BUSINESS WEEK - Shares of BCE Inc., the parent of Bell Canada, declined Monday following reports that its proposed $52 billion takeover by an investor group led by the Ontario Teachers' Pension Plan was in trouble. Citing unnamed people on both sides of the deal, the New York Times reported Monday that the banks that have committed to finance the deal wanted to re-negotiate the lending terms. Bill Fox, a spokesman for BCE, wouldn't comment on whether the banks are trying to re-negotiate the terms, but he said the company still expects the deal to close before the end of the second quarter.
"We have an agreement," Fox said. "I'm not going to comment on any aspect of the work being done to close the transaction. We're working to close on the basis of the terms set out in the agreement."
BCE's is not the first private equity deal to be affected by the credit crunch. Earlier this month, Clear Channel Communications Inc. agreed to take a lower price and slightly higher interest rates to settle a dispute with its lenders and allow its buyout to proceed. The BCE offer, valued at about $52 billion, includes debt, preferred equity and minority interests. According to the New York Times report, the banks backing the deal sent revised terms to the investor group, and these terms included higher interest rates, tighter loan restrictions and stronger protections for banks. The negotiations surrounding the deal, the report said, started to fray late Friday. Citigroup spokeswoman Danielle Romero-Apsilos declined to comment, saying it's too early to discuss what took place over the weekend regarding the BCE deal. Deborah Allen, a spokeswoman with Ontario Teachers Pension Fund, said they can't comment on discussions with the banks or BCE but said "we expect everyone will honor their commitments and we look forward to closing the transaction." Shares of BCE fell $2.02, or 5.2 percent, to $36.79 in afternoon trading. In the past 52 weeks, the stock has traded between $32.94 and $44.59.
Monday, May 19, 2008
Microsoft Revives Talks With Yahoo, Proposes New Deal
May 19 (Bloomberg) -- Microsoft Corp., the world's biggest software maker, revived the possibility of a deal with Yahoo! Inc. to challenge Google Inc. after failing to agree on a merger. Microsoft said yesterday it's exploring an agreement with Yahoo that stops short of a full takeover. Redmond, Washington- based Microsoft didn't elaborate on the proposal and said it ``reserves the right'' to reconsider its bid to buy all of Yahoo. The proposal gives Yahoo, owner of the second-most popular Web search engine, another chance to forge an agreement with Microsoft as investor Carl Icahn threatens to oust the Internet company's board. Yahoo Chief Executive Officer Jerry Yang demanded a higher price than Microsoft's $47.5 billion offer, prompting Microsoft CEO Steve Ballmer to abandon talks on May 3. ``Many analysts expected Microsoft to retrace its steps and seek a deal with Yahoo,'' said Raffaella Sommariva, a fund manager at AZ Fund Management SA in Luxembourg, which oversees the equivalent of $14.5 billion. ``An accord would be a great opportunity for both of them.''Yahoo said in a statement yesterday that it is open to pursuing any transaction in the best interest of investors. The company said it will continue to consider all of its options, including any proposal from Microsoft.
Yahoo Gains
Yahoo rose 82 cents, or 3 percent, to the equivalent of $28.48 at 9:31 a.m. in German trading from the U.S. close of $27.66 on May 16. Microsoft fell 20 cents to $29.79 in Germany from the U.S. close of $29.99 last week, while Google lost 66 cents to $579.41 in European trading. The agreement Microsoft and Yahoo are discussing involves Yahoo carrying search advertisements from Microsoft, the Wall Street Journal said yesterday, citing people familiar with the matter. That may be a way for Microsoft to scuttle talks between Yahoo and Google for a similar partnership, the newspaper said. Yahoo said in April it would run some Google ads next to its search results to boost sales. Google made as much as 70 percent more in sales from each query at the end of last year, Yahoo has said. Google CEO Eric Schmidt said on May 8 that while the test has ended, the two companies are on ``very friendly'' terms. ``Investors in Yahoo were very disappointed after Microsoft abandoned the talks,'' Sommariva said. ``Microsoft hasn't managed to reach a critical size with MSN to compete and Yahoo is battling with Google.''
