Healthy Skepticism About Two Deals

The market is right to not be ebullient about CVS-Caremark and Tribune.
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This column was originally published on RealMoney on Nov. 2 at 9:21 a.m. EST. It's being republished as a bonus for TheStreet.com readers.

For the longest time we were taught in this game that when a company puts itself up for sale, it may not be such a good idea to buy. The reason you put yourself up for sale is that you are out of gas. You think your stock is too high vs. its prospects. You think that others could do a better job.

That's how the market seems to be treating both the

CVS

(CVS) - Get Report

-

Caremark

(CMX)

deal

and

the

Tribune

(TRB)

auction. It's healthy and, at last, skeptical.

Let's take them apart.

Caremark's been challenged to grow for some time, mostly because there's no way it can buy anyone else anymore because the feds won't let it. They have already blocked more pharmacy benefit managers from buying other PBMs as anti-competitive. So that, plus

Wal-Mart's

(WMT) - Get Report

initiatives and some new rules about average wholesale prices that the PBMs can charge, made it so Caremark was indeed out of gas. So CVS bought it.

We also thought that CVS was growing, but now we're unsure of that, too. Why does it need to get into this low-margin, cutthroat game? Is it again the wounded giant, Wal-Mart?

Either way, we're now fearful of both players. This CVS move reminds me of when

Comcast

(CMCSA) - Get Report

tried to buy

Disney

(DIS) - Get Report

. Was that the signal that Comcast was out of gas and had no growth? Turned out not to be, but that's how the market took it. That's what's happening with CVS now.

Tribune is a case of incredible shrinking circulation. Only those of us who cut our teeth in newspapers can understand the severity of the circulation declines in the last few months. These declines are so great that you have to recognize that circulation numbers will be cut almost in half in a couple of years if they aren't reversed. The Knight-Ridder debacle -- meaning, the people who bought those properties are getting crushed -- is making people change their minds on the fly about newspapers.

I continue to believe that radio and newspaper properties are losing value by the month, mostly to

Google

(GOOG) - Get Report

.

That's the secret behind the decline in Tribune.

At the time of publication, Cramer had no positions in any of the stocks mentioned.

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