It is getting very hard to believe that Sam Zell can close his deal to buy-out the public shareholders at The Tribune Company (NYSE: TRB). Shareholders approved the $34 a share deal on Tuesday, but the stock stands at $28.98.

This morning, the Tribune announced that revenue for July fell another 5.9% to $467 million. Advertising revenue tumbled 10.3% to $247 and classified advertising revenues decreased 18.2%. At least sales at the company's TV and radio operations were flat.

According to The Motley Fool "On Monday, in part because of the expected continuing slide in a number of the company's properties, Standard & Poor's took the company's debt to a B + rating from BBB-, casting it smack-dab into the world of "junk." And as if that weren't enough, S&P has indicated that it'll further knock the rating down to B after the deal is completed." The company's debt burden will be $8.2 billion.

A quick look at the Tribune's latest 10-Q shows operating profit of just under $196 million. Perhaps on an annual run rate that could be $800 million a year. Of course, this would depend on revenue staying steady, and that is not going to happen.

Douglas A. McIntyre is a partner at 24/7 Wall St.

For the past few years, things have been nearly perfect for the private equity world. Credit was cheap and public companies were certainly willing to go private.

But, of course, things are much different now. In fact, there is some doubt that mega deals -- such as for TXU Corp. (NYSE: TXU) and SLM Corp. (NYSE: SLM) -- may not get done because of the tough credit environment.

However, can buyers legally walk from a deal?

Not very easily, actually. After all, when a buyer signs a merger agreement, it's an enforceable contract. And, if it is breached, the consequences can be severe. In fact, in some cases, the buyer may be required to complete the deal. The New York Times looks at this issue in depth today. (registration required).

Top Ten stocks with implied volatility above 105 with volume over 1,000 contracts: TMA, RAS, DFC, BZH, WCI, SPF, IMB, LEND, NFI & QLTI.

Hewlett-Packard (NYSE: HPQ) volatility Elevated into EPS & Outlook. HPQ is recently down $1.02 to $47.42. HPQ will report EPS on 8/16. American Technology say's "anticipate strong July quarter; despite outperformance, we remain buyers." HPQ August straddle is priced at $2.55. HPQ September option implied volatility of 36 is above its 26-week average of 27 according to Track Data, suggesting larger risk.

Wal-Mart Stores, Inc. (NYSE: WMT) volatility above average as WMT trades near 1-year low. WMT is recently down $2.18 to $43.92. WMT reported 2nd quarter net sales increased 8.8% to $91.99 billion, income from continued operations increased 4.1% to $2.98 billion compared to the same period a year ago. Smith Barney says "in addition to the reduction in full-year guidance, management cited continued economic pressure on consumers, which we believe may pressure the stock in the near-term." WMT September option implied volatility of 24 above its 26-week average of 20 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Two of the major newspaper companies reported second-quarter earnings today. The New York Times (NYSE: NYT) reported EPS of $0.34 from continuing operations compared with $037 in the second quarter last year, before items. Tribune Company (NYSE: TRB) reported EPS from continuing operations of $0.17 compared with $0.53 in the second quarter of 2006. Those earnings were brought down by about $0.30 in one-time charges related to job cuts and write-offs.

Tribune is expecting to be acquired by mogul Sam Zell through a complex process where employees would own a large portion of the company but, according to the Associated Press, "Now the industry's accelerating decline has some Wall Street experts wondering whether the deal for the parent company of the Chicago Tribune, Los Angeles Times and Chicago Cubs could fall apart." Revenues decreased 7% in the quarter and while the company remains publicly confident in the deal's prospects, the stock will plunge if it doesn't go through.

Shares of the New York Times soared on the news of Rupert Murdoch's bid for Dow Jones (NYSE: DJ). It has since given up all those gains as investors realized that was a one-shot deal rather than a sign of some new paradigm where the newspaper industry is something other than a declining wreck.

Tribune's saving grace has been the fact that its non-newspaper properties are performing well, but the industry continues its free fall. Advertising revenues fell 5.7% at the New York Times.

The newspaper industry remains one of the ultimate contrarian bets and, if the industry does somehow stage a turnaround, believers will be richly-rewarded. But none of these stocks are for the faint of heart, and I'll be staying far away for now.

