MediaFile

from DealZone:

Xerox-ACS: the backstory

Xerox, which said early Monday morning it will buy Affiliated Computer Services for $6.4 billion, has had its eye on the IT services company for at least two years, but talks only began toward the end of the first quarter of 2009, several people familiar with the matter told Dealzone. Blackstone, which advised Xerox, worked with the company on this over the past 18 months, in addition to making the introductions earlier this year, according to one source.

Talks grew hot and heavy over the summer, especially as the credit market conditions improved, a second source said. Xerox has committed financing of $3 billion for this deal, which is being arranged by JPMorgan, so the deal only began to look like a real possibility once the financing side was sorted out.

ACS, which competes with other technology services providers such as Computer Sciences Corp and Accenture, is an attractive company because of its recurring revenue business model. It's been an especially alluring target for private equity buyers, with Cerberus having offered to buy it for $62 a share in 2007. Cerberus withdrew its offer citing the credit crunch and ACS management's refusal to engage with them. TPG was also interested in ACS about five years ago, the second source added.

Buyout firms didn't lose the opportunity to sniff around at ACS this time around either, the sources said, although it's not clear if the ACS management asked its bankers to run a formal sale auction.

"Every PE firm in the world that could raise the debt was kicking the tires on this one because of the cash," said the third source.

Read The Washington Post’s buyout memo

The Washington Post is offering new buyouts to help the money-losing paper cut costs as it pursues a plan to become profitable again. You can read our story about it, along with an interview with Publisher Katharine Weymouth. Meanwhile, here are some excerpts from her memo to Post employees:

I need not tell you that our industry is undergoing a seismic shift as readers face an array of media choices and our traditional advertising and circulation bases decline. The good news is that the appetite for news is as robust as ever. Thanks to our presence on the Internet and on mobile phones and other devices, our audience includes more readers now than we have ever had. But while online revenues have been growing, they have not yet grown fast enough to offset the declines we are seeing in print revenues. As we move forward, our path is pretty straightforward: we will have to reduce our cost structure…

Below are some of the specifics on the VRIP that we plan to offer certain exempt employees in the next few weeks. We also plan to offer a similar VRIP to certain Guild-covered employees. Post representatives will be discussing the proposed VRIP with the Guild in a few weeks, consistent with the terms of the labor contract. While this VRIP is similar in some ways to the programs we have offered in the past, it will not be as generous as some of those prior buyouts.

Baltimore Sun feels Tribune cost cuts

Suburban bureau reporters at The Sun in Baltimore, Maryland, are about to learn the true meaning of the word “mobile.” The Tribune Co-owned paper is shutting down the last of its three suburban bureaus and bringing their reporters back to the main newsroom in Baltimore proper, sources told MediaFile on Tuesday.

The paper will outfit them with laptops and Blackberries and will send them back into the field to do their job by car or however else they can get to the story. It is part of wider changes going on at Tribune Co, which is in bankruptcy proceedings because of some $13 billion in debt that it has been unable to deal with because of the increasingly grim advertising sales plaguing newspapers.

Tribune’s chief executive, real estate magnate Sam Zell, was unhappy with the amount of empty space that The Sun has in downtown Baltimore, especially when considering all the space that the paper was renting in the suburbs, one of our sources says. The three bureaus that The Sun will shut down are in Anne Arundel, Baltimore and Howard counties. The Sun’s bureaus in Carroll and Harford counties already closed in the past year. It’s not clear if the two are related, but the three bureaus shutting down now are traditional turf war zones with The Washington Post, which recently said it will begin cooperating with The Sun on some coverage in the counties.

Watch Gannett layoffs in slow motion

It’s layoff week at Gannett — even the second N and T might be redundant.

The largest U.S. newspaper publisher and owner of USA Today, the nation’s biggest-selling daily paper, is slashing payroll just in time for the holidays. We read about layoffs everywhere these days, but if you want to see the slow-motion car crash version of how Gannett is doing it, look to Gannett Blog, run by former company reporter Jim Hopkins.

With no newspaper job to keep him busy, Hopkins chronicles nearly every event that he hears about Gannett. That includes a dose of rumor, but much of what he reports is more right than wrong.