Friday, June 30, 2006
The slide show from Tuesday's Town Hall Meeting with Dennis FitzSimons were shown, and remarks were made on the stock tender offer and the July repurchase of thirty million additional Tribune shares.
I asked the question "What percentage of the $100 million in cut backs will occur at the Los Angeles Times Operations Departments?" and I didn't take any notes, so I believe I misunderstood Mr. Johnson's answer? I thought he said since the Los Angeles Times brings in twenty-five percent of the Tribune's profits, we would cut twenty-five million from operations this year and twenty-five million in 2007? As many of my regular readers know, I'm not very good at math, but my calculations make this 50% of the $100 million at the Los Angeles Times. I know I am in error with these numbers, so I will query my co-workers on this today.
Would someone please give me the correct numbers on the cut backs for the Los Angeles Times over the next two years?
In January of 2005 I listed all six of my credit cards on a form and decided it was time to pay everything off. I have made my goals, and paid off four of the six credit cards, with another to be paid off this December.
My Visa and Master Cards seemed to be the hardest to pay off, and that was because I continued to use them every month. So I finally did the unthinkable, and cut the cards into small pieces. I have finally started to see the balances fall, with a payment made to my Visa card every Thursday to help lower my balance as quickly as possible.
With the Los Angeles Times Newspaper claiming there will be layoffs and LA Times management saying there will not be any layoffs, what's an employee to think? I say be prepared so if the worse comes to be, your not shocked and left unprepared by what may or maynot come to be.
Have a great day,
Thursday, June 29, 2006
About two years ago my daughter Kristine mentioned that I should join her on a service called MySpace.
Having no clue what this service offered, or if any costs were involved, I logged on and looked around.
Well the service is free, if you don't mind banner ads on every page you visit.
There are some groups I have enjoyed, like the over forty (for old people like myself) group, or single groups. You name it, and MySpace seems to have a group to fit every age or hobby you can think of.
Met Lowell (pictured at the top) on MySpace last summer, and we finally had our first real visit last Saturday at his 55th birthday party.
It's really fun to exchange emails with others like Lowell, because you get a feel for the other person before actually meeting face to face.
Lowell is such a happy man, married with four children, and we had such a great time chatting with him and celebrating his birthday.
My friend Rita is also Lowell's friend, and she enjoyed meeting him as well. On MySpace users make friend requests, that you can approve or reject, and some users appear to collect as many friends as possible for some reasons beyond me?
With all the negative publicity lately regarding MySpace, most people have heard of the service, but there are many good reasons to give the service a try.
I don't spend a lot of time on MySpace, with being pulled in some many different directions, but I do get on there at least once per month. You can view my profile by clicking here.
By ">Nikki Finke
Then, yesterday’s Wall Street Journal wrote that the Chandler family, which owns its Tribune shares through trusts and is at loggerheads with FitzSimons and will become the company’s largest shareholder in the wake of Tribune’s not-very-popular $2 billion stock buyback scheme, is preparing to meet with Geffen and other potential buyers like Ron Burkle and Eli Broad, as well as private-equity and other investors. It’s all an attempt by the family that once ruled the Spring Street roost to create some drama and force a breakup or sale of all or part of Tribune Co.
CHICAGO, June 29, 2006 /PRNewswire via COMTEX/ -- The McClatchy Company and Tribune Media Services, a subsidiary of Tribune Company, today announced a change in the name of the Knight Ridder/Tribune Information Services (KRT). Effective immediately, the entity will be known as the McClatchy-Tribune Information Services.
With the close of the sale of Knight-Ridder, Inc. to McClatchy, the Sacramento-based media company becomes Tribune's partner in operation of the joint venture formerly known as KRT.
The McClatchy-Tribune Information Services (MCT) provides news stories, feature articles, photos, graphics, illustrations, caricatures, themed content packages and paginated products. With contributions by more than 60 newspapers in the United States and abroad and material produced by its own staff in the United States and Europe, MCT supplies content to 1,200 media clients worldwide. MCT is also a major provider of content to online information services.
The MCT products are marketed worldwide by Tribune Media Services, the content-licensing unit of Tribune Company.
