Posted on 06/14/2006 10:59:30 AM PDT by Ernest_at_the_Beach
CHICAGO (MarketWatch) -- Tribune Co.'s second-largest shareholder has raised the stakes in its dispute over the company's strategic direction, calling for "decisive action" by the newspaper publisher and broadcaster, including a possible sale.
Last week, the company responded to the Chandler Trusts' objections to the buyback by issuing a statement pointing out that eight of the 11 members of Tribune's board of directors had approved the plan. It also said at the time that it does not comment on private conversations among board members.
But a weak advertising environment hampering all media in the past three years has been particularly hard on newspapers.
news?
The buyer will be making the second worst business decision in history. The first being, the NEW COKE!
Colonel McCormick is spinning in his grave. A once great conservative paper turned to liberal pap.
The Tribune company should dump the Cubs. Instead of the politically correct manager Baker the club needs a winner.
But who cares about winning? Liberals don't.
All true but they're still whistling past the graveyard: they've chosen to present only liberal propaganda and have alienated conservative readers like me.
Could the Los Angeles Times once again be up for sale?
That question is on the minds of several of the city's richest businessmen, who reaffirmed this week their interest in bidding for the country's fourth-largest daily newspaper.
Billionaire investor Ron Burkle, former Olympics organizer and Major League Baseball Commissioner Peter Ueberroth and philanthropist Eli Broad have indicated in recent interviews or in comments to others that they would like to buy The Times or see it in local hands.
"The L.A. Times is a world-class brand," Ueberroth, a financier and former travel entrepreneur, said in an interview this week. "We're always attracted to quality brands."
Though analysts estimate that The Times could sell for about $1 billion, Publisher Jeff Johnson said the paper was not for sale. With about $1 billion in annual sales, the paper accounts for about 18% of Tribune's revenue and about 17% of operating profit.
One deterrent would be the huge tax burden Tribune would incur in an outright sale.
Yet investors and analysts said Tuesday that a rift between the paper's owner, Tribune Co., and its second-largest shareholder, the Chandler family of Los Angeles, had the potential to put The Times in play.
If that happens, the Chandlers could once again act as kingmaker. A clause in the $8-billion agreement by the Chandlers in 2000 to sell the paper's parent, Times Mirror Co., to Tribune gives the family the right to veto a sale of the flagship newspaper.
(snip)
Last year entertainment mogul David Geffen told Tribune Chief Executive Dennis FitzSimons he would be interested in The Times. He was rebuffed, but the sentiment has spread.
Burkle's Yucaipa Cos. investment firm had bid for the 12 orphaned Knight Ridder papers and is interested in The Times.
Over here!
Here's the SEC filing:
http://investor.tribune.com/EdgarDetail.cfm?CompanyID=TRB&CIK=726513&FID=1193125-06-129575&SID=06-00
E & P's version...
Chandler Family Calls for Breakup of Tribune Co.
By E&P Staff and The Associated Press
Published: June 14, 2006 2:45 PM ET updated 4:00 PM
NEW YORK 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.
In a stinging letter to Tribune’s board of directors included in the filing, William Stinehart Jr., trustee of the Chandler Trust, wrote: “Over the past two years, Tribune has significantly underperformed industry averages and there is scant evidence to suggest the next two years will be any different. Clearly, it is time for prompt, comprehensive action.”
A Tribune spokesman has not returned calls from E&P placed this afternoon.
A Los Angeles Time article was short of details but commented, "The harsh remarks made by Tribune's second-largest shareholder in a securities filing are certain to raise tensions over the company's plan to buy back stock and fuel speculation about a sale of all or parts of the company."
Stinehart called Tribune’s decision to buyback 25% of its shares as “hasty and ill-informed” and that management created a “false sense of urgency in representing to directors that immediate action was required on the self-tender transaction.”
The Chandler family proposes three steps of action for Tribune including spinning off its television division and “some or all of its newspaper properties.”
