2nd Largest Shareholder calls company strategy a failure
From the AP Newsroom
June 14 13:15:00, 2006
(AP) - The second-largest shareholder of Tribune Co. onWednesday called for a breakup of the Chicago-based media company, saying its strategy of combining broadcasting and newspaperproperties in large cities has failed.
The Chandler family, which owns 12 percent of Tribune's shares,also said in a regulatory filing that they would not tender theirshares as part of a major buyback the company is undertaking.
The company had disclosed earlier that the Chandlers opposed thebuyback but didn't detail their reasons. In a letter to the company's board of directors included in a regulatory filing Wednesday, the Chandlers called the process by which the board considered the buyback "fundamentally flawed" and "a purely financial device that fails altogether to address the real business issues facing Tribune."
The Chandlers also have the right to name three of Tribune's 11 directors. Those three directors had voted against the buyback.
Tribune's shares have risen in recent sessions since the disclosure of the Chandlers' dissent as expectations grew among investors that Tribune might have to consider more dramatic action beyond the buyback to boost its long-lagging share price.
After the disclosure of the Chandlers' letter, Tribune shares rose again, jumping 75 cents, or 2.4 percent, to $31.80 in activetrading on the New York Stock Exchange.
Tribune's tender offer has a maximum price of $32.50.
In their letter, the Chandlers said Tribune must find a way to separate its broadcasting holdings from its newspaper business, saying that the company's strategy of owning broadcasting and newspaper properties in the same cities has failed to deliver growth.
They also noted that an anticipated change in regulations that would have made the cross-ownership of television and newspaper properties in the same cities permanently legal has not occurred.
The Chandlers became significant holders of Tribune after its purchase of Times Mirror Co., of which they were major shareholders, in 2000.
A Tribune spokesman was not immediately available for comment.