`Strong Enough'
Icahn, who has the backing of Paulson & Co., the New York hedge-fund manager run by John Paulson, said last week that a combination of Microsoft and Yahoo would create ``a force strong enough'' to fight Google. Microsoft hasn't held talks with Icahn, a person familiar with the situation said yesterday. Icahn didn't return a call seeking comment. ``The best strategy for Yahoo is to embrace Microsoft,'' Troy Mastin, an analyst at William Blair & Co. in Chicago, said in a Bloomberg Television interview last week. He predicts Yahoo shares will perform in line with the market. ``If they structure a deal correctly, they might still be able to retain a lot of the control and autonomy that they have today.'' Microsoft spent three months wooing Yahoo to expand its Internet-search business and compete with Google in the $41 billion worldwide online advertising market. Microsoft said its next move will depend on discussions that may take place with Yahoo, shareholders of the two companies, or other parties. Microsoft spokesman Frank Shaw and Yahoo spokeswoman Tracy Schmaler declined to comment.
`Major New Initiative'
Microsoft and Yahoo had discussed a partnership designed to boost each other's share of the Web search and advertising market, people briefed on the discussions said last May. Separately, Microsoft said yesterday it will talk about a ``major new initiative'' in its search engine technology on May 21. Microsoft will also make changes to its online branding, which is ``fragmented and confusing,'' Kevin Johnson, president of Microsoft's Internet business, said in a memo to employees. The company will ``double down'' on investments in Europe, pursue small acquisitions and expand partnerships to build up the online business, he said. Online ad sales reached $41 billion worldwide last year, according to Piper Jaffray & Co. Microsoft projected that may almost double by 2010. Icahn disclosed that he owned 10 million Yahoo shares and options to buy 49 million more. He submitted his own slate of nominees for Yahoo's board, including himself, Dallas Mavericks owner Mark Cuban and former Viacom Inc. CEO Frank Biondi. All 10 of Yahoo's current directors are up for re-election at the annual meeting on July 3. The 72-year-old investor, who helped orchestrate Oracle Corp.'s takeover of BEA Systems Inc., said in a letter to Yahoo's board that directors had ``botched'' talks with Microsoft. Yahoo disputed the claim, saying Icahn had a ``significant misunderstanding'' of the discussions.
Thursday, May 15, 2008
Does purchasing CNET really help CBS?
By John Simons, writer
(Fortune) -- With its bold $1.8 billion purchase of CNET, CBS is making a play for ad dollars that are shifting to the Internet. But the company may be paying too much for a network of Web sites that won't address the conglomerate's main problem: an over-reliance on advertising dollars as a source of revenue.
CBS Corp. President and CEO Leslie Moonves announced Wednesday morning that the company will make a cash tender offer to purchase CNET Networks Inc. for $11.50 per share, or about $1.8 billion. CBS will add CNET to its collection of media holdings: a TV broadcast network, 29 local television stations, outdoor advertising displays, 140 radio stations, cable channels such as Showtime, and Simon & Schuster publishing.
CBS management touted various "synergies" that the acquisition will unlock, but on the conference call with investors Thursday, executives offered few specifics. In a release, Moonves pointed out that the CNET deal would give the company exposure to the "fastest-growing advertising sector" - Internet advertising.
The acquisition takes place against a backdrop of slower ad spending. Overall advertising outlays grew at their slowest pace in five years during the last quarter of 2007, and that pace is expected to continue, according to Bernstein Research. Internet advertising grew 27% during all of 2007 to $25.5 billion, according to research firm, International Data Corp. Even so, that $25.5 billion represents only 7% of all U.S. advertising.
CBS's online empire will be vast. CNET is the 10th most visited Internet site in terms of global unique users and ranks 17th in unique U.S. users. CBS will add CNET's Web sites such as BNET (a business news and information site), GameSpot, News.com, TV.com and MP3.com to its own online operations CBS.com, CBSNews.com, and CBSSports.com. "By acquiring CNET, CBS will more than double Internet revenue and [ad] inventory space," said Frederick Moran, an analyst with the Stanford Group. "CNET also brings a dedicated online sales force and online advertising technology to CBS."
