Chandler family protests move
Tribune said Thursday that it will move ahead with a $2 billion share buyback, despite opposition from the Chandler family, which owns 12% of the Chicago company and has three seats on the board.
Trib stock popped higher on the statement by chairman-CEO Dennis FitzSimons and on speculation that one of the least successful media mergers in recent years — Tribune and the Times Mirror Co. — will unravel via a split-up or sale.
The buyback “allows the company to return value to shareholders who may be seeking some liquidity and supports our long-term strategy to grow revenue at our newspapers and television stations, expand our interactive businesses and divest non-core assets,” FitzSimons said.
“As has been our longstanding policy, we will continue to decline comment on private board discussions,” he added, referring to a report that the board is seriously examining a spinoff of the broadcast group and eventual sale of the rest of the company.
Ironically, sale chatter surrounding Tribune comes as its future looks rosier after six glum years that saw the stock plunge from $60 on the eve of the $8.3 billion merger with Los Angeles Times parent Times Mirror to a low of $27 earlier this year.
(Shares jumped 4.19% Thursday to close at $31.58.)
The L.A. Times is stabilizing, analysts say, after cutting costs and circulation. The paper, highly profitable five years ago, was hit by a tough economy on the West Coast, management turnover and an era of overall sluggish growth in the newspaper biz.
Times Mirror’s Newsday was crippled by a circulation scandal. And Trib stations lagged on soft ratings for the WB network.
“The merger at the outset looked great. In retrospect, it was a disaster,” for reasons completely unforeseen, said analyst Ed Atorino at Benchmark Co.
FitzSimons, who ran Tribune’s TV/entertainment division, became CEO in early 2003 and added the chairman title a year later.
The CW network, stepping in for the soon-to-be-defunct WB, is expected to be a boon for Tribune’s TV station group when it launches this fall.
The upbeat outlook — along with a large tax bill the Chandlers could incur in a sale — have some Wall Streeters doubting the stock-buyback tiff is related to a talk of a sale.
The Chandlers, who have a reputation as a contentious bunch, are said to believe the cash would be better spent on dividends and strategic investments to grow the company.
“The newspaper business throws off lots of cash, but it’s not growing. Maybe they should become dividend stocks, grow 2%-3%, like utilities,” Atorino said.