Geffen said in talks for L.A. Times

NEW YORK (CNNMoney.com) -- Chicago real estate mogul Sam Zell, tapped Monday as the buyer of media conglomerate Tribune Co., has already talked to entertainment mogul David Geffen about a possible deal for the Los Angeles Times, according to a published report.

The Washington Post reported the discussions. It quoted an unidentified source familiar with Geffen's thinking who said Geffen has spoken with Zell since Monday's announcement and is optimistic that he may gain control of the Times, either in a spinoff deal or a joint-venture partnership.

The Los Angeles paper has the fourth largest daily circulation at 1.2 million readers, according to the latest numbers from the Audit Bureau of Circulation. But like many newspapers, it is seeing declining paid readership and advertising revenue and announced a series of staff cuts in 2006.

Zell had his $8.2 billion bid for the Tribune Co. (Charts) accepted Monday. But he is paying only $315 million of that purchase price in cash and using debt to cover the rest of the purchase. He also will assume $5 billion in Tribune debt after the deal, creating an incentive to sell assets to reduce the debt level.

Los Angeles resident Geffen made an offer of $2 billion for the L.A. Times in 2006 that was rejected by the Tribune Co. in November, partly because the company didn't want to deal with tax implications of a sale, and partly because it was looking for the best possible price to sell the entire company.

But Zell is creating an employee stock ownership plan, or ESOP, to buy control of the Tribune Co., and an ESOP might be able to structure a sale of the Times in a way for the transaction to be tax free.

Geffen told the Los Angeles Times in an interview Monday that he hoped to meet with Zell about a possible purchase of the paper.

"I like Sam Zell," he said at that time. "I wish him well with this new enterprise."

Zell's deal for the company includes only a $25 million break-up fee, which could encourage other bidders, notably Los Angeles billionaires Eli Broad and Ron Burkle, to make a competing offer. The two were meeting with their advisers and "continuing to study Tribune opportunities," a source told wire service Reuters earlier this week.

Geffen, along with film director Steven Spielberg and former Walt Disney (Charts) executive Jeffrey Katzenberg, formed SKG media company in 1994. It has since broken up the company, selling the music business to Universal Music, a unit of Vivendi (Charts), and the live action movie studio to Paramount Pictures, a unit of Viacom, in 2006.

A number of prominent bidders for the Chicago Cubs baseball team have already expressed interest, including William Marovitz, another Chicago real estate developer and husband of Playboy Enterprises (Charts) CEO Christie Hefner, and Tom Begel, founder and chairman of Chicago-based private-equity firm TMB Industries.

Mark Cuban, the outspoken owner of the Dallas Mavericks basketball team and a rumored bidder for the team, said Wednesday in a television interview that it was too early to tell if he'd be a bidder. Besides the basketball team, Cuban is chairman and president of HDNet, an all-high definition national television broadcast network.

Meanwhile, former Baltimore County politician Theodore Venetoulis has a group of 100 investors interest in buying another Tribune Co. paper, the Baltimore Sun, he told that paper earlier this week.

"Our strategy has always been to see who acquires the entire company and try to work with that person to negotiate a sale of The Sun, and that's what we still intend to do," he said.

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