However, the CNET acquisition doesn't address CBS's oft-discussed Achilles Heel. CBS is more vulnerable to an advertising downturn than any of its peers in the industry: 72% of the company's revenue last year was derived from ad dollars, compared to 44% for News Corp., 35% for Viacom, 23% for Disney and 19% for Time-Warner. Although online advertising is expected to grow this year by 20%, companies who derive greater portions of their income from subscriptions generally fare better in a slowing economy.
Some observers are concerned that CBS, which offered a 45% premium to CNET's Wednesday closing price of $7.95 per share, is paying too much for its new Internet baby. Doug Creutz, an analyst with Cowen and Company, put it delicately Thursday morning in a communication with clients, when he called the acquisition "value-dilutive".
Creutz doesn't believe that the synergies CBS has outlined thus far merit the high acquisition price the company will pay. "One of our concerns about CBS has been that management might pursue expensive acquisitions to offset concerns about secular trends in the company's core broadcast television and radio businesses," Creutz said. "The CNET deal underlines this concern." Creutz reaffirmed his "underperform" rating on CBS shares.
Citigroup analyst Jason Bazinet is equally nonplussed. He noted in a message sent to investors Thursday morning that CBS is clearly trying to build a formidable presence on the Web with the addition of an online content company that commands ad rates "well above rivals". However, Bazinet observed, "the key CBS challenge will be sustaining premium [ad rates]." The Citigroup analyst reiterated his "hold" rating on CBS shares. "Merger and acquisition risk and sluggish ad growth continue to keep us on the sidelines," he wrote.
Around midday Thursday, CBS (CBS, Fortune 500) shares had fallen 2.9% to $24.09, while CNET shares had risen more than 43% to $11.39. The acquisition is expected to close sometime this summer.
(Fortune) -- With its bold $1.8 billion purchase of CNET, CBS is making a play for ad dollars that are shifting to the Internet. But the company may be paying too much for a network of Web sites that won't address the conglomerate's main problem: an over-reliance on advertising dollars as a source of revenue.CBS Corp. President and CEO Leslie Moonves announced Wednesday morning that the company will make a cash tender offer to purchase CNET Networks Inc. for $11.50 per share, or about $1.8 billion. CBS will add CNET to its collection of media holdings: a TV broadcast network, 29 local television stations, outdoor advertising displays, 140 radio stations, cable channels such as Showtime, and Simon & Schuster publishing.
CBS management touted various "synergies" that the acquisition will unlock, but on the conference call with investors Thursday, executives offered few specifics. In a release, Moonves pointed out that the CNET deal would give the company exposure to the "fastest-growing advertising sector" - Internet advertising.
The acquisition takes place against a backdrop of slower ad spending. Overall advertising outlays grew at their slowest pace in five years during the last quarter of 2007, and that pace is expected to continue, according to Bernstein Research. Internet advertising grew 27% during all of 2007 to $25.5 billion, according to research firm, International Data Corp. Even so, that $25.5 billion represents only 7% of all U.S. advertising.
CBS's online empire will be vast. CNET is the 10th most visited Internet site in terms of global unique users and ranks 17th in unique U.S. users. CBS will add CNET's Web sites such as BNET (a business news and information site), GameSpot, News.com, TV.com and MP3.com to its own online operations CBS.com, CBSNews.com, and CBSSports.com. "By acquiring CNET, CBS will more than double Internet revenue and [ad] inventory space," said Frederick Moran, an analyst with the Stanford Group. "CNET also brings a dedicated online sales force and online advertising technology to CBS."
However, the CNET acquisition doesn't address CBS's oft-discussed Achilles Heel. CBS is more vulnerable to an advertising downturn than any of its peers in the industry: 72% of the company's revenue last year was derived from ad dollars, compared to 44% for News Corp., 35% for Viacom, 23% for Disney and 19% for Time-Warner. Although online advertising is expected to grow this year by 20%, companies who derive greater portions of their income from subscriptions generally fare better in a slowing economy.
Some observers are concerned that CBS, which offered a 45% premium to CNET's Wednesday closing price of $7.95 per share, is paying too much for its new Internet baby. Doug Creutz, an analyst with Cowen and Company, put it delicately Thursday morning in a communication with clients, when he called the acquisition "value-dilutive".
