Board mulls sale proposals
It’s been a working weekend for the Tribune Co. board of directors.The 11-member board was understood to have met more than once over the weekend to consider competing buyout offers for the Chicago-based owner of 10 major daily newspapers, including the Los Angeles Times and Chicago Tribune, and 23 TV stations, including WPIX New York, KTLA Los Angeles and WGN Chicago, as well as the Chicago Cubs baseball team. As of Sunday night, Tribune spokesman Gary Weitman had no comment on the board’s progress in considering the bids, nor would he say whether board members were scheduled to meet again today. According to a report in Sunday’s Chicago Tribune, the board continues to lean toward an $8 billion offer from Chi real estate magnate Sam Zell. Zell’s offer values Tribune at $33 a share and would include a $300 million equity investment from him in exchange for preferred stock. Early last week, Tribune’s board had been expected to approve Zell’s offer by Friday or Saturday to meet the company’s self-imposed deadline of Saturday for making a decision on the fate of the company, which has been embroiled in shareholder controversy for months. But on Thursday, a sweetened offer valuing the company at $34 a share, or about $8.2 billion including a $500 million equity investment, came in from the partnership of Los Angeles billionaires Eli Broad and Ron Burkle. Sources familiar with the situation said Tribune board members requested additional information from Broad and Burkle on Friday. Reps for Zell and the Broad-Burkle partnership declined comment on Sunday. The Tribune sale process is being closely watched in Hollywood. Not only is Tribune a key affiliate partner with CBS and Warner Bros. in the CW — Tribune’s stations carry the network in New York, Los Angeles and Chicago, among other big markets — but Tribune is one of a handful of key buyers of off-network and firstrun programming offered in syndication by the major studios. What happens to Tribune’s 23 stations in the near-term will undoubtedly impact distributors’ plans for rolling out new product. The Broad-Burkle partnership had previously submitted a bid for the company in January. The special committee of independent Tribune directors that was set in September to oversee the company’s “strategic review” process was said to have deemed that bid insufficient. Broad and Burkle are also understood to have approached Trib last year about buying just the Los Angeles Times, an idea also rejected by Tribune brass. The latest Broad-Burkle and Zell offers also incorporate an employee stock ownership plan. The complex financing arrangement would allow Tribune to reap tax benefits by using the equity in its employee retirement plans to borrow money to pay a special dividend to shareholders without adding significant debt to the company, which has a debt load of about $5 billion. Tribune’s woes came to a head last June, when the company’s management faced a barrage of criticism and calls for the sale or breakup of the firm from Tribune’s largest shareholder, the Chandler family, which formerly owned the L.A. Times. Chandler scion Jeffrey Chandler, chairman of avocado grower Chandler Ranch Co., is a Tribune board member. Back in 2000, when Tribune bought L.A. Times parent Times Mirror, the company touted the advantages of owning strong newspaper and TV outlets in the nation’s top three markets, New York (where it absorbed Times Mirror’s Newsday), Los Angeles and Chicago. Trib at the time expected to gain significant market share advantages in the dynamic local advertising sector. Seven years later, however, the two bids receiving the strongest consideration from the board value the entire company at less than the $8.3 billion Tribune paid for Times Mirror in 2000. Indeed, Tribune’s stock price has never recovered from a slide that began in early 2004, when its stock hovered around $50. On Friday, amid much talk of a pending decision, Tribune’s shares moved up 58¢ to close at $32.11.
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