Hilton (NYSE: HLT) volatility and volume elevated prior to Blackstone paying $26 billion. HLT announced Blackstone Group (NYSE: BX) will acquire all the outstanding common stock of HLT for $47.50 per share. HLT closed at $36.05. I reported near the close of trading on 7/3/07 "option volume & volatility Elevated as HLT rallies 6%." HLT total volume of 32,490 contracts and HLT July option implied volatility of 39 was aggressive, above its 26-week average of 31 according to Track Data, suggesting larger risk.

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

In early February, The Blackstone Group announced that it had won the bidding for Equity Office Properties Trust in a record-breaking transaction worth $36 billion.

At that time, many commentators gave the deal a big thumbs up, anticipating that it would mark the start of another move higher in the long-running boom in listed property shares, dominated by Real Estate Investment Trusts, or REITs.

Others took note of the fact that the chairman and largest shareholder of EOP was Sam Zell. He is a well-known "vulture investor" with a longstanding reputation for buying cheap and selling dear, who stood to receive more than $90 million for his 1.9 million share stake.

While it may be too soon to say for sure, the relative performance of other shares in the sector after the deal was agreed upon suggests the cynics may have been right. Since February 7, the date Blackstone confirmed it had "won," the Dow Jones U.S. Real Estate Index has underperformed the S&P 500 Index by more than 10.5%.

With all the excitement about mega billion-dollar deals, a torrent of mergers and acquisitions activity, and the rocket-like trajectory of the private equity boom, it makes you wonder about who the real "smart money" is nowadays.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.

After snagging $900 million by selling Equity Office to Blackstone, I think Sam Zell should have taken a nice vacation. Get a tan. Think about the world. And plan the next move.

The last thing I thought was that he would actually buy a down-and-out newspaper company, Tribune Co. (NYSE: TRB). OK, he didn't plunk down much cash and he used some fancy leverage (much of which will be at the expense of the trusty American taxpayers).

What's even worse is that Zell is not interested in cutting jobs. Hey, isn't his nickname the "grave dancer"?

Instead, his new dance is the Internet. Somehow, he thinks he can leverage the Tribune's assets onto the Information Highway. But hasn't that been something the newspaper industry has tried to do for the past ten years anyway?

Interestingly enough, last week Zell gave a presentation at Stanford. His great inspiration? He thinks newspapers should stop allowing Google Inc. (NASDAQ: GOOG) from allowing millions of users to search for articles for free. Zell considers it theft.

For years, newspapers have tried to sell their articles. But now there are simply too many free alternatives.

So, if this is the grand strategy Zell has for the Tribune, I think it's a good bet that the Tribune's future is still very much in doubt.

If you want to read more about this, you can check out a story from the Washington Post. And, yes, it's free.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

If David Geffen wants the Los Angeles Times so badly, new Tribune Co. (NYSE: TRB) owner Sam Zell should let him have it.

Zell has plenty of other headaches to deal with in taking over the Chicago-based media company. The Los Angeles Times is chief among them.

The LA Times, which is one of the best newspapers in the country, is a mess. Circulation is falling at about double the national average. LA Times editor James O'Shea told the New York Times that he believed that the drop stabilized at the end of last year and added that online readership is growing though as the New York Times points out, ``he could not site specific figures."

In plain English that means that the paper's online business is stiil tiny compared with the print business. That's the case with all daily newspapers. But big city papers such as Tribune's Newsday, Baltimore Sun and Chicago Tribune, are in fierce competition for readers from local papers and Internet sites which makes the circulation declines more problematic.

Zell reportedly has no great passion for the newspaper business. The Wall Street Journal points out that Zell is likely to seek further budget cuts "a move that will likely be on popular with staff, particularly at the Los Angeles Times."

Unpopular? That may be an understatement. Editor Dean Bacquet stepped down last year amid a dispute over budgets. More journalists will bolt if there is further belt-tightening and morale will continue to plunge. Tom Taulli pointed out the potential pitfalls employees will face from the employee stock ownership plan Zell created to buy Tribune.

If Geffen wants to take on some if not all of the risks of a risky media property, Zell should sell him an interest in the LA Times or the whole paper outright.

Maybe the LA Times staff will find the inevitable cuts more palatable if they come from a local billionaire rather then one from Chicago. He has plenty of other things on his plate now.

The sale of the Tribune Co, (NYSE: TRB) seemed to take forever (the process took about ten months). Then again, the newspaper industry continues to sag.

That's why it took the financial imagination of deal maestro, Sam Zell, to get the deal done.