Creutz doesn't believe that the synergies CBS has outlined thus far merit the high acquisition price the company will pay. "One of our concerns about CBS has been that management might pursue expensive acquisitions to offset concerns about secular trends in the company's core broadcast television and radio businesses," Creutz said. "The CNET deal underlines this concern." Creutz reaffirmed his "underperform" rating on CBS shares.
Citigroup analyst Jason Bazinet is equally nonplussed. He noted in a message sent to investors Thursday morning that CBS is clearly trying to build a formidable presence on the Web with the addition of an online content company that commands ad rates "well above rivals". However, Bazinet observed, "the key CBS challenge will be sustaining premium [ad rates]." The Citigroup analyst reiterated his "hold" rating on CBS shares. "Merger and acquisition risk and sluggish ad growth continue to keep us on the sidelines," he wrote.
Around midday Thursday, CBS (CBS, Fortune 500) shares had fallen 2.9% to $24.09, while CNET shares had risen more than 43% to $11.39. The acquisition is expected to close sometime this summer.
Monday, May 12, 2008
Research In Motion to Start Selling Faster Blackberry Bold
May 12 (Bloomberg) -- Research In Motion Ltd. introduced a BlackBerry phone with quicker Web browsing and more room for songs and videos, getting a jump on a faster iPhone that analysts expect next month. The device, called the BlackBerry Bold, has a brighter screen and better Web browser than previous models, co-Chief Executive Officer James Balsillie said in an interview. The phone, which also has satellite navigation and a video camera, will start selling at AT&T Inc. for $300 to $400 this summer in the U.S., he said. The product sets up a showdown between Apple Inc. CEO Steve Jobs and Balsillie in the market for so-called third-generation phones, which offer speedier Web access and video downloads. Phones with Internet, e-mail and video are the fastest-growing part of the handset market, with users quadrupling to 400 million in the next three years, RBC Capital Markets estimates.
``You need to provide faster networks, faster processors,'' said Balsillie, 47. Consumers are using ``more and more multimedia'' and ``there are lots of contenders out there.'' Research In Motion, based in Waterloo, Ontario, rose $9.07, or 6.8 percent, to $141.84 at 1:06 p.m. New York time in Nasdaq Stock Market trading. Apple advanced $4.30, or 2.3 percent, to $187.75. Research In Motion had more than doubled in the past 12 months before today, while Apple is up 72 percent over that span.
Faster Connection
The Bold, which also will go on sale in Europe and Asia, is the first BlackBerry to use high-speed downlink packet access, or HSDPA, a network technology that speeds data delivery. Apple may introduce an iPhone with faster data in June, according to analysts such as RBC's Mike Abramsky. Since the iPhone's debut last June, Apple has seized the No. 2 spot in the U.S. market for so-called smart phones, handsets with computer and Internet functions. The BlackBerry ranks first. To fend off the iPhone, Research In Motion has expanded beyond business customers, releasing devices that have music players and cameras. The new BlackBerry lets users listen to songs from Apple's iTunes music program.
``Where Research In Motion falls short against Apple is in marketing and on the entertainment side,'' Rob Enderle, president of research firm Enderle Group in San Jose, California, said today in a Bloomberg Television interview. ``Where Apple's been moving is on entertainment, particularly video.''
Venture Fund
In a bid to foster new uses for the BlackBerry, the company started a $150 million venture-capital fund with the Royal Bank of Canada and Thomson Reuters Corp., Balsillie said. The fund invests in companies developing smart-phone applications. The Bold has 1 gigabyte of memory, more than any previous BlackBerry. Users can expand it to 8 gigabytes with a memory card. Cupertino, California-based Apple sells the iPhone in 8- gigabyte and 16-gigabyte versions. While Balsillie unveiled the Bold before Jobs showed the new iPhone, the Apple device may still be the one that starts selling first, said UBS AG analyst Maynard Um. Apple, whose iPhone is sold exclusively in the U.S. through AT&T, usually waits to show new products until they are available to shoppers. Research In Motion might benefit from following Apple's introduction because AT&T's rivals are likely to battle the new iPhone with their products, Um said. That may allow the Bold to start selling in a less competitive market later on.
Touch Screen?
