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Koch Brothers Making Play for Tribune’s Newspapers

April 21, 2013 by Leave a Comment

The first two pieces of the strategy — educating grass-roots activists and influencing politics — were not surprising, given the money they have given to policy institutes and political action groups. But the third one was: media.

Other than financing a few fringe libertarian publications, the Kochs have mostly avoided media investments. Now, Koch Industries, the sprawling private company of which Charles G. Koch serves as chairman and chief executive, is exploring a bid to buy the Tribune Company’s eight regional newspapers, including The Los Angeles Times, The Chicago Tribune, The Baltimore Sun, The Orlando Sentinel and The Hartford Courant.

By early May, the Tribune Company is expected to send financial data to serious suitors in what will be among the largest sales of newspapers by circulation in the country. Koch Industries is among those interested, said several people with direct knowledge of the sale who spoke on the condition they not be named. Tribune emerged from bankruptcy on Dec. 31 and has hired JPMorgan Chase and Evercore Partners to sell its print properties.

The papers, valued at roughly $623 million, would be a financially diminutive deal for Koch Industries, the energy and manufacturing conglomerate based in Wichita, Kan., with annual revenue of about $115 billion.

Politically, however, the papers could serve as a broader platform for the Kochs’ laissez-faire ideas. The Los Angeles Times is the fourth-largest paper in the country, and The Tribune is No. 9, and others are in several battleground states, including two of the largest newspapers in Florida, The Orlando Sentinel and The Sun Sentinel in Fort Lauderdale. A deal could include Hoy, the second-largest Spanish-language daily newspaper, which speaks to the pivotal Hispanic demographic.

One person who attended the Aspen seminar who spoke on the condition of anonymity described the strategy as follows: “It was never ‘How do we destroy the other side?’ ”

“It was ‘How do we make sure our voice is being heard?’ ”

Guests at the Aspen seminar included Philip F. Anschutz, the Republican oil mogul who owns the companies that publish The Washington Examiner, The Oklahoman and The Weekly Standard, and the hedge fund executive Paul E. Singer, who sits on the board of the political magazine Commentary. Attendees were asked not to discuss details about the seminar with the press.

A person who has attended other Koch Industries seminars, which have taken place since 2003, says Charles and David Koch have never said they want to take over newspapers or other large media outlets, but they often say “they see the conservative voice as not being well represented.” The Kochs plan to host another conference at the end of the month, in Palm Springs, Calif.

At this early stage, the thinking inside the Tribune Company, the people close to the deal said, is that Koch Industries could prove the most appealing buyer. Others interested, including a group of wealthy Los Angeles residents led by the billionaire Eli Broad and Ronald W. Burkle, both prominent Democratic donors, and Rupert Murdoch’s News Corporation, would prefer to buy only The Los Angeles Times.

The Tribune Company has signaled it prefers to sell all eight papers and their back-office operations as a bundle. (Tribune, a $7 billion media company that also owns 23 television stations, could also decide to keep the papers if they do not attract a high enough offer.)

Koch Industries is one of the largest sponsors of libertarian causes — including the financing of policy groups like the Cato Institute in Washington and the formation of Americans for Prosperity, the political action group that helped galvanize Tea Party organizations and their causes. The company has said it has no direct link to the Tea Party.

This month a Koch representative contacted Eddy W. Hartenstein, publisher and chief executive of The Los Angeles Times, to discuss a bid, according to a person briefed on the conversation who spoke on the condition of anonymity because the conversation was private. Mr. Hartenstein declined to comment.

Michael J. de la Merced contributed reporting.

Article source: http://www.nytimes.com/2013/04/21/business/media/koch-brothers-making-play-for-tribunes-newspapers.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

RIM’s Delay Caused by Poor Performance, Analysts Say

January 3, 2012 by Leave a Comment

Shock because even RIM acknowledges that the new phones are vital to reversing its rapid loss of market share in North America. At the same time, analysts were skeptical about the company’s explanation that the delay stemmed from its decision to wait for a new, improved microprocessor.

Instead, many analysts say that both the new phones and RIM’s new operating system, BlackBerry 10, may have significant performance problems and are delaying the project.

“They can’t get the infrastructure and the operating system ready in time,” said Peter Misek, an analyst with Jefferies Company. Alkesh Shah, an analyst at Evercore Partners, agreed. “Waiting for the chipset is a contributing factor in a number of factors that led to the delay,” he said. “Creating the ecosystem for the phones is the bigger problem.”

