FCC Gives Approval for Tribune Takeover

Late Friday, FCC gave approval for the Tribune (TRB) takeover. Media companies are not allowed to own newspapers and television stations in the same market, and Tribune had a waiver that allowed it to do so. Upon change of ownership, the waiver needs to be re-approved and that is what everyone was waiting for the FCC to do.

Now it is up to the bankers to raise the debt to finance the takeover by Sam Zell. The stock price trading way below the takeover price of $34 pretty much says that the market thinks there could be some issues with the debt financing. I took a position in TRB with the belief that the deal will go through--and I don't think anything has changed (even with the credit market problems). Given the interest by Sam Zell (he talks as if he already owns Tribune) and the steps taken by Tribune to facilitate the deal (including increased leverage to buyback shares earlier this year as part of the deal), I think there is a high chance of the deal going through. If there are issues with financing, the deal may be re-negotiated down to, say, $30 range (from $34).

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