Friday, June 09, 2006

Update from Dennis FitzSimons

From: FitzSimons, Dennis J.
Sent: Wednesday, June 07, 2006 11:49 AM
Subject: Update

Dear Fellow Employee:

As you may already be aware, today's Wall Street Journal carries a story about Tribune's recently announced tender offer. The article makes reference to the fact that three board members dissented from the vote to move forward with the tender offer. While we never discuss board deliberations or discussions, this became a matter of public record yesterday. We amended our tender offer filing at the request of the Chandler Trust representatives on the board.

It's important to note that eight of the 11 board members voted in favor of the tender offer as being in the best interests of all shareholders, many of whom are employees. The board made this decision after considering a broad range of alternatives and we are proceeding with the tender offer. It allows the company to return value to shareholders who may be seeking some liquidity, while also allowing us to continue moving forward on our long-term strategy to grow revenue at our newspapers and television stations, expand our interactive businesses and divest non-core assets.

We'll keep you apprised of further developments.



Kanani said...

I'm always asking, "What? Who? Why?"

So this is from
Definition of Buy Backs

The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may be looking for a controlling stake.

A buyback is a method for company to invest in itself since they can't own themselves. Thus, buybacks reduce the number of shares outstanding on the market which increases the proportion of shares the company owns.

Buybacks can be carried out in two ways:

1. Shareholders may be presented with a tender offer whereby they have the option to submit (or tender) a portion or all of their shares within a certain time frame and at a premium to the current market price. This premium compensates investors for tendering their shares rather than holding on to them.

2. Companies buy back shares on the open market over an extended period of time.

Kanani said...

Okay. Tick Tock. I'm thinking.... feel free to jump in.

So... would the Chandlers be opposed to increasing the value of their stock through a buyback?

Or, did their shares represent a threat for a controlling stake?

Now.... if Tribune wants to decrease the number of shares and increase the overall value of the company, is this because they need leverage in order to expand the company off into other types of media?

And if so, where does this leave the ownership of the newspapers?

Okay, so now that we've talked about that....
here's the deal:

If you decide to take the buyback, then you will be responsible for reinvesting your shares elsewhere. All of this has tax considerations, and you have to figure out what you're goals are with this money for the long haul.

More on that later....