"McClatchy is excited about this opportunity to join Tribune in the operation of this distinguished media service," said Howard Weaver, the McClatchy Company's vice president for news. "We are committed to maintaining the high journalism standards that have characterized the KRT service for so many years, and to finding ways to make the service a more valuable resource for our customers."
"The need for the type of content MCT provides its clients is only going to grow over the next several years," said David D. Williams, president and CEO of Tribune Media Services. "We're delighted to have McClatchy as our partner in enhancing the service and in reinforcing its position as a leading supplier of editorial material to media organizations around the world."
McClatchy and Tribune said they anticipated no changes in the way MCT aggregates and distributes content to its clients.
About The McClatchy Company
On June 27, 2006, The McClatchy Company acquired Knight-Ridder, Inc. At the time, Knight Ridder published 32 daily newspapers in 29 U.S. markets, with a circulation of 3.4 million daily and 4.5 million Sunday, along with a variety of investments in internet and technology companies.
As part of that announcement, McClatchy said it planned to sell 11 of the acquired newspapers that do not fit with the company's longstanding operating strategies and acquisition criteria, and to sell the St. Paul Pioneer Press due to anticipated antitrust concerns involving McClatchy's Minneapolis Star Tribune. On June 27, 2006, McClatchy completed the sales of the Duluth (MN) News Tribune; the Grand Forks (ND) Herald; the Aberdeen (SD) American News; and the Ft. Wayne (IN) News-Sentinel and a 75% interest in the Fort Wayne Joint Operating Agency.
Upon completion of the remaining divestitures, McClatchy will include 32 daily newspapers and approximately 50 non-dailies. Papers added through this transaction include The Miami Herald, The Kansas City Star, Fort Worth Star-Telegram and The Charlotte Observer. They will join McClatchy's 12 papers serving cities including Minneapolis, MN; Sacramento, CA; and Raleigh, NC. In addition, McClatchy combined with Knight Ridder has an expanded network of valuable internet assets.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this press release regarding the transactions between McClatchy and each of Knight Ridder, MediaNews, Hearst, Sound Publishing Holdings, Inc., Philadelphia Media Holdings LLC and The Wilkes-Barre Publishing Company Inc., the expected timetable for completing the remaining transactions, future financial and operating results, benefits and synergies of the transactions, future opportunities for the company and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," estimates and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the remaining transactions, the ability of McClatchy to successfully integrate Knight Ridder's operations and employees; the ability to realize anticipated synergies and cost savings; and the other factors described in McClatchy's Annual Report on Form 10-K for the year ended December 25, 2005 and the final Prospectus/Proxy Statement/Information Statement contained in McClatchy's Registration Statement on Form S-4 (Registration No. 333-133321). McClatchy disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document.
About Tribune Media Services and Tribune Company
Tribune Media Services (TMS), a subsidiary of Tribune Company, is a leading provider of information and entertainment products for print, electronic and on-air media in the United States and abroad. It distributes TV and movie listings and related editorial content under the TMS and Zap2it brands; syndicates comics, editorial cartoons, features and opinion columns; creates and distributes a variety of online information products; licenses editorial content from national periodicals; and manages national advertising networks. TMS also markets news, features, information graphics and multimedia content to media clients around the world through the McClatchy-Tribune Information Services. For more information, visit http://www.tms.tribune.com .
Tribune Company (TRB) is one of the country's top media companies, operating businesses in publishing and broadcasting. It reaches more than 80 percent of U.S. households and is the only media organization with newspapers, television stations and websites in the nation's top three markets.
For more information,
contact: Steve Tippie
Tribune Media Services
SOURCE Tribune Media Services
Wednesday, June 28, 2006
06-29-06 12:00 AM EST
Press publisher resigns for Florida job
06-28-06 06:39 PM EST
Forum CEO says purchase of Grand Forks, Duluth papers complete
06-28-06 04:44 PM EST
McClatchy gets $65M for Wilkes-Barre newspaper
06-28-06 04:10 PM EST
Daily Telegram joins Forum C...
