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Chandlers Call for Tribune Breakup
Associated Press
All Associated Press News
NEW YORK (AP) - The second-largest shareholder of Tribune Co. on Wednesday called for a breakup of the Chicago-based media company, saying its strategy of combining broadcasting and newspaper properties in large cities has failed.
The Chandler family, which owns 12 percent of Tribune's shares, also said in a regulatory filing that they would not tender their shares as part of a major buyback the company is undertaking.
The company had disclosed earlier that the Chandlers opposed the buyback, but didn't detail their reasons. In a letter to the company's board of directors included in a regulatory filing Wednesday, the Chandlers called the process by which the board considered the buyback "fundamentally flawed" and "a purely financial device that fails altogether to address the real business issues facing Tribune."
The Chandlers also have the right to name three of Tribune's 11 directors. Those three directors had voted against the buyback.
Tribune's shares have risen in recent sessions following the disclosure of the Chandlers' dissent as expectations grew among investors that Tribune may have to consider more dramatic action beyond the buyback to boost its long-lagging share price.
Following the disclosure of the Chandlers' letter, Tribune shares rose again, jumping 75 cents or 2.4 percent to $31.80 in active trading on the New York Stock Exchange. Tribune's tender offer has a maximum price of $32.50.
In their letter, the Chandlers said Tribune must find a way to separate its broadcasting holdings from its newspaper business, saying that the company's strategy of owning both broadcasting and newspaper properties in the same cities has failed to deliver growth.
They also noted that an anticipated change in regulations that would have made the cross-ownership of television and newspaper properties in the same cities permanently legal has not yet occurred.
The Chandlers became significant holders of Tribune following its purchase of Times Mirror Co., of which they were major shareholders, in 2000
Tribune's Chandler Family Calls for Company Breakup (Update7). . . Sales Decline
Revenue at Tribune fell 2 percent last year to $5.6 billion, and analysts expect sales to be little changed this year. Net income, after falling 4 percent last year to $557 million, is set to rise 4 percent in 2006, according to analysts surveyed by Thomson Financial.
The broadcast division reported a 6.1 percent decline in sales in 2005, compared with a 0.8 percent drop at the print unit.
FitzSimons said on May 30 he planned to sell assets and trim costs to bolster profit. He also announced the buyback plan.
The $8 billion purchase of Times Mirror in 2000 was the biggest in Tribune's history, which dates back to the 1847 creation of the Chicago Daily Tribune newspaper. Tribune subsequently expanded into broadcasting in 1924 with the start of radio station WGN and bought the Cubs from chewing-gum heir William Wrigley in 1981.
Newspapers and broadcasting became the focus of Tribune's expansion in the 1990s, with the company promoting the Cubs on its Chicago television and radio stations.