Freedom sale reported back to square one


Both the Wall Street Journal and the Los Angeles Times report that talks to have MediaNews Corporation acquire Freedom Communications have broken down. That could open the door to other suitors to pursue the various pieces of Freedom, which owns both television stations and newspapers.

Both reports say the sticking point was money – MediaNews thought Freedom was worth $700 million and Freedom’s post-Chapter 11 owners wanted more.

The biggest single asset is Freedom’s flagship newspaper, the Orange County Register. Crain’s Chicago Business reported that Tribune Company, despite its own Chapter 11 proceeding, has resumed negotiations to try to acquire the Register to give it regional dominance when combined with its Los Angeles Times.

Just what will the market bear these days for a newspaper transaction? According to the WSJ, the Freedom newspaper group – 25 dailies and 16 weeklies – could fetch four times EBITDA, or around $350 million, while the eight TV stations are seen as pricing at eight times EBITDA, or $400 million.

RBR-TVBR observation: It is just so difficult to value newspapers, given that the industry has seen revenues decline for 19 straight quarters – with no one able to predict when that string will finally end. In that environment, even 4x would make some bankers nervous. But 8x for the TV group seems the low end of what we keep hearing as deal talk.