06-28-06 12:38 PM EST
Street Sends McClatchy Shares South
06-28-06 10:03 AM EST
Tribune TV Stations to Air 'Two and a Half Men'
06-28-06 03:00 AM EST
Tribune Co. calls buyback a success
Jeff Johnson and Mark Kurtich held a meeting at 8:30pm tonight at the Olympic Facility, and will also hold another meeting tomorrow at 1:00pm.
We were informed of the meeting around 6:00pm today, so no one is realy sure of what news they will bring? Most feel it will be news of layoffs, or other ways to cut costs.
The meeting should be over by now, and my phone has not rang, so it couldn't be too bad.
We'll find out tomorrow what the message will be.
I'm trying something new as you can see. Below are links to many Tribune news articles, just move your cursor to the story that interests you, and right click to be taken directly to the story. You can also click on the title of this message to be redirected to Morning Star.
If you have any problems, do not hesitate to contact us for assistance.
News, Alerts, and Opinions
06-28-06 10:03 AM EST
Tribune TV Stations to Air 'Two and a Half Men'
06-28-06 08:00 AM EST
New CareerBuilder.com Survey Shows Challenges and Hope for U.S. Veterans Looking for Jobs
06-28-06 05:49 AM EST
McClatchy completes S-T purchase
06-28-06 01:03 AM EST
Business Topics by Industry
06-27-06 05:12 PM EST
Marti Buscaglia bids Knight Ridder farewell
06-27-06 04:36 PM EST
Big Movers in the Stock Market
06-27-06 03:27 PM EST
IL Job Opening: Tribune
06-27-06 02:30 PM EST
PULSE: Chandler Trusts calls for "meaningful strategic action"
06-27-06 02:09 PM EST
2ND UPDATE: Tribune Co.: 45 Mln Shares Tendered In Dutch Auction
06-27-06 01:16 PM EST
Big Movers in the Stock Market (Reg Req'd)
06-27-06 12:58 PM EST
Tribune Co.: 45 mln shares tendered in Dutch auction
06-27-06 12:32 PM EST
Chicago Tribune Weights In Against Net Neutraility
06-27-06 10:29 AM EST
Tribune Closes Dutch Auction
06-27-06 10:12 AM EST
Tribune Announces Preliminary Results of Modified 'Dutch Auction' Tender Offer
06-27-06 09:49 AM EST
UPDATE: Tribune Co.: 45 Mln Shares Tendered In Dutch Auction
06-27-06 09:12 AM EST
U.S. stocks to open at mixed levels; all eyes on Fed decision
06-27-06 09:00 AM EST
Number of Consumers Selling SUVs on Cars.com Continues to Rise
06-27-06 08:38 AM EST
U.S. stock futures flat to down; confidence, home data to come
06-27-06 06:58 AM EST
Tribune To Buy 45 Million Shares In Dutch-Auction Offer
06-27-06 06:34 AM EST
Trib completes share auction
06-27-06 06:31 AM EST
PULSE: Tribune to buy 45 million shares in Dutch-auction offer
06-27-06 06:00 AM EST
Tribune Announces Preliminary Results of Modified 'Dutch Auction' Tender Offer
06-27-06 03:55 AM EST
Commentary by Chuck Frederick: Paper's sale in 1936 was hardly big news
06-27-06 12:22 AM EST
McClatchy CEO feels 'pressure to deliver'
06-27-06 12:00 AM CST
Price move on heavy volume
06-27-06 12:00 AM CST
Volume more than twice 30-day average
Tuesday, June 27, 2006
I pictured Mr. FitzSimons as a larger man, meaning I thought he would have a beer belly. But he was in very good physical shape, tall and slender, appears he watches what he eats and works out daily.
As I walked into the Chandler Auditorium my digital camera was noted, and I was told I could not take any photographs during the town hall meeting. Darn I thought to myself, I had charged my batteries and was set to fill my one gigabyte card with as many pictures of our CEO as I was able.
The meeting was to be limited to thirty minutes, but went on for almost an hour. About half way into the meeting Jeff Johnson went up to the podium and said something to Mr. FitzSimons. That's when we were told by Mr. FitzSimons that everything was off the record and nothing from the meeting could be broadcast in any manner. So I'm unable to share what was said at today's town hall meeting, but I'm sure it will be reported somewhere else.
