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Monday, June 19, 2006

Chandler's Have Dicey TV Track Record

B&C Beat
By higgins at
2006-06-19 10:10

The Chandler family's distaste for TV stations is a central element of their attack on troubled Tribune Co.'s plan to buy back $2 billion worth of stock.

But it's amusing now to watch members of the Chandler family lecture Tribune Co. about unloading the company's TV stations. That's because, when the family behind Times Mirror Corp. exited the station business, their judgment proved to be horrible.

The family acquired 12% of the newspaper and broadcasting company's stock when it sold controlling interest in Times Mirror to Tribune in 2000.

The Chandlers dismiss Tribune's big stock buyback as misguided, addressing “financial structure in advance of strategy.” The Chandlers prefer to spin off the TV stations.

Tribune's independent directors countered a blistering Chandler letter to the board with one accusing the family of looking after only their personal interests.

However, their own track record selling TV stations is not great. Times Mirror unloaded its four stations in 1994 to Argyle Television, collecting $320 million and a small equity stake in Argyle. Just a year later, Argyle cut a deal to flip the stations to New World Television, for nearly double that: $716 million.

Now, Times Mirror made plenty of money on the initial sale ($131 million), including a dodgy tax benefit. But the company clearly left a couple hundred million dollars on the table.

Add to that, of course, that much of the plunge in Tribune's stock price can be blamed on the Times Mirror deal, including a surprise $1 billion tax hit and book-cooking at Times Mirror's newspaper, Newsday.

Still, I agree with the Chandlers' objection that the buyback is a bad idea. And perhaps their other arguments are legitimate. But their track record puts the family in the same credibility crunch that plagued investor Carl Icahn in his similar attack against Time Warner. They may be right, but are these people whose lead investors will want to follow?.

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