>> Investors stunned Tuesday by a media merger going the wrong way. The parent of USA Today, Gannett, walking away from its planned merger with Tronc, the company behind the Chicago Tribune and the Los Angeles Times. Reuters media correspondent Jessica Toonkel.>> Our sources say two things happened. One was Tronc was adding on some additions to the deal that would have made the deal more expensive for Gannett to do.
Things like adding stock for directors on the board. The other thing was two of the banks involved in financing the deal backed away after they saw Gannett earnings.>> This is in stark contrast to what's going on in other parts of the media universe, where companies are digging deeper and deeper to buy content.
Last month, AT&T announced the biggest deal of the year when it offered $85 billion for Time Warner. But Tronc, formerly known as the Tribune Company, is no Time Warner. While the cable giant can boast of strong subscriber numbers for HBO, and a ratings beat at its CNN news channel, Tronc doesn't have anything to brag about.
Newspaper circulation continuous to decline, and even in an election year, advertising rates are getting crushed by the switch to digital media. The options for the jilted newspaper are bleak, unless it can find a rich suitor like Jeff Bezos, who stepped in to buy the Washington Post. Or Mexican billionaire Carlos Slim, who rescued the New York Times.
Or Rupert Murdoch, who took on the Wall Street Journal.>> I don't think there's any way to say that these media magnates are gonna save the newspaper business. I mean, The Wall Street Journal, right now, just offered buyouts to its entire newsroom under Murdoch. Think there's something to be said about not having to be accountable to shareholders, and being able to be more long term, in kind of fixing things.
But, I don't know what the fix looks like yet.>> Wall Street punishing Tronc with a 12% drop in the stock, and erasing $56 million in market value in an already depressed sector.