With rounded corners, the Bold's design resembles that of the iPhone. Unlike Apple's product, it has a regular keyboard and not a touch screen. Still, Balsillie said he isn't ``religious'' about having a keyboard in the BlackBerry. Analysts say he may release a touch-screen model later this year.
``The BlackBerry design has improved quite a bit,'' UBS's Um said in an interview. ``We are going to see more innovation coming from them.'' Separately, Research In Motion said today it would make it easier to access Microsoft Corp.'s e-mail and messenger programs with the BlackBerry. The BlackBerry dominated U.S. shipments for e-mail phones in the fourth quarter with 41 percent of the market, according to Reading, England-based research firm Canalys. The iPhone had 28 percent and Palm Inc., maker of the Treo, had 9 percent. While Research In Motion dominates the market, Apple may grow faster this year. Apple may more than triple its shipments to 14 million this year from last year's 4 million, RBC's Abramsky estimates. BlackBerry shipments will almost double this fiscal year to 25 million from 14 million last year, he projects. Research In Motion will probably start selling other new BlackBerrys this year, including one that flips open to reveal a keyboard, Toronto-based Abramsky wrote in a note this month. He recommends buying both Apple and Research In Motion shares.
Playboy posts quarterly loss, shares drop
By Robert MacMillan
NEW YORK (Reuters) - Adult entertainment publisher Playboy Enterprises Inc posted a quarterly loss on Tuesday because of weaker publishing and domestic television revenue and forecast more trouble during the year, pushing its shares down 8 percent. The worse-than-expected results illustrate the trouble that Playboy and other publishers and television companies face as more people get their entertainment online, and often for free. Its results also show that, at least for Playboy, licensing its bunny ears brand and bachelor lifestyle cachet is proving a more resilient business than the magazine that created them.
"Our publishing and domestic entertainment businesses continue to face unprecedented change in the way consumers access and use media content," Chief Executive Christie Hefner said in a statement accompanying the quarterly results. Hefner forecast the licensing business would grow throughout the year but said Playboy did not expect it to offset the weaker results it anticipates in its media business. The publisher of the iconic men's magazine reported a loss of $3.1 million, or 9 cents a share, compared with a profit of $1.5 million, or 4 cents a share, in the first quarter a year ago. Excluding restructuring and severance charges, the company's loss was 6 cents a share. Analysts' average forecast was a profit of 6 cents a share, according to Reuters Estimates. Revenue fell 8 percent to $78.5 million, missing the average analyst estimate of $85.4 million.
"I think the company has a fantastic brand and I think there's a tremendous opportunity to exploit that brand across multiple platforms, particularly on the location-based entertainment side," said RBC Capital Markets analyst David Bank. "The challenge is to rightsize the other businesses, which aren't really growth businesses." Licensing revenue, not counting an art sale last year, rose 5 percent, helped by a 10 percent rise in revenue from international consumer products. Other businesses did not fare as well. Domestic television revenue fell 16 percent despite growth in monthly subscription revenue at Playboy TV. Publishing revenue fell 14 percent as circulation and ad sales at Playboy magazine fell. Advertising pages in the second quarter will be down 5 percent compared with last year. Online revenue fell 3 percent to $15.2 million because of lower pay site revenue. Hefner said the company is redesigning the Playboy.com website to attract more visitors and create a better portal to its other properties.
"This will be a transitional year as we are still in the investment stage of the retooling process, and results won't be apparent until year-end at the earliest," Hefner said. Playboy shares fell 66 cents to $7.60 in morning trade on the New York Stock Exchange.
NEW YORK (Reuters) - Adult entertainment publisher Playboy Enterprises Inc posted a quarterly loss on Tuesday because of weaker publishing and domestic television revenue and forecast more trouble during the year, pushing its shares down 8 percent. The worse-than-expected results illustrate the trouble that Playboy and other publishers and television companies face as more people get their entertainment online, and often for free. Its results also show that, at least for Playboy, licensing its bunny ears brand and bachelor lifestyle cachet is proving a more resilient business than the magazine that created them."Our publishing and domestic entertainment businesses continue to face unprecedented change in the way consumers access and use media content," Chief Executive Christie Hefner said in a statement accompanying the quarterly results. Hefner forecast the licensing business would grow throughout the year but said Playboy did not expect it to offset the weaker results it anticipates in its media business. The publisher of the iconic men's magazine reported a loss of $3.1 million, or 9 cents a share, compared with a profit of $1.5 million, or 4 cents a share, in the first quarter a year ago. Excluding restructuring and severance charges, the company's loss was 6 cents a share. Analysts' average forecast was a profit of 6 cents a share, according to Reuters Estimates. Revenue fell 8 percent to $78.5 million, missing the average analyst estimate of $85.4 million.
