I didn't predict that the crumbling of the Tribune empire would come so fast. (Read my first post). But there is panic from the members of the huge media company's second-largest shareholder, the Chandler Family Trusts. They urged the publisher and broadcaster to break itself up by the end of 2006 or consider a sale of the entire company, calling its media strategy a failure, according to a filing released today.
I met the great king, Mr. Chandler, when I was with Times-Mirror, just starting my newspaper career. Though he was in his seventies, he looked like he was in his fourties. And back in the 1980s he already spotted the trends in media and decided to cut the Denver Post and Dallas Times Herald from his family portfolio. He didn't just surf, play Texas Hold'em and joke around with his staff at the LA Times, Chandler knew when to fold them.
The Chandler Trusts, which own about 12 percent of Tribune's shares, said in a filing with Securities and Exchange Commission that the company "must find a way to separate the newspaper business from television broadcasting." There highly-paid researchers have concluded what bloggers have been writing about for a few years. The end of the big newspaper monopolies is very near.
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. Why not claim there newspapers as "nonprofits?" That will come. But it's hard to argue that when they had profit margins of 20 percent for decades. 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. 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. I'm sure the other shareholders will be wanting a look at that committee's findings.
Next time you are in Chicago, take a look at the magnificent Tribune Tower on Michigan Ave. It actually has pieces of famous buildings from around the world embedded in it's stone face. It's a monument to the power and wealth that the press had held on to for so long. But times have changed.