In the past week two beleaguered newspaper companies — The New York Times and the Tribune Company — have found near term solutions to their long term problems.
Both are looking to sell non-core assets to help them pay down their debt. This makes sense, but still looming are the problems of declining advertising revenue due to the recession and the challenge of shifting their business model online. What the future of online newspapers will look like is still uncertain -- will they charge premium subscription services? Find new ways to do hyper-targeted advertising? We'll see, at least for now these pending deals give them a cushion to figure it out.
The Tribune Company, taken private in a buyout led by Sam Zell last year, and now in bankruptcy proceedings, is moving forward in the sale of the Chicago Cubs and related properties. Thomas Ricketts, a Chicago bond trader has won the exclusive rights to negotiate for the sale of baseball team, Wrigley Field and 25 percent of the local Comcast sports network. The question remains whether the Tribune company's bankruptcy, which excludes the Cubs, will hold up Ricketts reportedly $900 million (or so) bid. The court will still have to approve the purchase, as will Major League Baseball. (More on the deal can be found on my colleague Darren Rovell's blog)
Meanwhile the New York Times Co. is in negotiations to sell a big piece of its headquarters building in midtown Manhattan to W.P. Carey & Company, which specializes in sale-leaseback transactions.
The Times owns 58 percent of the skyscraper, and is looking to sell the 19 floors it currently uses, which it would continue to occupy. As part of a sale-leaseback deal the Times would be responsible for paying taxes, maintenance and utilities, in return for maintaining control over the space. The Times would hold onto the six floors it currently leases to other tenants. The Times has said it was interested in a sale-leaseback deal to generate up to $225 million to help pay off debt: a $400 million revolving credit line expires in May.
This follows the news that Mexican Billionaire Carlos Slim is lending the Times $250 million to help it refinance its debt. Now all eyes are on the New York Times Company's earnings on Wednesday January 28th.
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