"I think the company has a fantastic brand and I think there's a tremendous opportunity to exploit that brand across multiple platforms, particularly on the location-based entertainment side," said RBC Capital Markets analyst David Bank. "The challenge is to rightsize the other businesses, which aren't really growth businesses." Licensing revenue, not counting an art sale last year, rose 5 percent, helped by a 10 percent rise in revenue from international consumer products. Other businesses did not fare as well. Domestic television revenue fell 16 percent despite growth in monthly subscription revenue at Playboy TV. Publishing revenue fell 14 percent as circulation and ad sales at Playboy magazine fell. Advertising pages in the second quarter will be down 5 percent compared with last year. Online revenue fell 3 percent to $15.2 million because of lower pay site revenue. Hefner said the company is redesigning the Playboy.com website to attract more visitors and create a better portal to its other properties.
"This will be a transitional year as we are still in the investment stage of the retooling process, and results won't be apparent until year-end at the earliest," Hefner said. Playboy shares fell 66 cents to $7.60 in morning trade on the New York Stock Exchange.
Cablevision to Buy Newsday After Outbidding Murdoch
By Gillian Wee and Tim Mullaney
May 12 (Bloomberg) -- Cablevision Systems Corp., the New York-area cable provider, topped offers from Rupert Murdoch and Mortimer Zuckerman to buy Tribune Co.'s Newsday in a transaction valuing the Long Island newspaper at $632 million. Tribune will get $612 million for a 97 percent stake in Newsday, plus an additional $18 million in prepaid rent for some facilities, the companies said in a statement today. Tribune will keep a remaining 3 percent stake worth $20 million. Cablevision plans to use Newsday, located about 7 miles from its Bethpage headquarters, to expand local advertising and subscription businesses. Murdoch's News Corp. dropped a $580 million bid on May 10, saying a purchase was no longer economical. For Tribune Chairman Sam Zell, the higher offer from Cablevision helps him pay down the $13 billion in debt he acquired through his takeover of Chicago-based Tribune last year.
``If Rupert Murdoch, with an adjacent market newspaper and local TV broadcaster, can't see a way to make money at $580 million, it's a stretch to think that Cablevision can make this work at $650 million,'' said Craig Moffett, an analyst at Sanford C. Bernstein & Co., before the announcement. He has an ``outperform'' rating on Cablevision and doesn't own the shares. Cablevision said last week that it wouldn't rule out more acquisitions beyond cable after announcing plans to build a high-speed wireless network and purchase the Sundance Channel for independent films. The Bethpage, New York-based company also owns Madison Square Garden and the New York Knicks basketball team.
Expansion Concern
Cablevision, led by Chairman Charles Dolan and his son, Chief Executive James Dolan, said in today's statement that they will use Newsday to generate ``substantial operating cash flow'' as they expand in local ads and subscriptions. The company's stock dropped 63 cents, or 2.5 percent, to $24.34 at 10:48 a.m. in New York Stock Exchange composite trading and had risen 1.9 percent this year before today. Gains have been held back on concern over the Dolans' investments outside of their main business, according to Richard Greenfield, an analyst at Pali Capital LLC in New York.
``All they seem intent on doing now is making acquisitions in non-core businesses,'' Greenfield said in an interview today with Bloomberg Television. He raised his recommendation on Cablevision to ``neutral'' last week. ``This is not like buying a brand like Dow Jones or the New York Times. This is a very challenged long-term business.'' Zell, who took control of Tribune last year, is cutting jobs and selling assets to repay debt as print advertising and circulation decline. Tribune is the second-largest U.S. newspaper publisher after Gannett Co. The owner of the Los Angeles Times and Chicago Tribune has $1.85 billion in debt maturing by the end of 2009. The company also plans to sell its Chicago Cubs baseball team and the Cubs' home stadium, Wrigley Field.