As the meeting came to an end, I was saddened that I had no pictures of Mr. FitzSimons, and that I had not had my picture taken with him as well. Since I sat in the second row from the front, it took a few minutes to exit the auditorium, and who do I run right into, Mr. FitzSimons. I shook his hand and thanked him for coming to Los Angeles to speak with the employees of the Los Angeles Times. Then I popped the question "Can I have a picture taken with you?" He didn't hesitate and answered "Sure"
So much for starting my career as a reporter for the Pressmen's Twenty Year Club today.
Mark Kurtich, senior vice-president of production, is moving today from his home base at the Olympic Facility to Tribune West.
Mark has been a fixture at the Olympic Plant for nine years, so his moving will leave a void at our plant.
The publisher of the Los Angeles Times , Jeff Johnson, requested that Mark move closer to the square.
Good luck Mark.
My apology goes out to Mark for spelling his last name incorrectly. Ed
Last Update: 9:34 AM ET Jun 27, 2006
NEW YORK (MarketWatch) -- About 45 million Tribune Co. common shares were tendered in a just-completed Dutch auction, the media company said Tuesday, adding that the tendered shares represented about 15% of its outstanding stock as of mid-May.
Chicago-based Tribune Co. (TRB) said it expects to buy the shares at a price of $32.50 each.
The company's shares were up 5.7% at $32.66 in morning trading.
Tribune Co. has been locked in a boardroom struggle with a major shareholder, the Chandler Trusts. The shareholder group has called for Tribune Co. to separate its newspaper business from its television-broadcasting business and begin to explore other strategic alternatives, which could include tax-free spin-offs of newspaper assets or the sale of the company as a whole.
"Now, our priority is to improve operating performance through a combination of top-line growth initiatives and additional cost savings," said Dennis FitzSimons, Tribune Co.'s chairman, president and chief executive, in a statement. "We'll also continue to move forward on dispositions of non-core assets."
The company owns such newspapers as the Chicago Tribune, Newsday, the Los Angeles Times and the Baltimore Sun. It also owns 26 television stations and the Chicago Cubs baseball team, among other properties.
The buyback figure is preliminary. The final total is subject to verification by the depositary for the shares.
Tribune Co. said it will also acquire 10 million of its shares at the same price from the McCormick Tribune Foundation and the Cantigny Foundation on July 12.
The company said it plans to buy back as many as 20 million more of its shares in the open market beginning on or after July 12.
In a Dutch auction, a company sets a range of prices -- in Tribune Co.'s case, $28 to $32.50 -- within which holders can tender their shares. The company then chooses the lowest price within the range at which it can buy the number of shares specified in the offer.
Merrill Lynch and Citigroup served as co-dealer managers for the offer.
Angela Moore is a MarketWatch editor based in New York.
Based on the preliminary count by the depositary for the tender offer, Tribune expects to acquire approximately 45 million shares of its common stock at a price of $32.50 per share. These shares represent approximately 15 percent of the shares outstanding as of May 15, 2006. Because Tribune will purchase all of the shares tendered, no proration is required.
The number of shares to be purchased is preliminary and subject to verification by the depositary. The actual number of shares purchased will be announced upon verification and payment will occur promptly thereafter.
Pursuant to the terms of the purchase agreements with the McCormick Tribune Foundation and the Cantigny Foundation, Tribune will also acquire an aggregate of 10 million shares of Tribune common stock on July 12, subject to adjustment based upon the final number of shares tendered, at a price of $32.50 per share. Tribune plans to repurchase up to an additional 20 million shares in the open market beginning on or after July 12, 2006.
"We are pleased with the successful conclusion of the tender offer. This leveraged recapitalization represents a very meaningful step in our plan to enhance value for shareholders," said Dennis FitzSimons, Tribune chairman, president and chief executive officer. "Now, our priority is to improve operating performance through a combination of top-line growth initiatives and additional cost savings. We'll also continue to move forward on dispositions of non-core assets."
