Tribune Media(TRCO) Merger Talks Heat Up, Tronc(TRNC) Talks To Purchase Us Weekly Break Down

Quick updates on two situations we wrote about with a spin and its former parent. Last week we reported that Tronc(TRNC) was close to a deal to buy Us Weekly for over $100 million. Tronc, formerly Tribune Publishing, is a spinoff of Tribune Media(TRCO). This week, reports indicate that Tronc’s discussions with Wenner Media over Us Weekly have broken down and that American Media is now the frontrunner to purchase the celebrity weekly magazine.

Wenner and Pecker were close to a deal for about $90 million several weeks ago, but then Tronc, owner of the Chicago Tribune and Los Angeles Times, among other papers, materialized with a bid believed to be around $95 million.

Just as suddenly, however, the deal with Tronc, controlled by Executive Chairman Michael Ferro and billionaire investor Patrick Soon-Shiong, unraveled.

Tronc, formerly called Tribune Publishing, has an avowed interest in expanding its celebrity news and increasing Web traffic. But it apparently discovered something in the due diligence stage that caused it to back away at the eleventh hour.

Tronc, Wenner Media and AMI declined to comment.

While Tronc’s dealmaking has cooled down, the dealmaking at former parent Tribune Media appears to have picked up. On Monday, we mentioned rumors that Sinclair Broadcasting(SBGI) would buy the company. Some analysts felt that such a deal was unlikely, given FCC ownership restrictions. The NY Post reports that a deal is in fact close and that ownership restrictions may be lifted as soon as next week.

Sources believe the rule change could come as soon as this week or next. The FCC chairman has said he believes the media ownership rules are ready for a shake-up, and that the days of people waiting for the local news to update them at 11 p.m. date back to the era of “The Love Boat.”

“The talks have been going well. Sinclair expects to close soon,” a source close to the negotiations told The Post. “As soon as it gets the FCC thumbs-up, it’s a done deal.”

The two parties are said to be discussing a price tag of $40 to $41 a share, consisting of an almost all-stock swap plus a small amount of cash.

…

The huge merger is coming together in part because of a close relationship with Sinclair’s executive chairman and former CEO, David Smith, and President Trump, sources said. Smith is a well-known contributor to Republican causes.

“David Smith goes to see Trump and Trump says, ‘What do you need to happen in your business?’ ” says a source familiar with the meeting. Another person confirmed that a meeting took place and potential FCC rule changes were discussed.

Trump appeared on Sinclair-owned TV stations 11 times in the final three months of the campaign. Some of those interviews aired in key swing states such as Ohio and Pennsylvania.

 

At $40-$41 per share of Tribune Media stock, the deal would come in well below the bullish valuations presented in the Barron’s article we discussed on Monday. Sinclair is said to be most interested in Tribune’s broadcast stations and may divest(is it too much to hope for a spinoff?) other assets.

Media watchers are also wondering when Sinclair might conduct post-acquisition sales of Tribune’s cable network WGN and its 31 percent stake in Food Network, which is owned by Scripps Networks Interactive.

“Sinclair doesn’t want to buy all of it, but they will if they have to,” a source said. “They may sell off the real estate and they may have to sell off some stations.”

Disclosure: The author holds no shares of any stock mentioned