Oaktree Capital Management has made a new pitch for talks between Trib Publishing and Gannett. Credit: Getty

When previously comparing the siege of Tribune Publishing to a corporate Game of Thrones, I overlooked an important player—the third column already inside the gates.

That would be Oaktree Capital Management, the second largest shareholder after chairman Michael Ferro. Like most firms in its line of work, Oaktree has little tolerance for visionaries like Ferro, especially ones with little to point to in the way of successful visions. Oaktree sides with Gannett in its struggle to buy enough Tribune Publishing stock to take over the company, and on Monday it sent Tribune directors a letter that couldn’t have been clearer: 

Investment partnerships managed by Oaktree Capital Management, L.P. are long-time holders of approximately 14.8% of the common stock of Tribune Publishing Company (“Tribune”). Thus we have followed very closely the Gannett proposal to purchase Tribune and your response to date.

We have met with Michael Ferro and spoken with him on the phone, and we have listened to his ideas about building value as a standalone company through a digital transformation of Tribune. The ideas we have heard appear to be preliminary and involve great execution risk. Companies with much greater resources than Tribune and with a substantial head start are struggling in a rapidly changing environment to effect digital change that is profound enough and quick enough to overcome the outgoing tide of print revenues.

In summary, we have not seen anything to give us any confidence that Tribune on its own, with the resources and competitive position it has today, can achieve over any reasonable period of time the value for shareholders that we believe can likely be achieved through a transaction with Gannett. And we see very substantial risk that through pursuing an independent course, Tribune will destroy enormous shareholder value. We have also met with Gannett management and advisors and listened to their description of their interest in acquiring Tribune and what they believe they can do through integrating Tribune’s properties with their system. 

Our conclusion is that we are convinced that you and Tribune’s management should engage Gannett immediately and seek to negotiate a transaction in the interest of all Tribune shareholders. We expect you to carry out the fiduciary duty that you owe to all shareholders, and believe that the only possible conclusion consistent with your fiduciary duty is to engage with Gannett with the objective of maximizing value to all Tribune shareholders.

Oaktree clearly has no faith in Ferro, and I don’t see anything in this letter that could be called a vote of confidence in whatever Gannett plans for Tribune Publishing. But Gannett is offering $15 for shares worth about half that when Gannett entered the picture in April. Oaktree’s message to other shareholders: it’s time to take the money and run.