Merrill Lynch & Co. and Citigroup served as co-dealer managers for the tender offer. Georgeson Shareholder Communications Inc. served as Information Agent and Computershare Trust Company, N.A. served as the depositary. Any questions about the tender offer may be directed to Georgeson at 17 State Street, 10th Floor, New York, N.Y. 10004, telephone 866/767-8963. (Banker and brokerage firms call collect 212/440-9800.)
TRIBUNE (TRB) is one of the country's top media companies, operating businesses in publishing and broadcasting. It reaches more than 80 percent of U.S. households and is the only media organization with newspapers, television stations and websites in the nation's top three markets. In publishing, Tribune operates 11 leading daily newspapers including the Los Angeles Times, Chicago Tribune and Newsday, plus a wide range of targeted publications. The company's broadcasting group operates 26 television stations, Superstation WGN on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. Popular news and information websites complement Tribune's print and broadcast properties and extend the company's nationwide audience.
SOURCE Tribune Company
Monday, June 26, 2006
By Devin Leonard, FORTUNE senior writer
Did you ever get good advice from a sworn enemy? Did you grit your teeth and take it, or could you just not bear to give him the satisfaction?
That's the position Tribune Co. CEO Dennis FitzSimons is in now.
He's in a very public battle with the Tribune Co.'s secondlargest shareholders, the legendary L.A. newspaper clan called the Chandlers.
On June 13, a family representative wrote a letter complaining to the Chicago-based company's board that Tribune shares had fallen more than 38% since January 2003. That, by the way, is when FitzSimons became CEO.
The letter said Tribune had pursued a failed business strategy and that it was time to break up the company or maybe just sell the whole thing. The tall mustached CEO is furious with the Chandlers, though he works hard to conceal his anger.
At his recent presentation to analysts at the Newspaper Association of America conference in New York City, FitzSimons made it clear he had no intention of selling Tribune Co.
Instead, he argued that the Chandlers' complaints are really just a smoke screen - the real issue between Tribune and the Chandlers, he said, are two taxfree partnerships in which each has a financial interest. The Chandlers want to unwind them; Tribune wants the Chandlers to indemnify it against $70 million in taxes the company might owe if they are unwound.
The Chandlers, known for their obsessive desire to avoid taxes, appear to be balking.
"The disagreement is not so much about strategy as it is about economics and tax risk," FitzSimons said.
This is what the newspaper business has come to: The descendants of Gen. Harrison Otis, who bought a stake in the Los Angeles Times 124 years ago, want to sell the 159-year-old Tribune Co., and it's all because the two sides can't agree about a tax bill.
(There's also a dispute over the value of some preferred shares and HOT SEAT Tribune CEO FitzSimons is under attack from dissident shareholders.) At least that's FitzSimons's side of the story.
His not-so-subtle implication: The Chandlers are a bunch of greedy rich people who are raising a public ruckus because they couldn't get their way in the boardroom. You can see why this fight has generated so many headlines.
The Tribune Co. is a Chicago institution once run by newspaper legends like Joseph Medill and his grandson, Col. Robert McCormick. The Chandlers controlled Times Mirror for decades - a newspaper empire that has grown to include such respected dailies as Newsday, the Baltimore Sun,and the Hartford Courant.
Tribune Co. absorbed those papers in 2000 when it struck a deal with the Chandlers to acquire Times Mirror for $8 billion.
That transformed Tribune Co. into the nation's thirdlargest newspaper publisher after Gannett and Knight RidderKnight Ridder. But it also got a pack of Chandlers - 170 of them controlling 12% of Tribune Co. stock - and handling them is proving to be more difficult than anticipated.
Now we're seeing the first big shareholder revolt at a newspaper company since last November, when Bruce Sherman of Private Capital Management sent a similar letter to Knight Ridder. That put the company into play, and now McClatchy is acquiring it for $6.5 billion.
The media world wonders if the Chandlers' letter will do the same to Tribune.
As private-equity groups and other potential bidders circle around, FitzSimons's empire may be on the verge of unraveling. The Chandlers of L.A. will never be confused with the Sulzbergers of New York or the Grahams of Washington, D.C., who put journalistic quality over economic self-interest.
