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Tribune Company May Break Up
The Tribune Company, the huge media conglomerate that includes the Los Angeles Times, the Chicago Tribune, Chicago's Channel 5 and a host of other holdings, may splinter apart. According to the Los Angeles Times, at a Tribune board meeting Thursday discussing corporate problems, a committee was appointed to determine a number of options including a breakup of the conglomerate or an outright sale of the media empire.
The company said a special panel of independent directors would study "alternatives for creating additional value for shareholders." In 2000, the Tribune company bought the Times Mirror Co., which then owned the Times, for about $8 billion, with the expectation that ownership of television stations and newspapers in Los Angeles and Chicago would give the company an edge with advertisers and in pursuing the emerging Internet arena. It didn't work out that way and the Chandler family, which had controlled the Times Mirror Co., has been unhappy with the results. Reporting on the five-hour Chicago meeting, the Times wrote that the board unanimously approved a restructuring of two partnerships at the center of a boardroom rift that broke out this summer involving the Chandler family, which is now Tribune's largest shareholder bloc.
According to the Times, the Chandlers had been pushing to restructure the partnerships, which had been an obstacle to a sale or any other transaction that might have lifted the company's battered stock price. The Tribune Company has seen advertising revenue for its newspapers and TV stations shrink, according to the Times, which has suffered circulation declines. A resulting slump in Tribune's stock — it has lost almost half its value in the six years since the Times Mirror acquisition — has led Wall Street to clamor for action. Last June the Chandlers publicly attacked Tribune management and demanded that it spin off the company's 25 TV stations sell some of its 11 newspapers or auction off the entire company. As soon as they went public, potential buyers for the Times began lining up to snag the Times. Outside experts were divided on whether the board's action would inevitably lead to a corporate breakup or a sale of the Times. Paul Ginocchio, a publishing and advertising analyst for Deutsche Bank, told the Times the realignment of the partnerships cleared a path for dramatic changes. "Why wouldn't you get rid of the L.A. Times, your squeakiest wheel? Or most of the TV assets could be spun off or sold," Ginocchio said. "Then Tribune is in a position to go private, if that is what they want to do." But independent newspaper analyst John Morton told the Times that the seven board members on the special committee — the full board, minus Tribune Chairman and Chief Executive Dennis J. FitzSimons and the three Chandler directors — have supported management, which has been reluctant to sell the Times. "I find it unlikely they would want to dispose of the Los Angeles Times, which is a major revenue and profit producer for them," Morton said. "It would seem irrational. On the other hand, there are other forces at work, namely the Chandler family."
Editor's note:
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