The Chandlers addressed Tribune’s operational style concerning its newspapers: “Management’s operational response (yet another round of cost-cutting) is subject to serious execution risk and offers little to spur revenue growth and invigorate the newspaper franchises … Management has been and is once again acquiescing to sub-par growth in return for short-term cash flow. Morale at many of the newspapers is already quite low and will be driven lower with a new round of cost cuts,” Stinehart wrote.
The company had disclosed earlier that the Chandlers opposed the buyback, but didn't detail their reasons.
The Chandlers have the right to name three of Tribune's 11 directors. Those three directors had voted against the buyback.
The letter also knocks Tribune management for its Internet strategy. Citing E.W. Scripps and The New York Times Co. as model publishers who have “aggressively pursued investments in growing Internet properties that hold promise,” Tribune, the Chandlers feel, has “primarily managed a declining asset base for short-term cash flow.”
The Chandlers said they are willing to untie the complicated trusts including giving the company the option to purchase real estate at a value of $150 million less than the amount Tribune’s appraiser had determined.
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.
The Chandlers became significant holders of Tribune following its purchase of Times Mirror Co., of which they were major shareholders, in 2000.
E&P Staff and The Associated Press (letters@editorandpublisher.com)
here's a Reuters as well
--
Tribune investor urges split or sale of company
http://news.yahoo.com/s/nm/20060614/bs_nm/media_tribune_dc_3
By Robert MacMillan
Wed Jun 14, 3:54 PM ET
NEW YORK (Reuters) - Tribune Co.'s (NYSE:TRB - news) second-largest shareholder urged the publisher and broadcaster to break itself up by the end of the year or consider a sale of the entire company, calling its media strategy a failure, according to a filing released on Wednesday.
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The Chandler Trusts, which own about 12 percent of Tribune's shares, said in a filing with the U.S. Securities and Exchange Commission that the company "must find a way to separate the newspaper business from television broadcasting."
In a letter addressed to the Tribune board of directors, the Chandler Trusts said that the company had not achieved its aims of boosting profits by owning complementary media outlets in major U.S. markets. They expressed fears the future would be no different unless it changes course.
"This strategy has failed," said the Chandler Trusts, which represents the Chandler family.
The Chandlers said the company should consider a tax-free spinoff as the most effective way to accomplish the split. It said Tribune's board has been considering such a move for "many months" but has taken no action.
Three Tribune board members representing the Chandler Trusts signed the letter. The Chandler family took a stake in Tribune as part of its agreement to sell the Times-Mirror Co., and its flagship Los Angeles Times newspaper, to Tribune for $8.3 billion in 2000.
Tribune had sought to build a stable of major newspapers -- including the Times, Chicago Tribune, The Baltimore Sun -- to work in tandem with its television and Internet holdings. It also owns the Chicago Cubs baseball team.
Part of the strategy, the letter said, anticipated changes in U.S. media regulations that would allow media companies to own multiple radio and TV stations, as well as print publications, in the same market. But an effort to relax those regulations has languished in a legal battle.
In the interim, Tribune has seen its stock fall nearly 38 percent during the past two years as many of its papers lost readers to the Internet, while newsprint costs rose and advertising dollars retreated.
Tribune responded in May with a $2 billion share buyback program, or up to 25 percent of its stock, that Chief Executive Dennis FitzSimons said would boost value for shareholders.
The McCormick Foundation, Tribune's largest shareholder, said it would participate in the program, but the Chandler Trusts criticized the tender offer as "fundamentally flawed."
"Prudence should have required that management first determine a cogent and realistic strategy for restoring the value of Tribune's business and assets prior to creating a financial structure that limits strategic options," the letter said.
The Chandler Trusts urged Tribune to create a committee of independent directors to evaluate management and business issues. A Tribune spokesman was not immediately available for comment.
Tribune shares rose 69 cents, or 2.22 percent, to $31.74 shortly before the close of trading on the New York Stock Exchange.
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