By Thomas S. Mulligan, Times Staff Writer
June 21, 2006
Los Angeles Times
NEW YORK — Tribune Co. Chief Executive Dennis J. FitzSimons said Tuesday that he would hold fast to his strategy of buying back shares and wringing out higher profits from the company's media properties by sharing resources, cutting costs and focusing on local news.
FitzSimons said he expected Tribune's stock buyback to be completed Monday on schedule.
The executive also picked up a strong endorsement from a fellow CEO at a newspaper industry conference here.
William Dean Singleton, head of Denver-based MediaNews Group Inc., called the $2-billion stock repurchase championed by FitzSimons "a brilliant idea."
Singleton predicted that with the backing of eight of Tribune's 11 directors, FitzSimons would repel a challenge from three other board members who have called for the company to be sold or broken up.
Chicago-based Tribune owns the Los Angeles Times, the Chicago Tribune, TV station KTLA, the Chicago Cubs and other media properties.
"Anytime you can buy back 25% of your stock and let the federal government pay a big hunk of it, that's a good plan," Singleton said, referring to Tribune's financing of the buyback with debt, the interest on which is tax deductible.
The three Tribune directors representing California's Chandler family — longtime owners of The Times — last week attacked the buyback as "hasty and ill-informed." They said they would not sell any of their shares, which amount to a 12% stake in Tribune, under the buyback.
The Chandlers favor a spinoff of Tribune's broadcast division as a way to lift the company's sagging stock price. Echoing a letter from Tribune's independent directors, FitzSimons said the Chandlers' proposed alternative to the stock buyback — particularly dissolving two Chandler trusts held in partnership with Tribune — would primarily benefit the family at other shareholders' expense.
"This disagreement is not so much about strategy as it is about economics and tax risk," he said.
A spokesman for the Chandler trusts indicated Tuesday that FitzSimons had mischaracterized the dispute and was using taxes as a "smokescreen." He added: "Focusing on the potential tax at the expense of taking meaningful strategic action on behalf of all shareholders is simply myopic."
FitzSimons added detail to Tribune's previously announced plan to cut $200 million in expenses over the next two years, saying that $40 million would come from technology efficiencies, such as centralized advertising and circulation systems.
An additional $80 million to $100 million would come from, among other things, outsourcing computer operations, reducing newsprint consumption, sharing national and foreign news content among the newspapers and TV stations, and eliminating jobs through attrition and layoffs, he said. Citing the regulatory "quiet period" imposed on corporate officers while a buyback offer is pending, FitzSimons declined to answer questions from the dozens of securities analysts and reporters in the audience.
During a break, FitzSimons repaired to a reception room and huddled with Singleton one-on-one for about 15 minutes.
Neither would give details of their conversation.
"General newspaper business," FitzSimons said, smiling.
Times staff writer Michael Hiltzik contributed to this report.