Sam Zell's Tribune company is going to be hard-pressed to pay the interest on the debt required to go private and still have any profit left over.
That is the gist of a pithy report by Goldman Sachs analyst Peter Appert, I found among my backed-up holiday e-mails. By Appert's calculation, annual interest expense will run to roughly $1 billion. Earnings before interest, taxes, depreciation and amortization (so-called EBITDA) are projected at only $1.15 billion.
"Any further deterioration in industry fundamentals could put the company in a liquidity crunch fairly quickly," Appert writes.
Zell has announced that he plans to sell the Chicago Cubs as well as the Advocate of Stamford and the Greenwich Time, already sold to Hearst. Other asset sales seem inevitable, Appert predicts, especially Tribune's valuable 30% share in Scripps' wildly successful Food Network.
We wouldn't be astonished to see other Tribune papers on the block -- Allentown and Newport News, particularly -- but some of the bigger ones as well if community-based buyers or others come in with an attractive offer.
