May 13, 2021

With Tribune Publishing set to approve the sale of the company to hedge fund Alden Global Capital in 10 days, three shareholders have filed lawsuits seeking to block the deal — and more legal action seems likely to follow.

Tribune Publishing disclosed the shareholder complaints in a Securities and Exchange Commission filing Wednesday.

It argued that the suits were without merit but nonetheless offered additional information that revised the lengthy proxy statement it issued March 23 that recommended that shareholders approve the sale at a virtual special meeting May 21.

Maryland investor Stewart Bainum Jr. has been trying to put together an alternative and higher offer to Alden’s bid, which values the company at $630 million. His effort turns on lining up buyers for the eight Tribune metros besides The Baltimore Sun, which he wants to keep himself.

But so far, a source advising him has said, Bainum has been unable to identify anyone wanting to acquire the flagship Chicago Tribune, and the door is closing on a timely counter-bid.

So the strategy for opponents of the deal may shift now to aiming to delay or shut down the sale — and to go to court to advance that case.

Tribune Publishing’s proxy amendment acknowledges, “Additional lawsuits arising out of the Merger may also be filed in the future.”

The NewsGuild has led opposition to Alden’s pursuit of Tribune Publishing and has a webinar scheduled Thursday with speakers, including a representative of CtW Investment Group. CtW’s stated mission is to use union pension funds as leverage to target “irresponsible and unethical corporate behavior.”

In a brief filed May 5, the Guild urged rejection of the Alden sale, arguing that the fund was underpaying with a lowball offer and has conflicts of interest because it has three members on Tribune Publishing’s seven-person board of directors.

CEO Terry Jimenez has indicated that he will vote no because he thinks the company’s financial prospects are good and the Alden offer is too low.

Tribune Publishing’s main addition to the proxy statement is an expanded list of comparable transactions. It shows that those acquiring news properties commonly paid 4.5 to 6 times a property’s EBITDA (earnings before interest, taxes, depreciation and amortization) in acquisitions between 2011 and 2015.

More recently, as the industry has fallen further out of favor with investors, multiples have frequently been just 4.5 to 3.5 times EBITDA. Chatham Asset Management paid 3.4 times EBITDA for McClatchy last September.

Dr. Patrick Soon-Shiong, the owner of the Los Angeles Times, also owns a 24% stake in Tribune Publishing. His decision will be key to whether the deal is approved or rejected, but he has not indicated how he plans to vote.

Tribune Publishing stock has been trading for just pennies more than Alden’s offer of $17.25 a share, suggesting that the market expects the deal to go through rather than be upset by an alternative bid at a higher price.

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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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