Chandler family said to be weighing bid for Tribune Co.

November 14, 2006|By Thomas S. Mulligan and James Rainey | Thomas S. Mulligan and James Rainey,LOS ANGELES TIMES

LOS ANGELES -- Lackluster bidding for Tribune Co. has sparked a debate within the Los Angeles Times' founding family about whether to launch its own bid for the company, a family member said yesterday.

If Tribune ultimately is going to be sold in pieces, some members of the Chandler family reason that if there is money to be made doing that they might as well be the ones to make it, the family member said.

Others believe in restoring the Times to family control, but the clan remains divided on how to proceed, said the family member, who asked not to be named because the Chandlers have not been commenting on the continuing auction of Tribune.

"There is a great opportunity after these bids came in low for the Chandler Trusts to get back into the newspaper business, specifically around the Los Angeles Times property," the family member said.

The board of the Chandler Trusts, with eight family members, continues to hold a different view: "The sale of the entire company is the best outcome for all stockholders," according to a person familiar with their thinking.

The Chandlers' public criticism of Tribune management in June pushed the Chicago-based company into the auction that is going on now.

The family's ownership stake has risen from about 12 percent earlier this year to 20 percent because of the restructuring of complicated partnerships they had formed with Tribune. The family also holds three of 11 seats on the company's board.

Four preliminary bids have come from private-equity companies, acting individually or in groups; one from Los Angeles billionaires Eli Broad and Ronald W. Burkle; and interest has been expressed by Gannett Co., the nation's largest newspaper company, according to sources familiar with the process.

Los Angeles billionaire and music mogul David Geffen also has expressed interest in buying The Times but is not believed to have made a bid.

In addition, Maurice R. "Hank" Greenberg, former chairman of insurance giant American International Group Inc., also is considering a bid for Tribune or other newspaper companies, The New York Times reported yesterday.

The Chandler family member came forward partly in response to a column that Harry Chandler, son of the late former Times Publisher Otis Chandler, wrote in Sunday's edition of the newspaper. It claimed that most of the extended family had no interest in the future of the Times.

"To say there is no emotional desire to be a part of the newspaper by the extended family is just plain wrong," said the other Chandler, who has been following the contest for Tribune closely.

This person said that buying back the Times is far from a settled point within the large and far-flung family. The two Chandler Trusts that hold the Tribune stock and other investments have about 170 beneficiaries. Other family members believe it is best to sell and get out of the media business as soon as possible.

The family's net worth is unclear, although public filings reveal that the Chandler Trusts hold nearly $1.6 billion in Tribune stock.

Industry experts believe that the increased interest in Tribune means that a sale or breakup of the company is nearly certain. But no nonbinding bid has been much above where the stock has traded in recent weeks, according to sources familiar with the bidding.

Tribune shares closed at $32.46 yesterday, up 43 cents. The recent closing peak was $33.99 on Sept. 22, the day after Tribune announced it would explore a range of options, including selling all or parts of the company. Besides the Times, Tribune owns the Chicago Tribune, Newsday in New York, The Sun in Baltimore, the Chicago Cubs baseball team, other newspapers, about two dozen TV stations and a significant stake in the Food Network.

Representatives of Gannett, which owns USA Today, about 90 other daily newspapers and 23 TV stations, met with Tribune management last week and examined some of the company's private financial data, according to a Tribune executive familiar with Gannett's actions. He asked not to be named because he is not authorized to speak for the company.

Gannett is a partner with Tribune and McClatchy Co. in CareerBuilder.com, the leading Internet job-search site. A Tribune purchase would give Gannett a controlling stake in the business, which some analysts say is worth more than $1 billion.

While insurance magnate Greenberg was only said to be considering a bid, he is not unfamiliar to other players in the drama surrounding Tribune. He worked closely with Broad in the late 1990s when the giant AIG acquired Broad's SunAmerica Inc., a retirement-savings specialist, for $18.4 billion.

"Something will happen," said Eric McKissack, chief investment officer of Chicago-based Channing Capital Management, which owns about 600,000 Tribune shares.

Risk arbitragers, who place bets on takeover targets such as Tribune, aren't sure there is much more value to be had, said Keith M. Moore of the New York arbitrage firm of Kellner DiLeo & Co. He noted that Tribune shares have not traded at very high volume recently, nor has the stock been especially volatile - two signs of arbitrager involvement.

"Arbs" tend to dump a stock when a deal falls through, but Moore said their cautiousness regarding Tribune could mean there would be no giant sell-off but only a modest slide of $2 or $3 a share.

Thomas S. Mulligan and James Rainey write for the Los Angeles Times.

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