April 6, 2021

Maryland hotel magnate Stewart Bainum Jr. and Swiss billionaire Hansjörg Wyss plan to disassemble Tribune Publishing if their upset bid for the company, now formalized, is successful.

Bainum would keep The Baltimore Sun and Wyss the Chicago Tribune. They would seek to find local buyers for the company’s other seven papers.

That is the opposite of the likely plan of hedge fund Alden Global Capital, should its bid for Tribune Publishing be accepted. Alden could roll the entire chain into the group of 60 daily papers its MediaNews Group already owns.

The Bainum-Wyss strategy was briefly reported by the Chicago Tribune Monday morning. I have independently confirmed its accuracy with an informed source.

Alden has a tentative agreement to buy Tribune Publishing, for $17.25 a share, an offer accepted by a special committee of directors and scheduled to go to shareholders for final approval.

That deal remains in force, but Bainum and Wyss, proposing $18.50 a share, now have confirmed financing for their offer and have been given a chance to look at the company’s books.

Theirs is the higher bid should they go forward, and Tribune would probably recommend acceptance unless Alden raises its offer.

Returning Tribune papers to local ownership would represent a rescue from the deep cuts to be expected under Alden, wildly welcomed in each of the nine newsrooms and a boost to the cause of local journalism.

However, the strategy comes with some obvious difficulties, my knowledgeable source conceded.

Bainum and Wyss have expressions of interest in the Orlando Sentinel, the South Florida Sun-Sentinel, The Hartford Courant and The Morning Call in Allentown, Pennsylvania. It would be a gamble, though, to count on any of these feelers to blossom into a sale — especially given the tough economic challenges of operating an independent paper profitably these days.

Another possible scenario is that some of the seven would sell, others not. Bainum and Wyss might agree to keep some or all of those that failed to find buyers.

They could also seek out a chain as an alternative buyer for some of the titles. Hearst, for instance, controls most of the Connecticut market except for Hartford. The Florida papers would fit the huge footprint Gannett already has in that state, where it owns 19 dailies.

Still, there might be a dog or two too damaged as a business to be saleable — notably the New York Daily News, which Tribune bought in September 2017 for $1, assuming substantial liabilities and covering ongoing operating losses.

A second challenge for Bainum, Wyss and other potential local owners would be to decentralize services, national ad sales included, that now operate jointly under the Tribune Publishing umbrella.

That is an expensive and time-consuming proposition — as might not be readily apparent to wealthy, community-minded owners whose business experience has not been in publishing.

Two sources I spoke with said that the next phase of the unfolding story — the Bainum group’s “due diligence” examination of Tribune Publishing together with legal work on a final offer — will take at least several weeks and maybe a month or more.

Should Alden consider upping its bid, there is no particular reason for the fund to do so until then.

Also, as I wrote last week, if Alden chooses not to contest the upset bid, it stands to walk away with a $100-million plus consolation prize on what it has invested in accumulating about a third of Tribune Publishing stock.

In a press release and letter to employees Monday, Tribune Publishing underscored that it is premature to count on a Bainum-Wyss binding offer being made, let alone accepted.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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