Yale School of Management

tronc: Valuing the Future of Newspapers

Overview:

When Tribune Publishing renamed the company ‘tronc,’ analysts wondered if it was the worst corporate rebrand ever and twitter lit up with abusive comments. One tweeter wrote, “I think ‘TRONC’ is the sound journalists make the second before they barf after seeing company memos about “content and monetization."

Tribune Publishing made the controversial move to "tronc" in the midst of a bruising takeover battle. In May 2016, the Tribune Publishing board rejected a second all-cash buyout offer from Gannett Publishing, $15/share, up from an initial unsolicited bid of $12.25. The debate became public and heated, as Gannett made an appeal directly to the Tribune's non-management shareholders. The effort failed.

To bolster their contention that the company was worth more than Gannett was offering, the Tribune announced a strategic redirection: a new stock listing, the name "tronc," and a goal of posting 1,000 videos a day with AI software. The over century-old publisher of newspapers was billing itself as a multi-platform "content creator."

Tronc’s leadership’s interest in re-categorizing their enterprise as a tech company rather than a publisher was rooted in the problems of the newspaper industry. For newspapers, circulation was dropping, and advertising revenues were dropping even faster. Newspaper publishers were seeking new business models to sustain operations. The troubles of the newspaper industry, however, made valuation of publishing companies controversial. Some investors seemed to be paying hefty premiums for the right to control well-known newspapers.
 
After their early summer skirmishes, negotiators for tronc and Gannett continued meeting behind closed doors trying to find a mutually acceptable price. In October 2016, rumors were swirling that the two sides had come to an agreement at a price of $18.75 per share. However, the banks that were set to finance Gannett’s purchase announced that they would not support the deal. The negotiations collapsed and the stock price of both Gannett and tronc slid.

The failure of the acquisition raised all kinds of questions. Should the Tribune’s board have accepted Gannett's offer of $15 per share? If not, what was the right price? What is the best way to value a company like tronc? Did the strategic repositioning of tronc make any difference?

Format:
Raw, online
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Teaching Note:
No
Suggested Citation:

Jean Rosenthal, Heather E. Tookes, and Jaan Elias, "Tronc: Valuing the Future of Newspapers," Yale SOM Case 17-015, August 25, 2017

Country:
United States
Keywords:
  • asset valuation
  • Tribune Publishing
  • Gannett Publishing
Perspectives:
  • Business History
  • Competitor/Strategy
  • Investor/Finance
  • Leadership & Teamwork

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