Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Tribune Publishing can't have its newspapers and eat them too.

Gannett Co. on Monday disclosed an $815 million takeover offer for the publisher of the Los Angeles Times, Chicago Tribune, and other venerable metro dailies, saying it wanted to bring the matter to shareholders' attention after Tribune had stonewalled previous advances.

Exit Strategy
Tribune Publishing investors cheered Gannett's offer and its 63 percent premium.
Source: Bloomberg
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Stonewalling is an odd stance for Tribune to take considering that it's been such a big proponent of consolidation in the beleaguered newspaper industry. Tribune's logic until now has been that consolidation allows big, sprawling parent companies to cut costs and increase bargaining power with its advertisers. A merger with Gannett would allow Tribune to partake in one of the biggest newspaper consolidations to date. At stake is roughly $50 million in annual cost savings for the combined companies and perhaps a longer lease on life for some of the newspaper business's survivors.   

Tribune, for its part, says it simply took a while to get its financial advisers hired after Gannett's first approach earlier this month. Now, it's got Goldman Sachs and crew helping it review Gannett's $12.25-a-share bid.

Perhaps Tribune's new leadership wants to give itself more time to turn things around. In February, the company got a cash infusion from entrepreneur Michael Ferro (now Tribune's non-executive chairman and largest shareholder). Less than a month later Tribune replaced its CEO

But this isn't the first time Tribune has been unresponsive to takeover offers. Private-equity firm Apollo Global Management approached Tribune about a deal last year only to discover that the target was unwilling to schedule meetings or provide a look at financials, according to Politico. Los Angeles billionaire Eli Broad has also in the past made an offer for two flagship Tribune newspapers -- the Los Angeles Times and the San Diego Union-Tribune.

In the meantime, little at Tribune has improved. The company didn't make money last year and it might not this year. Revenue is still trapped in a downward spiral, despite the influx of new circulation and advertising dollars from Tribune's purchase of the San Diego Union-Tribune last year. A plan to buy Freedom Communications and its two Southern California papers ran into problems this yearOne antitrust attorney called the decision to fight that purchase "the antitrust equivalent of calling the SWAT team on a 90-year-old lady for jaywalking" -- but that's another story. All of this does, however, raise questions about Tribune's ability to keep up its own acquisition strategy. And the outlook for newspapers isn't getting any better as publications struggle to adapt to the digital age.

Hitch Your Wagon to a Better Star
After splitting with its television counterpart in 2015, Gannett has significantly outperformed Tribune Publishing.
Source: Bloomberg

Against that backdrop, Tribune is going to have to prove to investors that going it alone is a better strategy than striking a deal with Gannett.

Gannett is offering a 63 percent premium to Tribune's closing share price on Friday, giving shareholders a shot at recouping their steep losses over the past year. The bid is a far cry from the $25.50 that Tribune traded for back in the summer of 2014 when it was spun off from its TV station counterpart, Tribune Media. It's just not clear how Tribune will revisit a share price like that on its own, despite its deployment of media jargon such as "content-first strategy", "innovative technology" and "plans to increase agility".

There is a chance that federal regulators frown on a Gannett-Tribune Publishing tie-up on anti-trust grounds. The companies don't have much overlap in large markets, but the Justice Department defined a monopoly narrowly in Tribune Publishing's attempt to buy the Orange County Register and Riverside Press-Enterprise, arguing that the buyer in that proposed deal would have ended up with 98 percent control over English-language daily newspaper circulation in Orange County. So if Gannett and Tribune do merge, some divestitures may be needed to get regulators' blessing.

Deals Are The Future
Newspapers have been regularly consolidating to help weather the advent of the digital age.
Source: Bloomberg

Of course, acquisitions and financial engineering alone won't save print journalism. The only way to do that is to overhaul the underlying operating model to compete with the likes of Facebook, Google and Twitter -- something that's much easier said than done and something that every newspaper from New York to Chicago to Los Angeles is struggling to do.

Even so, smart, well-executed consolidation can help delay the inevitable, and perhaps that's the best newspapers can hope for at this point. For Tribune's part, it needs to be willing to participate as both a buyer and a seller if it truly believes its own gospel of consolidation.  

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Price includes debt. 

To contact the author of this story:
Brooke Sutherland in New York at

To contact the editor responsible for this story:
Timothy L. O'Brien at