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Does Apollo Really Want to Buy Tribune Publishing?

Tribune Company Spins Off Newspapers From Broadcast Parent CompanyTribune Company Spins Off Newspapers From Broadcast Parent Company

Politico‘s Ken Doctor reported over the weekend that private equity firm Apollo Global Management (APO) had reached out to newspaper company Tribune Publishing Co. (TPUB) about a possible buyout, after which it possibly would have sold off the LA Times and San Diego Union-Tribune — which represent around 40% of TPUB’s business — to billionaire Eli Broad.

All of this reporting was apparently sparked by the following Rupert Murdoch tweet:

Only trouble, according to Doctor, is that Tribune Publishing never returned Apollo’s calls:

Apollo Global Management first approached Tribune Publishing about a month ago, telling board chair Eddy Hartenstein of its interest in buying the company, as confirmed by confidential sources. After receiving that expression, Tribune Publishing has been ‘non-responsive,’ unwilling to schedule meetings or provide deeper-than-public financials.

A source familiar with the situation declined to comment to Fortune on the original contact, but says there are no current discussions between Apollo and Tribune Publishing.

Two thoughts on this:

(1) If Doctor is correct, then Hartenstein and the Tribune board may be breaching their fiduciary duties to Tribune Publishing shareholders. Apollo is a deep-pocketed investor that theoretically could pay a significant premium to the company’s ever-sinking share price. How do you not at least engage in a conversation? Let alone announce that there was an informal approach (thus encouraging other potential bidders — unless that was the purpose of this leak, although Murdoch’s prompting makes that appear unlikely). Unless…

(2) Apollo’s approach was so informal as to be considered in jest. You know, because Tribune Publishing is barely profitable (it was actually in the red for Q3), already has a bunch of debt on its books (long term debt $$ > current market cap $$) and is…. well, it’s a newspaper publisher (i.e., an industry in secular decline).

I know Apollo did deep due diligence earlier this year on Digital First Media (owner of the Denver Post and San Jose Mercury News, among others), but it ultimately passed. Just like almost every private equity firm has passed on legacy print media assets — save for B2B trades — for around a decade. The only notable exceptions to that rule — Platinum Equity buying the aforementioned SD Tribune and Avista Capital Partners’s much larger purchase of The Star Tribune in Minneapolis — were decidedly split in terms of success (Platinum nearly tripled the SD Tribune‘s value, while the Star Tribune went bust). Unless Apollo has a sweetheart deal lined up with Eli Broad, it’s hard to see why it would volunteer for the aggravation.

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