Mr. Shah and several other analysts said that delays in the development of BlackBerry 10 and poor battery performance in prototype versions of the new phones were behind the decision to further delay production until faster, smaller and more power-efficient chips became available in late 2012. Those delays made it impossible for RIM to begin selling the new phones early in 2012, as it first promised.

“One of the problems is the delay in the BB 10 software and that may have led to the selection of chips that caused the most recent delay,” said Rod Hall, an analyst with JPMorgan Chase.

While the analysts’ skepticism is partly based on speculation, it has also been fueled by RIM’s general loss of credibility with them. For more than a year, the company has been forced to repeatedly restate financial forecasts and failed to deliver some critical, new products on time.

“They don’t have a firm grasp of the issues and realities of bringing these phones to market,” said Colin Gillis, an analyst with BGC Partners. “There are not many believers right now,”

RIM has declined to identify the new chip. RIM also declined to comment directly about development problems with BlackBerry 10 or the battery life of the new phones.

It reiterated the earlier remarks of its co-chief executives, Jim Balsillie and Mike Lazaridis, that the delay was simply the result of its decision to wait for an improved chipset. “RIM made a strategic decision to launch BlackBerry 10 devices with a new, LTE-based dual core chipset architecture,” the company said, referring to a chip that supports a high-speed wireless service known as LTE that is now available in some parts of the United States. “As explained on our earnings call, the broad engineering impact of this decision and certain other factors significantly influenced the anticipated timing for the BlackBerry 10 devices.”

But it is no secret that RIM has been struggling with its new operating system, which is based on technology from QNX Software Systems, a company based in Ottawa that RIM acquired in 2010. The BlackBerry PlayBook, RIM’s money-losing tablet computer, was the company’s first product to use a QNX operating system. Despite the BlackBerry brand’s strong association with e-mail, it arrived in April 2011 without e-mail software or the ability to directly synchronize users’ address books and calendars.

Software that was supposed to remedy those issues and others has been delayed and is now promised for February.

Mr. Misek, said that RIM initially tried to merge, or thread, some of its current operating system with QNX to speed up the development timetable. But that proved unsuccessful, forcing RIM to create more software code from scratch than it initially anticipated.

Michael Morgan, the senior analyst for mobile devices at ABI Research, said that many problems with BlackBerry 10 came from making it work on RIM’s network, which moves all BlackBerry data, giving corporate e-mail a high level of security and all users lower wireless data bills.

To accommodate people with both BlackBerry phones and PlayBook tablets, RIM had to redesign security features on its network, which currently allow only one hand-held device access to any given user’s account, Mr. Morgan said.

“When you change something that low level in an operating system, it has ramifications which affect every function,” Mr. Morgan said. “I’m really shocked by a nine-month delay.”

Like many analysts, Mr. Morgan also says he thinks that RIM is struggling to bring the long battery life that has been a hallmark of BlackBerrys to the new phones.

While the QNX operating system has a reputation for reliability, he said, it has been mainly used in situations where power consumption is not a significant concern. Many touch-screen navigation and control systems in cars, for example, use QNX. But automobiles carry large batteries and alternators that recharge them.

When ABI’s researchers disassembled PlayBook tablets, Mr. Morgan said, they found several systems to reduce power consumption. He said, however, that those measures might not be enough for phones that will have much smaller batteries than the PlayBook.

“QNX is being applied now in a place it hasn’t been before,” he said.

Adding to the problem is RIM’s decision to make the new phones operate on LTE networks. Most current chips that operate on those high-speed networks have a reputation for quickly draining batteries.

While LTE networks are relatively scarce today, they are likely to be an important selling point for new phones a year from now.

Article source: http://feeds.nytimes.com/click.phdo?i=ea617b9d79b782a2ce5857bdf5f26931

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DealBook: In Latest Deals, Big Roles for Boutique Investment Banks

August 23, 2011 by Leave a Comment

From left, Frank Quattrone of Qatalyst, Robert Pruzan of Centerview and Peter Weinberg of Perella Weinberg.Left to right: Peter DaSilva for The New York Times; Kirsten Luce for The New York Times; Simon Dawson, via Bloomberg NewsFrom left, Frank Quattrone of Qatalyst, Robert Pruzan of Centerview and Peter Weinberg of Perella Weinberg.

For merger advisers this year, it has been good to be an independent.

Two big deals last week — Google’s $12.5 billion takeover bid for Motorola Mobility and Hewlett-Packard’s $11.7 billion purchase of Autonomy — underscored the growing influence of boutique investment banks. Among the firms that helped propel the two transactions were Qatalyst Partners, Centerview Partners and Perella Weinberg Partners, as well as the biggest independent investment bank, Lazard.

Only Barclays Capital, which advised H.P., is a full-service bank that can lay claim to a significant role in either deal. While other big names were listed as advisers to Autonomy, nearly all were added at the last minute, according to people briefed on the matter who asked for anonymity because the discussion among the banks was private. “Last week was a boutique week,” said Peter Weinberg, a scion of a legendary Goldman Sachs family who co-founded Perella Weinberg. “It’s a strip of the financial services market that’s experiencing secular growth.”

Since the passing of the financial crisis, boutique investment banks have claimed that their time has come. Their pitch is relatively simple: we sell advice and advice alone. They have no research arms or proprietary trading businesses, which trade for the bank’s own account, that could lead to a conflict of interest.

Boutiques, as well as their larger publicly traded cousins like Lazard and Evercore Partners, have largely risen in the league tables so far this year, bolstered by their work on big deals like ATT’s $39 billion takeover of T-Mobile USA and Express Scripts’ merger agreement with Medco Health Services. (Greenhill Company and Evercore advised ATT alongside JPMorgan Chase. Medco retained Lazard as well as JPMorgan.)

Led by the technology banker Frank P. Quattrone, Qatalyst has climbed to 29th place in Thomson Reuters’ league tables as of Monday, thanks to its role as adviser to Motorola, Autonomy and others. It has earned an estimated $34.2 million in fees this year, according to Thomson Reuters and Freeman Consulting. Mr. Quattrone founded Qatalyst in 2008 after emerging victorious from a long legal battle against obstruction-of-justice charges. In just its second year of operations, the firm was ranked 79th and earned an estimated $14 million.

Centerview Partners, which was founded five years ago, has laid claim to a number of big mandates this year, including advising Express Scripts, Motorola and Capital One Financial in its purchase of the ING Group’s American online banking arm. It is also one of three advisers to Kraft Foods in its planned spinoff of its North American grocery business. That has led to an estimated $71.7 million in fees.

To a firm, the boutiques were founded by longtime deal makers from established names — Goldman, Morgan Stanley and Credit Suisse among them — who say they want to recreate the investment bank of old.

Some are growing at a rapid clip. Moelis Company was founded in 2007 by Kenneth D. Moelis, a former top UBS banker, and has embarked on a hiring spree, as well as opening offices in far-flung places like Dubai and Sydney, Australia. (It is now ranked 20th, ahead of RBC Capital Markets and the Jefferies Group, and has earned an estimated $112.3 million.)

And Perella Weinberg has built up an asset management arm that now oversees more than $8.2 billion in capital.

Still, for many of these firms the model is Felix Rohatyn of Lazard or Sidney Weinberg, Peter Weinberg’s grandfather, of Goldman. Those bankers concentrated on advising clients on an array of matters, deals or otherwise. Such matters may not always become public, according to executives from these firms.

“We do consider ourselves to be consiglieres to C.E.O.’s and to boards,” said Robert A. Pruzan, a Centerview co-founder who was formerly the president of Wasserstein Perella.

Yet each firm appears to have its own take on the independent model. Mr. Pruzan says that his firm is staked on big transactions for longtime clients like Kraft and PepsiCo, while Qatalyst has built itself up as a tech specialist that so far has fetched big premiums for the companies it sells.

But despite some claims from boutiques born after the financial crisis, such firms are unlikely to dislodge the top full-service banks from the league tables.

At No. 2 on Thomson Reuters’ league tables as of Monday, JPMorgan Chase has worked on 207 deals worth $390 billion. The three top independent banks in the tables — Lazard, Evercore and Greenhill — combined have worked on 212 deals worth nearly $394 billion.

Unlike boutiques, the full-service banks benefit from their vast trading arms and other operations. They can provide a fuller picture of how the capital markets may react to a potential deal as well as the necessary financing for a transaction. Barclays Capital, for instance, committed to providing £5 billion ($8.2 billion) to H.P. for its Autonomy deal, which Perella Weinberg could not do.

And many assignments for boutiques are providing fairness opinions to boards, which generate lower fees than active deal management. While they won’t turn down the work, bankers acknowledge that they seek a mix of both kinds of tasks to grow.

Still, these firms say that there can be a healthy balance between the big banks and their smaller brethren.

“The boutiques should have a meaningful share of the M.A. market, but not half, or even close,” Mr. Weinberg said. “The big firms have a critical role to play, particularly on the financing side.”

Article source: http://feeds.nytimes.com/click.phdo?i=4d6bf7329aefa4d04668cf464cc58fb6

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