Quick Take: Tribune's Purchase Not Politically Motivated
NEW YORK (TheStreet) -- Tribune Company (TRBAA:OTC), which just emerged from bankruptcy in December, has announced it will acquire 19 local television channels. Here to break down the move is TheStreet's Debra Borchardt and Leon Lazaroff.
Although the company may still be seen as struggling by some, investors have cheered the new deal, pushing the stock up Monday morning. That's even though the company had revenue of only $58 million last quarter, Borchardt said.
The deal was worth about $4.1 billion, on the other hand. But Lazaroff said he's confident that local television has been a solid business avenue for companies to pursue. Clearly, investors think so too.
But could the move be political, rather than financial? Although the political side of it
should
pay off, with revenue boosts coming from key battleground states, the move was more content-motivated, according to Lazaroff.
As the company sees many other content companies raking in the cash with exclusive streaming rights to companies such as
Netflix
(NFLX) - Get Report
, it knows that all it needs is a well-received television series to get itself there too.
With good television shows, the money will come. Not only would the company make money from the streaming rights, but it would also boost future viewership, as long as the content was good.
However, as Lazaroff added, only time will tell whether the deal will pay off. The company also did not provide any insight as to what it would do with its newspaper businesses.
-- Written by Bret Kenwell in Petoskey, Mich.
.
Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.