——By Mick Gregory
The Tribune Company is under pressure to sell its largest paper, the Los Angeles Times, as you’ve read here and in the business press. The major trouble was coming from the Chandler family, the former owner of the L.A. Times and one of the company’s largest share holders in the stock and cash deal.
The Wall Street Journal reports that several prominent Los Angeles billionaires are interested in buying the L.A. Times, the nation’s No. 4 paper in terms of circulation. Business leaders in Los Angeles are also joining together to urge the Tribune not to make further staff and cost cuts at the paper, saying that it should sell the paper if it is not satisfied with results.
The Tribune bought the LA Times as part of its purchase of the Times Mirror Co. in 2000. The purchase made the Chandler family the company’s No. 2 shareholder in Tribune Co., and made the newspaper publisher party to two complicated partnerships with the
Chandlers, which could not be unwound until this month without negative tax consequences.
Scott Smith, president of Tribune Publishing, dismissed the idea of a sale of the L.A. Times in an interview with the Wall Street Journal. He told the paper he sees the Times and its staff as a central source of content for other Tribune Co. newspapers.
But the Journal reports that Eli Broad, philanthropist and founder of insurer SunAmerica, and supermarket magnate Ronald Burkle, recently sat down with representatives of the Chandler family and their investment bankers to discuss how they might structure a deal to purchase the Times from the Tribune. However the paper reports people close to the Chandlers said these talks didn’t go far.
In addition, entertainment industry mogul David Geffen made his own separate, informal, all-cash offer to buy the Times, according to people familiar with the situation and reported as a major story on today’s DrudgeReport.com.
In response to all three overtures, Mr. FitzSimons wrote a letter saying the board had decided unanimously to not discuss the transaction “at this time,” according to a person who saw one copy. Tribune stock is down nearly 40 percent since the end of 2003. The company took on debt to finance a $2 billion share buyback earlier this year to try to help share price, a move that was opposed by the
Chandler family trust.
The Tribune is just one of many newspaper companies with its share price sharply declining over the last 12 months; Gannett, the largest newspaper-centric company has seen its stock fall even even further, dropping more than 20 percent in the last year, while the New York Times has lost nearly 30 percent in that period.
The “death spiral” started when Knight-Ridder, one of the nation’s largest newspaper companies, and considered to be the most Web savvy, was acquired by the much smaller, McClatchy chain earlier this year under pressure from shareholders to sell its assets to make up for share price declines there. Since that purchase, McClatchy has sold off several former Knight-Ridder papers, some to local ownership groups. McClatchy stock has fallen at double digit rates. It’s the equivalent of a carriage company buying up all the buggy whip factories when Chevrolet and Ford got into the auto business.