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Rupert Murdoch is one possible buyer of Tribune Co. papers

The Chicago Tribune 435 N. MIchigan Avenue. | Richard A. Chapman~Sun-Times

The Chicago Tribune at 435 N. MIchigan Avenue. | Richard A. Chapman~Sun-Times

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Updated: February 2, 2013 6:24AM

Rupert Murdoch knows that the lines to Tribune Co. are now open.

On Monday, Tribune emerged from Chapter 11 bankruptcy after four years. The media giant, which owns the Chicago Tribune and WGN TV and radio, is expected to be sold in chunks large or small now that it’s owned by the financial firms who were its biggest creditors.

Murdoch, the media baron who runs News Corp., is one possible buyer of marquee names such as the Tribune newspaper or the company’s Los Angeles Times.

In 2012, Murdoch accelerated News Corp’s split into separate publishing and broadcasting companies, a process expected to be done by mid-2013. Establishing a separate publishing company will let him bid for Tribune-owned newspapers with more hope that regulators won’t get in the way.

He will have inside connections for any bid. Two of Tribune’s new board members have direct connections to Murdoch as former executives of his Fox network. They are Ross Levinsohn, also a former chief executive of Yahoo Inc., and Peter Liguori, who is expected to become Tribune’s new chief executive.

Even the presumably outgoing CEO, Eddy Hartenstein, has past experience with Murdoch. He sold him DirecTV in 2004. Tribune said Hartenstein will remain CEO until the new board organizes itself in a few weeks.

New industry analyst Ken Doctor, author of Newsonomics, said Murdoch’s most pronounced interest is probably in the Los Angeles Times because of its power within the entertainment business. But in building a national publishing network linked to his Wall Street Journal and New York Post, the Chicago Tribune also would be useful.

“The market for newspapers has stabilized” after years of declining advertising revenue, Doctor said. “It’s a decent time to sell, as last year saw more merger and acquisition activity in newspapers.”

Doctor said Tribune’s owners “are much more likely to sell the newspapers rather than to cut staff and operate them.”

Tribune’s 23 TV stations are the profitable side of its business and there could be less pressure to sell them. But asset sales will be the focus of the owners, Oaktree Capital Management LP; Angelo, Gordon & Co. and JP Morgan Chase & Co.

The assets include stakes in Food Network and CareerBuilder Inc. Lance Vitanza, managing director at CRT Capital Group LLC, told Bloomberg News, “It’s all for sale. If they reorganize around anything it will be the TV assets, but we wouldn’t be surprised if they sell those too.”

Financial adviser Lazard in 2012 estimated that the company’s newspapers, primarily its eight major dailies, are together worth $623 million. But Doctor said strong interest in the Los Angeles Times and Chicago Tribune will drive up prices.

Lazard estimated the company’s 23 TV stations and WGN are worth $2.85 billion.

Other Tribune directors are Bruce Karsh, president and co-founder of Oaktree; Oaktree Managing Director Ken Liang; Peter Murphy, founder of Wentworth Capital Management LP; and entertainment lawyer Craig Jacobson.

“Tribune will emerge from the bankruptcy process as a multi-media company with a great mix of profitable assets, strong brands in major markets and a much improved capital structure,” Hartenstein said in a press release.

He also issued a separate statement to employees, thanking them for hard work during the four years and saying the company is “well-positioned for success in 2013.”

In emerging from bankruptcy, Tribune said it will receive a $1.1 billion senior secured term loan and a $300 million asset-based revolving line of credit. The loan will fund certain payments to creditors and credit line will be used for ongoing operations.

A federal bankruptcy judge approved the reorganization plan in July, but final action had to wait until November, when the Federal Communications Commission approved the transfer of the company’s broadcast licenses to the new company.

The Tribune bankruptcy was inordinately complex, featuring warring groups of creditors. Some were emboldened to pursue claims because of a 2010 report by an outside examiner that concluded top executives at Tribune engaged in “intentional fraud” to close the sale to Chicago real estate tycoon Sam Zell.

The $8.2 billion sale left the company with $13 billion in debt just as changes in technology started reducing advertising in traditional print media. The company no longer generated enough cash to cover the debt as well as operations.

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