Dropped Bid
New York Daily News owner Zuckerman declined to comment on his bid today. News Corp.'s decision to drop its offer came three days after Chairman Murdoch said talks with Chicago-based Tribune were at a ``pretty advanced stage.'' Murdoch, who completed News Corp.'s $5.2 billion purchase of Dow Jones & Co. in December, had planned to combine Newsday's printing and distribution operations with his New York Post. The move would have helped News Corp. increase cash flow by $100 million a year, Murdoch said on a May 7 conference call. Newsday had a circulation of 379,613 in the six months through March, according to the Audit Bureau of Circulations. That's a 4.7 percent drop from a year earlier. The newspaper had $80 million in earnings before interest, taxes, depreciation and amortization last year, a person familiar with the sale talks said last month. Cablevision was advised by Banc of America Securities LLC and Merrill Lynch & Co., as well as Hughes Hubbard & Reed LLP and Sullivan & Cromwell LLP. Tribune was advised by Citigroup Inc., McDermott Will & Emery, Sidley Austin and Paul Hastings.
May 12 (Bloomberg) -- Cablevision Systems Corp., the New York-area cable provider, topped offers from Rupert Murdoch and Mortimer Zuckerman to buy Tribune Co.'s Newsday in a transaction valuing the Long Island newspaper at $632 million. Tribune will get $612 million for a 97 percent stake in Newsday, plus an additional $18 million in prepaid rent for some facilities, the companies said in a statement today. Tribune will keep a remaining 3 percent stake worth $20 million. Cablevision plans to use Newsday, located about 7 miles from its Bethpage headquarters, to expand local advertising and subscription businesses. Murdoch's News Corp. dropped a $580 million bid on May 10, saying a purchase was no longer economical. For Tribune Chairman Sam Zell, the higher offer from Cablevision helps him pay down the $13 billion in debt he acquired through his takeover of Chicago-based Tribune last year.``If Rupert Murdoch, with an adjacent market newspaper and local TV broadcaster, can't see a way to make money at $580 million, it's a stretch to think that Cablevision can make this work at $650 million,'' said Craig Moffett, an analyst at Sanford C. Bernstein & Co., before the announcement. He has an ``outperform'' rating on Cablevision and doesn't own the shares. Cablevision said last week that it wouldn't rule out more acquisitions beyond cable after announcing plans to build a high-speed wireless network and purchase the Sundance Channel for independent films. The Bethpage, New York-based company also owns Madison Square Garden and the New York Knicks basketball team.
Expansion Concern
Cablevision, led by Chairman Charles Dolan and his son, Chief Executive James Dolan, said in today's statement that they will use Newsday to generate ``substantial operating cash flow'' as they expand in local ads and subscriptions. The company's stock dropped 63 cents, or 2.5 percent, to $24.34 at 10:48 a.m. in New York Stock Exchange composite trading and had risen 1.9 percent this year before today. Gains have been held back on concern over the Dolans' investments outside of their main business, according to Richard Greenfield, an analyst at Pali Capital LLC in New York.
``All they seem intent on doing now is making acquisitions in non-core businesses,'' Greenfield said in an interview today with Bloomberg Television. He raised his recommendation on Cablevision to ``neutral'' last week. ``This is not like buying a brand like Dow Jones or the New York Times. This is a very challenged long-term business.'' Zell, who took control of Tribune last year, is cutting jobs and selling assets to repay debt as print advertising and circulation decline. Tribune is the second-largest U.S. newspaper publisher after Gannett Co. The owner of the Los Angeles Times and Chicago Tribune has $1.85 billion in debt maturing by the end of 2009. The company also plans to sell its Chicago Cubs baseball team and the Cubs' home stadium, Wrigley Field.