The price tag for the Tribune comes to $34 per share or about $8.2 billion. That is about 10X EBITDA, which is a pretty good valuation.

To finance the deal, Zell is using a leveraged Employee Stock Ownership Plan (ESOP). That is, he will borrow a huge amount of money and have employees vest into the stock over time.

A big attraction is the significant tax benefits. First, the interest and principal is deductible on the debt. Next, owners of the Tribune's stock may be able to rollover their holdings into other stocks or bonds – and avoid paying capital gains tax. Also, by being converted to an S Corporation, the Tribune might be able to exempt some of its profits from taxation.

Another benefit is that the employee ownership should be an incentive for the workers.

On the other hand, if the Tribune's business weakens over the next few years, it could be a big hit to the personal balance sheets of employees – and that, of course, would not be so good for morale.

Just look at the ESOP at UAL Corp(NYSE:UAUA). It turned out to be a disaster because industry fundamentals fell to pieces and the company finally had to declare bankruptcy.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Tribune Co. (NYSE: TRB) opened at $32.85. So far today the stock has hit a low of $32.11 and a high of $33.10. As of 12:25, TRB is trading at $32.95, up $0.84 (2.6%).

After hitting a one year high of $34.28 in September, the stock has trickled downward over the past several months until recently catapulting back up the charts on news of its impending buyout. The stock is rising still today after accepting an $8.2 billion private equity buyout offer from real estate investor Sam Zell. While investors are eating the deal up, Jim Cramer is up in arms. The buyer can afford to take a big hit, Cramer says, but he fears that it's the employees who will pay dearly, and with Tribune's new owners having zero experience in the newspaper business, he is skeptical about the company's future prospects. Cramer even goes so far as to say that bankruptcy may be imminent. The technical indicators for TRB have been bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $35 range. TRB has not been above $35 since late 2005 and has shown resistance above $34. This trade could be risky if the current $34 bid gets upped in a bidding war, but given the outlook for the newspaper business, this is a relatively low probability event.

For more news & views about mergers and acquisitions, please see BloggingBuyouts.

Brent Archer is an analyst on the move at Investors Observer. (Free Subscription)

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.

Have billionaires Eli Broad, Ron Burkle and Sam Zell run out of ways to spend their money? Maybe this explains their bidding war for Tribune Co. (NYSE:TRB).

Last night, Broad and Burkle said they would pay $34 per share for the Chicago-based media company, $1 more per share than an offer Tribune was on the verge of accepting from Zell. Both deals would be financed through employee stock ownership programs, according to the Los Angeles Times.

Broad and Burkle will invest $500 million in Tribune, more than the $300 million Zell reportedly offered, the paper said.

Money, though, isn't going to solve Tribune's problems.

Big city metros such as The Los Angeles Times are particularly vulnerable to competition from the Internet and smaller local papers. Tribune's largest paper also has had turmoil in its management ranks that reportedly has hurt morale in the newsroom. The other big Tribune papers like Newsday, The Baltimore Sun and the Chicago Tribune have similar problems.

Zell said he plans to keep Tribune intact. I don't think Burkle and Broad have made a similar pledge. Regardless, the Chicago Cubs are probably going to get a new owner at some point in the not-too-distant future.

These wannabe press lords may regret having their wish come true.

Tribune Co. (NYSE: TRB) is close to accepting Sam Zell's $8 billion offer to take the company private, ending a soap opera that's gone on for too long.

The owner of the Los Angeles Times and Chicago Tribune will probably reach an agreement with Zell by a self-imposed deadline of March 31, people familiar with the matter told Bloomberg News. Zell's offer values Chicago-based Tribune at $33 a share, a 6.8 percent premium over yesterday's close.

Zell plans to create an employee stock ownership plan to finance the debt needed for the acquisition, Bloomberg says, adding that billionaire plans to keep the company in tact.

Tribune should take Zell's money and run as fast as it can to the bank.

I've questioned before whether the grave dancer really understands what's he has gotten himself into. If Zell is a success, I will gladly admit that my skepticism is wrong. Still, I bet that this isn't the last private equity deal among newspaper publishers.

Gannett Co. (NYSE:GCI) and McClatchy Co. (NYSE:MNI) would seem like logical candidates to go private. Though like other publishers they are struggling, Wall Street has considered both companies to be well run. McClatchy's reputation, though, took a hit when it acquired Knight Ridder. Gannett has the advantage of owning both USA Today and strong local media franchises.