Granted, the late Otis Chandler, publisher of the Los Angeles Times from 1960 to 1980, transformed the paper from a partisan rag into a Pulitzer Prize winner.
The Chandlers were appalled because they felt the paper had become too liberal, and when Otis stepped down, people speculated he'd been eased out by his relatives. Even though Otis stuck around on the Times Mirror board until 1998, his influence waned.
In 1995, the Chandlers hired Mark Willes, a former General Mills executive who vowed to use his marketing skills - he claimed to have come up with the idea for Honey Nut Cheerios - to boost the Times' circulation.
Willes became known as the "cereal killer" because of his proclivity for closing papers, selling off assets, and laying off employees. The Chandlers also got a little carried away with minimizing taxes.
"Times Mirror was very, very well known in the tax community for being the most aggressive corporate taxpayer in the country," says Robert Willens, a Lehman Brothers tax and accounting analyst. "They were willing to pretty much try any novel technique to avoid taxes."
The best example was Times Mirror's claim that it didn't owe taxes on the 1998 sale of its legalpublishing division to Reed Elsevier for $1.65 billion. Why not? Because, Times Mirror argued, the deal was a "reverse triangular merger."
In September a federal tax court ordered the company to pay back taxes on the deal. Now you see why FitzSimons is loath to do any more deals with the Chandlers that might involve a potential tax hit.
"As you are aware, Tribune absorbed a $1 billion tax bill in September that was inherited along with the Times Mirror acquisition," FitzSimons lamented. "This reduced our market capitalization and certainly damaged our stock performance vs. our peers'."
So why should Tribune take strategic advice from the Chandlers? Well, because the Chandlers, unsympathetic though they may be, have it right: The strategy behind Tribune's purchase of Times Mirror was deeply flawed.
When the deal was announced, FitzSimons's predecessor, John Madigan, predicted superior revenue growth for the merged company because it could use Times Mirror papers in L.A., New York, and Hartford to cross-promote content and advertising with Tribune's TV stations in those cities.
The company promised "incremental cross-media, national advertising, and Internet revenues of $60 million in 2001, growing to $200 million in 2005."
But the robust growth didn't materialize. For the past three years Tribune Co.'s revenues have been virtually flat. Investors and analysts have since declared the merger a failure.
Tribune's response doesn't inspire much confidence. It threw investors a bone in recent days by announcing the sales of TV stations in Albany and Atlanta. Its most ambitious plan - a $2 billion stock buyback - is a financial ploy that doesn't address the real business issue confounding Tribune Co.: The Internet is eating up circulation and ad dollars.
So, the Chandlers' representative argued in a June 13 letter, the company "should begin promptly exploring ... strategic alternatives, including breaking up and selling, or disposing in tax-free spinoffs, some or all of its newspaper properties, and the possibility of an acquisition of Tribune as a whole at an attractive premium."
There's one problem: The Chandlers still seem blinded by their aversion to taxes.
They are pushing for a tax-free spinoff of Tribune's 24 remaining television stations. That's a bad idea. Sixteen of the stations are affiliates of the new CW network, a partnership between CBS and Warner Brothers, a division of Time Warner (which also owns Time Inc., FORTUNE's parent).
The CW doesn't debut until September, and advertisers won't write big checks to the network until they see some ratings.
So in the meantime, how do you value the stations? There's no point rushing down this road.
Here's a better idea. Tribune should sell the underperforming Los Angeles Times. Publicly traded newspaper companies might not touch it. But private buyers would pay a high price.
David Geffen and Eli Broad have made no secret of their interest. The sale could raise $1 billion for Tribune and would stabilize its earnings. Most important, it would strongly signal to investors that it's no longer business at usual in Chicago.
The Chandlers have all but put the company in play with their letter. Now they have a choice: Do they worry about taxes, or do they push the company to actually make the bold moves they've called for?
If the past is any indication, the Chandlers are likely to do the former. Then again, they watched the value of their stock drop by 38% since 2003. Isn't that as bad as paying taxes?
