QUO VADIS TRIBUNE?

Tomorrow is the deadline Tribune has set for bids on its $7.3 billion newspaper and television empire. But enthusiasm for Tribune has been tepid, rousing little interest from publicly traded newspaper companies but plenty from private money.

That unsettles some, who fear that private equity's focus on short-term gain will lead to more cuts and quality reductions in an already shaky industry. But Freedom president Scott N. Flanders said private-equity ownership of newspapers is actually the best idea for this turbulent era.

"Media companies in transition should be private," Flanders said. "When you're privately backed, you have the flexibility to be nimble."

In recent decades, almost all large newspapers and chains have been publicly owned. Now, however, newspapers have fallen into disfavor with Wall Street, which values stock-price growth over almost every performance metric. And newspapers are not growing.

Advertising growth exists only online, yet digital revenue is still less than 10 percent of almost every paper's total revenue. Consequently, public investors have forced companies to sell newspapers and break up venerable chains in an effort to extract value. The result: More papers are falling into private hands, where equity partnerships rule.

Though they are not growing, many newspapers continue to make healthy profits, making them appealing targets for equity firms: small groups of moneyed investors who typically hold their new companies for a few years, urge them to cut costs and create value, and then sell their interest and move on. Some equity firms leave the companies stronger and better-positioned for the future; others do not. Private-equity companies used to be known as leveraged-buyout firms, and some of those were known as sharks.Tomorrow is the deadline Tribune has set for bids on its $7.3 billion newspaper and television empire. But enthusiasm for Tribune has been tepid, rousing little interest from publicly traded newspaper companies but plenty from private money.

That unsettles some, who fear that private equity's focus on short-term gain will lead to more cuts and quality reductions in an already shaky industry. But Freedom president Scott N. Flanders said private-equity ownership of newspapers is actually the best idea for this turbulent era.

"Media companies in transition should be private," Flanders said. "When you're privately backed, you have the flexibility to be nimble."

In recent decades, almost all large newspapers and chains have been publicly owned. Now, however, newspapers have fallen into disfavor with Wall Street, which values stock-price growth over almost every performance metric. And newspapers are not growing.
Advertising growth exists only online, yet digital revenue is still less than 10 percent of almost every paper's total revenue. Consequently, public investors have forced companies to sell newspapers and break up venerable chains in an effort to extract value. The result: More papers are falling into private hands, where equity partnerships rule.

Though they are not growing, many newspapers continue to make healthy profits, making them appealing targets for equity firms: small groups of moneyed investors who typically hold their new companies for a few years, urge them to cut costs and create value, and then sell their interest and move on. Some equity firms leave the companies stronger and better-positioned for the future; others do not. Private-equity companies used to be known as leveraged-buyout firms, and some of those were known as sharks.