All newspaper publishers are better off out of the public markets.

Sam Zell has gotten really rich without my help. But I have to wonder what is motivating the "grave dancer" to buy Tribune Co. (NYSE:TRB).

Of all of the things that that Zell could spend with the billions he's earned from the sale of his Equity Office Properties company, Tribune seems to be an odd choice. I know he's from Chicago and Tribune, owner of the Chicago Tribune and Los Angeles Times, is based there. But it's going to take more than civic pride to turn around Tribune.

The trends in the newspaper business are lousy. Though publishers are gaining Internet advertising revenue, it's not at a fast enough rate to off-set the decline in their core print business. Young people don't read papers and probably aren't going to start anytime soon.

Maybe Zell can prove naysayers like me wrong. Maybe private equity players will take an interest in Gannett Co. (NYSE:GCI), New York Times Co. (NYSE:NYT), and other publishers. But the newspapers continue to decline at faster rates than even the most pessimistic forecasts.

As the New York Times points out today, newspapers had an awful February. Advertising plunged 14 percent at USA Today, 7.5 percent at the Times (where I've done freelance writing), 5 percent at Tribune and McClatchy Co. (NYSE:MNI). Believe it or not before investors LIKED McClatchy before it acquired Knight Ridder last year.

I don't know what Zell and the members of the billionaire boys club who suddenly fancy themselves as William Randolph Hearst think they can do as publishers that the current crop of managers haven't already tried. Tribune, whose papers are mostly based in big cities where competition for readers is intense, seems like a particularly difficult company to turn around.

Like I said earlier, Zell has done fine in his career without my help. I only hope he understands the rough road ahead for Tribune.

Before the dust has settled on the recent acquisition of Equity Office Property Trust, the Blackstone Group follows with an IPO that is projected to raise exactly the same amount of money that they contributed to the buyout, $4 billion - the rest is someone elses money or leverage. Coming out with this IPO after the Blackstone CEO recently called public markets overrated (as posted recently by Amey Stone) is ironic indeed.

Why have an IPO when you have not had a problem raising money in the past, and subject yourself to the requirements of a public company when you are already on record as finding this a nuisance at best? Could it be that you are thinking the public market is ripe for the picking? Is it possible given your disdain that you believe the public offering will raise more money than a private offering? Perhaps you believe selling 10% of the company to the public who's voice is diluted is preferable to a single entity holding 10% of the company and having a big say? Probably all of the above and millions in fees to go around as well. How much of the IPO is already spoken for with friends and family that were able to buy discounted shares?

So what's wrong with this IPO, absolutely nothing at all - just stop pretending, stop whining, and get on with it. If I over paid Sam Zell by so much I would start laying off the risk too. Both sides knew exactly what they were getting into. I hope buyers of the Blackstone shares do as well. A word of caution from the left coast. Out here another very shrewd commercial real estate tycoon sold off his real estate company. It was not long ago that Richard Ziman sold Arden Realty the largest owner of Southern California commercial office space to G.E. Capital.

Far be it from me to second guess the wisdom of two giants like Blackstone and GE, but as one that has looked at over a thousand properties in the last six months and only acquired one, I can testify that things are pretty pricey in the western states. Above all else, if Dick Ziman and Sam Zell are selling, I'm not sure I'm buying.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

Billionaire Sam Zell seemed to like the idea of owning part of the Tribune Company (NYSE:TRB), for a few minutes at least. Other billionaires, like Eli Broad and Ron Burkle, were interested in buying only some of its newspapers. Private equity interests have approached the company about its TV stations.

Now the company is facing the March 31 deadline it set for bids and it appears that no one wants to pony up, at least not at a price much north of where the company currently trades.

That is very bad news for TRB shareholders. Because Wall Street has been hoping for a big bid, Tribune shares are only a few percentage points below where they traded a year ago. Similar companies like The New York Times Company (NYSE:NYT), McClatchy Company Holding (NYSE:MNI), and Journal Register Co. (NYSE:JRC) are off much more. McClatchy shares declined 35% over the period and stock in Journal Register is down 45%.

All of this means that when the March 31 deadline passes, Tribune shares could begin to correct and it would not be a shock if that correction takes that stock down 20% -- at least if investors look at the performance of similar companies.

The Tribune Company needs to find another billionaire.

Douglas A. McIntyre is a partner at 24/7 Wall St.