If I am able to get close enough I will try and get a photograph of Mr. FitzSimons and myself to share on my blog. If not, I will still be thrilled attending the meeting. So stay tuned, I will report on tomorrow's meeting sometime Tuesday night.
Here's the confimation email.
Colleague:Your RSVP for Tuesday (June 27) morning's meeting with Dennis FitzSimons in the Chandler Auditorium has been accepted. Please plan to arrive by 10:20 a.m. The meeting will start promptly at 10:30 a.m.
By Joseph Menn and Thomas S. Mulligan
June 25, 2006
Tribune Co. is likely to succeed today in its effort to buy back as much as 25% of its stock, gaining an interim victory over boardroom critics who recently called for a breakup of the Chicago-based owner of the Los Angeles Times, KTLA-TV Channel 5, the Chicago Tribune, the Chicago Cubs baseball team and other properties. Yet the dissident Chandler family of California, Tribune's second-largest shareholder, is not expected to give up its fight.
The Chandlers, who used their three seats on the 11-member Tribune board to vote against the buyback, have publicly criticized the company's management in recent weeks.
They attracted little public support for their campaign, but if the buyback goes through, the Chandlers will become the company's largest single stockholder.
And some investors predict that, with Tribune's tender offer expiring tonight, the family will begin sitting down with big shareholders in an attempt to form alliances that could reinvigorate the fight over Tribune's turnaround strategy. 'I've been sort of surprised that they haven't contacted me,' said one large stockholder, who requested anonymity.
A spinoff or other breakup plan 'is where the institutional holders and the Chandlers sort of get on the same page,' said another person involved with the opposition to Tribune's plan who asked not to be identified. 'The question is, are there people out there with significant chunks who are willing to line up behind them, and more important, do it publicly?' said a smaller Tribune stockholder who also asked not to be named. 'That's what it's all about.' Some shareholders who support the buyback agree with the Chandlers' assessment that the company would be worth more in pieces than whole. Among those who believe Tribune could do more to increase shareholder value is John Miller of Ariel Capital Management, which is Tribune's sixth-largest shareholder. Ariel has been supportive of the company thus far, and Miller called the share buyback 'an important first step' in a long-term recovery plan for Tribune. But he said it was only a first step.
Analysts say a public alliance of the Chandlers and other investors could lead to a rival slate running for the board.
Another option for the Chandlers, analysts suggested, is to endorse a major transaction with a specific outside party, such as one of the private investment firms that have inquired about buying some or all of the television business. The family also might simply disclose more about the interest it has received for other properties, whetting shareholders' appetite for asset sales. A number of Los Angeles financiers, including Eli Broad, Ron Burkle and David Geffen, have recently discussed a potential multibillion-dollar bid for The Times, according to people briefed on those talks who asked not to be named because the discussions are confidential. If such a bid materialized, it would probably be a joint effort, the people said. 'Burkle and Geffen are neighbors, and either could write a check for The Times,' one said. 'They are not going to get into a bidding war.' In Baltimore, where Tribune owns the Baltimore Sun, the Abell Foundation, which is tied to the former owners of the paper, expressed interest this month in a joint bid if the property becomes available.
Without some new alliances, the Chandlers' effort probably would come to an end, investors said, even though a successful buyback would make them the single largest Tribune holder.
Under the buyback, Tribune's largest shareholder would cash in shares.
The buyback has three phases. In the first, ending tonight at midnight Eastern time, shareholders can tell Tribune at what price they would be willing to sell their shares between $28 and $32.50. The stock closed Friday at $31.34, so many holders could be willing to sell at $32.50. Tribune will pay the lowest single price per share it can to collect as many as 53 million shares through the so-called Dutch auction.
It will then pay the same per-share price for an additional 10 million shares owned by the McCormick Tribune Foundation, a charity governed by Tribune top management and former executives that owns 13.6% of the Chicago media company's stock.
Finally, Tribune can buy 12 million more shares on the open market starting next month. Tribune plans to announce the result of the Dutch auction Tuesday morning.
The Chandlers, who hold about 12% of the stock, acquired the stake in 2000, when the family sold its control of The Times and its parent, Times Mirror Co., to Tribune.
