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Tribune Expected to Sell Baltimore Sun

The Baltimore Sun is expected to sold in the near future as its owner, the Tribune Co., divests itself of all of its newspapers after emerging from a four-year bankruptcy.

Tribune is expected to focus on its network of 23 television stations, cable television systems and other properties.

The Sun is one of Tribune’s eight major market papers, including its flagship, the Chicago Tribune, and the Los Angeles Times.

Mentioned as possible buyers of the Tribune properties are famous names in the media world, including Warren Buffett, CEO of Berkshire Capital, and Rupert Murdoch, CEO of New Corp. Buffett, who has acquired numerous newspapers recently, has publicly expressed his interest in The Morning Call, a Tribune paper in Allentown, Pa.

The Tribune acquired the Sun in 2000 when it purchased the Times Mirror Co. for $8.3 billion, the largest newspaper sale until then. Times Mirror had bought the Sun in 1986 from the Abell and Black families of Baltimore.

Five years ago, with the Tribune in financial trouble because of the debt incurred to buy Times Mirror and with newspaper valuations falling, Chicago developer Sam Zell bought the entire company for $8.2 billion, and took the it private. A year later, with the recession hitting and faced with even more debt from the buyout, the Tribune filed for bankruptcy.

Oaktree Capital Management, a hedge fund company, is Tribune’s largest controlling owner with a 23 percent stake. JPMorgan Chase & Co. and Angelo, Gordon & Co. each hold a 9 percent stake.

Lazard, Tribune's financial adviser, estimated TV operations to account for $2.85 billion of the company's $7 billion valuation in its most recent report. The company’s publishing arm represents $623 million, while a 30 percent stake in the Food Network and the company’s cash balance are the other notable assets.

Like most newspapers, the Sun and other Tribune papers have struggled with increased productions costs at the same time advertising revenues plummeted. Over the past 10 years, ad revenues have shrunk by half, on average according to the Newspaper Association of America (NAA), and papers in general have lost between and half and two-thirds of their former values.

Content for this story came primarily from a report by Reuters reporters Jennifer Saba and Liana B. Baker.
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