Set Your TiVo (Updated)


I’m tentatively scheduled to be on CNBC’s Closing Bell at 3:30 this afternoon, to discuss a variety of possible public-to-private buyouts. Expect discussion of such companies as Clear Channel, Tribune and (it’s back) Ford Motor Co. Expect me to say yes, why and no.

4:10pm Update: Ummm…. Not quite the topics you were expecting? Me either, but such things sometimes happen on live TV just before the closing bell. For those interested in how I arrived at the above conclusions, here goes:

Clear Channel
If this one doesn’t happen, it won’t be due to a lack of buyer interest or means. The radio market has been kind of flat over the past several years, but still has enough “drive-time” revenue to outpace other old media sectors. Only real question at this point is if Clear Channel Outdoor is part of the sale, or if a proposed spinout happens instead.

As a quick aside, there is an underlying issue to the Clear Channel deal which is more important than the deal itself: Namely, how private equity firms will justify their ability to skirt federal media-ownership regulations. Not to the FCC, but to their own limited partners.

Some prospective buyers of Clear Channel also recently bought companies like Univision and Susquehanna Radio, which theoretically should preclude a purchase of Clear Channel (since they share a number of markets). The firms are getting around this impediment by arguing that they don’t actually control Univision, et. all, since they are all minority investors.

It works for the FCC, but how would you like to be an LP shelling out millions of dollars in management fees to a firm that explicitly doesn’t manage its portfolio companies?

Tribune
I don’t see PE firms as a buyer for Tribune, which would be better served by deep-pocketed local investors (vanity play), strategic investors (consolidation play) or a combination of the two.

Big-city dailies are suffering from fundamental changes in news consumption, not from anything cyclical. The only reasonable way for a PE firm to do this deal would be to completely remake Tribune in an electronic image (like the “Could Yahoo Buy the Mercury News?” scenario) — and no firm is going to take on that type of time or risk.  

PE firms interested in print media will stick to local newspapers, magazines and directories. They will leave Tribune, Boston Globe, LA Times, etc. to someone else.

Ford Motor Co.
I’ve discussed this one in depth before, so just to summarize why this won’t happen:

  • Too much existing debt.
  • General UAW contract to be renegotiated next year.
  • Ford family seems uninterested in a buyout
  • No likely buyers. WL Ross has no interest, Ford wouldn’t sell out to Jacques Nasser and I think CD&R already got what it wanted in the Hertz deal. Maybe TPG…
  • Only caveat is that a successful turnaround of Ford would be more than just the cover of a firm’s annual report: It would be its business legacy.