In recent weeks, they have complained that the buyback should have taken a back seat to a spinoff of Tribune's 26 TV stations or another strategic move, such as the sale of some or all of the company's 11 newspapers.
But the Chandlers also have another agenda. Many of their Tribune shares are held through two investment partnerships jointly owned with the company. For tax reasons, they wanted those partnerships unwound before the buyback. Tribune Chief Executive Dennis J. FitzSimons has treated the Chandlers 'as sort of an irritant' instead of a serious obstacle to his plans, said independent analyst John Morton. He said FitzSimons had been able to do so in part because he had behind him a bloc of eight directors, mostly 'close-knit Chicagoans.' 'If a horde of institutional investors joined the Chandlers, that might force the other eight to reconsider, just out of fiduciary duty,' Morton said. FitzSimons hasn't ruled out a spinoff of Tribune's TV properties, but he and some big investors first want to watch the performance this fall of the CW, a new network tying 16 of the stations together. A strong start could enhance their value, just as a poor season could hurt it. Noting that Tribune has also announced plans to sell 'non-core' assets to help pay down $2 billion in debt incurred in the buyback, Larry Grimes, a Maryland-based newspaper broker, speculated that the company's Spanish-language publishing division, including the newspaper Hoy, could go on the block. Tribune 'could recapture through existing products' the readers it would lose in such a sale, he said.
Sunday, June 25, 2006
By David Streitfeld
June 24, 2006
For years, Chandler family lawyer William Stinehart Jr. has played the invisible front man.
One person who served with Stinehart as a director of Chandler-controlled Times Mirror Co., the former owner of the Los Angeles Times, couldn't recall him. The executive, who requested anonymity, drew a blank even after viewing a photograph of Stinehart.
People who have been in meetings with the Los Angeles tax lawyer confirm that he's taciturn. Former Times Senior Vice President Jeffrey S. Klein said Stinehart was 'a very shy, soft-spoken guy' to the point that 'I don't recall him ever saying a word' at board meetings.
Behind the scenes, however, Stinehart is the Chandler clan's designated enforcer, most recently firing the salvo that brought the family's revolt against Tribune Co. into the open.
This month Stinehart penned a blistering letter using terms such as 'failed,' 'disastrous,' 'strategic missteps' and 'little credibility' to describe the Chicago media company's stewardship in the six years since it acquired Times Mirror.
Stinehart sent the letter on behalf of himself and two other Chandler family representatives who sit on Tribune's board. Their demands, if implemented, would ultimately lead to the breakup or sale of the company.
Stinehart's quietness can be deceiving.
'He's conservative with words,' said Norman Sprague III, who serves with Stinehart on the board of the Harvey and Mildred Mudd Foundation. 'But he's not shy about expressing his opinions.'
In 2000, Mark Willes, then chairman of Times Mirror, found out how devastating Stinehart's words could be when the lawyer dropped by for what Willes thought was an innocuous chat.
Instead, Stinehart told Willes that the Chandlers were in secret talks to sell Times Mirror to Tribune.
An unidentified colleague who saw Willes later said he was 'white as a sheet' and heard him say, 'I just had the worst hour of my life,' according to an account written by former Times Publisher David Laventhol for the Columbia Journalism Review.
Stinehart wasn't brought in by the Chandlers to play such a role, but evolved into it. The sprawling Chandler family is made up of deeply press-adverse press lords, and they picked a lawyer in their mold.
In an era when Google can ferret out colorful trivialities and ancient revelations on just about anyone in the public eye, Stinehart, 62, comes up dry.
His biography is the shortest among Tribune directors on the company's website, two brief paragraphs totaling fewer than 75 words.
Stinehart declined to be interviewed for this story. He even quashed a request made by The Times of Harvard-Westlake School to view the 1961 yearbook of predecessor Harvard School. Stinehart had been the school's student body president.
What is known about him is he came out of a well-to-do world, where his parents - identified in The Times' style of that long-ago era as 'Mr. and Mrs. William Stinehart of Hancock Park'
- gave parties featured in the society columns. William Stinehart Sr. died last year.
A friend from childhood, