Posted by chicagomedia.org on May 20, 2009 at 13:27:34:
Broadcast value holding up Cubs deal
By: Ann Saphir and Mike Colias
May 18, 2009
(Crain's) -- Thomas Ricketts, who is leading his family's bid for Tribune Co.'s Cubs, has lined up financing for the deal, but a dispute over price is delaying the transaction.
The Ricketts family, whose original bid was close to $900 million, now believes the real price should be closer to $850 million, a source said. The sides disagree over the value of the team's multiyear contract to broadcast games on Tribune's WGN network.
At issue is about $40 million to $50 million - roughly 6% of the original bid, which also includes Wrigley Field and a 25% stake in regional cable channel Comcast Sports.
Broadcasters pay sports teams for the right to air games. The contract between the Cubs and WGN, which was inked last fall, might have been set too low, given that the broadcaster and the sports team have been owned by the same parent: Tribune Co.
Mr. Ricketts and a Tribune spokesman decline to comment.
The Ricketts family last week worked out final details on a $350-million loan from J. P. Morgan Chase & Co., Citigroup Corp. and Bank of America Corp. The Ricketts family in February sold about $403 million in TD Ameritrade stock to raise cash for the buyout. Separately, Barclays PLC is marketing a $100-million private placement of notes with institutional investors, a source said.
The Ricketts family, which founded TD Ameritrade and still has more than $1.5 billion of stock in the brokerage, has the money to backstop the private placement should it run into trouble. Tribune has insisted that much of the deal be paid for with debt as a way to avoid capital gains tax. Tribune will maintain a small stake in the Cubs after the deal.
Because Tribune filed for bankruptcy protection in December, the deal will need Bankruptcy Court approval. Major League Baseball also will have to sign off on the deal. MLB won't vote on it this week, sources said. The next scheduled meeting is in August.
The Ricketts family still plans to sell a small amount of preferred shares to individual investors after the team is sold.
(Reuters contributed to this report.)