Dropped Bid
New York Daily News owner Zuckerman declined to comment on his bid today. News Corp.'s decision to drop its offer came three days after Chairman Murdoch said talks with Chicago-based Tribune were at a ``pretty advanced stage.'' Murdoch, who completed News Corp.'s $5.2 billion purchase of Dow Jones & Co. in December, had planned to combine Newsday's printing and distribution operations with his New York Post. The move would have helped News Corp. increase cash flow by $100 million a year, Murdoch said on a May 7 conference call. Newsday had a circulation of 379,613 in the six months through March, according to the Audit Bureau of Circulations. That's a 4.7 percent drop from a year earlier. The newspaper had $80 million in earnings before interest, taxes, depreciation and amortization last year, a person familiar with the sale talks said last month. Cablevision was advised by Banc of America Securities LLC and Merrill Lynch & Co., as well as Hughes Hubbard & Reed LLP and Sullivan & Cromwell LLP. Tribune was advised by Citigroup Inc., McDermott Will & Emery, Sidley Austin and Paul Hastings.
Friday, May 9, 2008
Wall Street set to stumble on AIG loss
By Jennifer Coogan
NEW YORK (Reuters) - Stock index futures fell on Friday, with financial stocks poised to decline after American International Group (AIG.N), the world's largest insurer, reported a larger-than-expected record loss. Equity markets overseas were pushed lower as the price of oil topped $125 a barrel. Tokyo's main index lost more than 2 percent and Europe's broad benchmark was down by nearly the same amount. Shares of AIG fell 8.3 percent to $40.50 before the opening bell. The company had to write down assets linked to subprime mortgages and said it would raise $12.5 billion to strengthen its balance sheet.
Another big financial company, Citigroup Inc (C.N) said it intends to shed roughly $400 billion of non-core assets in a bid to become more competitive. AIG "rekindles fears about the credit markets and that we're not through with the write-downs," said Jim Awad, chairman of W.P. Stewart Asset Management in New York. "On top of that, you've got Citi selling assets, which in the long run is a good thing, but it implies several more years of turmoil and restructuring."
S&P 500 futures were down 6.8 points, below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 81 points, and Nasdaq 100 futures slipped 8 points. Transportation and other energy-dependent stocks were likely to sag as U.S. crude for June delivery was up $1.55 to $125.24 a barrel after hitting a record of $125.98. Airlines particularly be under pressure after UBS cut its price target on shares of six major carriers. Semiconductor shares may lag after graphics chip maker Nvidia Corp (NVDA.O) posted quarterly earnings and gross margins that missed estimates. Nvidia shares were down 3 percent at $21.29 before the open. Stock futures showed a muted reaction to government data showing the U.S. trade deficit narrowed more than expected in March on a record plunge in the value of imports, underscoring the U.S. economic slowdown.
NEW YORK (Reuters) - Stock index futures fell on Friday, with financial stocks poised to decline after American International Group (AIG.N), the world's largest insurer, reported a larger-than-expected record loss. Equity markets overseas were pushed lower as the price of oil topped $125 a barrel. Tokyo's main index lost more than 2 percent and Europe's broad benchmark was down by nearly the same amount. Shares of AIG fell 8.3 percent to $40.50 before the opening bell. The company had to write down assets linked to subprime mortgages and said it would raise $12.5 billion to strengthen its balance sheet.Another big financial company, Citigroup Inc (C.N) said it intends to shed roughly $400 billion of non-core assets in a bid to become more competitive. AIG "rekindles fears about the credit markets and that we're not through with the write-downs," said Jim Awad, chairman of W.P. Stewart Asset Management in New York. "On top of that, you've got Citi selling assets, which in the long run is a good thing, but it implies several more years of turmoil and restructuring."
S&P 500 futures were down 6.8 points, below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 81 points, and Nasdaq 100 futures slipped 8 points. Transportation and other energy-dependent stocks were likely to sag as U.S. crude for June delivery was up $1.55 to $125.24 a barrel after hitting a record of $125.98. Airlines particularly be under pressure after UBS cut its price target on shares of six major carriers. Semiconductor shares may lag after graphics chip maker Nvidia Corp (NVDA.O) posted quarterly earnings and gross margins that missed estimates. Nvidia shares were down 3 percent at $21.29 before the open. Stock futures showed a muted reaction to government data showing the U.S. trade deficit narrowed more than expected in March on a record plunge in the value of imports, underscoring the U.S. economic slowdown.
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