including the Big Three -- New York, Los Angeles and Chicago -- with the ability to deliver news, advertising and entertainment through print, television and the Internet.

"I think it is a terrific deal," said Edward J. Atorino, a media analyst at Wasserstein Perella Securities in New York. "It gives them clout in Los Angeles, clout in Chicago, and now they have clout in New York. I would like to see what this company looks like 18 months from now. I think it will be a powerhouse."

Times Mirror stock shot up $37.6875 from Friday's close of $47.9375, or 78.61 percent, to close yesterday at $85.625, a 52-week high, on volume of 3.4 million shares. The number of shares traded yesterday was 15 times the daily average for Times Mirror stock.

The Tribune Co., which owns the Chicago Tribune and television and radio stations across the country, saw its share price fall $6.375 per share, or 17.1 percent, to $30.8125.

Times Mirror purchased The Sun, the former Evening Sun and WMAR-TV in 1986 from the A.S. Abell Co. for $600 million. Its other newspapers include its flagship, the Los Angeles Times; Newsday on Long Island, N.Y.; and the Hartford Courant in Connecticut.

Michael E. Waller, publisher of The Sun, said he does not expect wholesale layoffs or consolidations in Baltimore. But "there will certainly be changes," he added.

"Is it all going to be good news? No. Nobody's going to spend $8 billion and then tell you to run it any way you want," Waller said in a meeting yesterday with newsroom employees. "I'm pretty confident about their commitment to news, and they don't believe in large staff reductions to solve their problems."

Unlike Times Mirror, which generally has granted its newspapers broad autonomy, the Tribune Co. would likely play more of a role, Waller said. He described the new owner as one with "more discipline in financial matters."

Jack Fuller, president of Tribune Publishing, said the company has "no plans for layoffs at The Sun." The company believes it can obtain about $80 million in annual operating savings without cutting staff, Fuller said.

He said there are "things we could quickly capitalize on," such as purchasing. "We see a lot of opportunities around the company already."

John W. Madigan, chairman, president and chief executive officer of the Tribune Co., said combining the two companies would result in one of the country's most creative media firms.

"We think we are creating the premiere multimedia company in America," he said in a teleconference with reporters. "We think it is going to be a tremendous combination of world-class assets that will do new and creative things in the media markets for advertisers, consumers and others."

The Tribune Co. made a cash tender offer for up to 28 million Times Mirror shares, which represents about 48 percent of shares outstanding. Under the deal, Times Mirror shareholders would be able to sell their shares to Tribune for $95 each or exchange them for Tribune common stock. Each Times Mirror share could be exchanged for 2.5 shares of Tribune stock.

The Tribune Co. offer is nearly double Friday's closing of $47.9375 per Times Mirror share.

The deal, which is expected to be completed in the second or third quarter, was approved Sunday night by Times Mirror's board of directors.

Leland Westerfield, a securities analyst at New York-based PaineWebber Inc., said the potential of the combined companies is "sky high."

The combination of highly recognizable newspapers and television and radio stations should attract both local and national advertisers, Westerfield said. "That has enormous potential."

But some media analysts greeted the deal with skepticism.

"I'm still scratching my head," said James M. Marsh, a media analyst at Prudential Securities Inc. in New York.

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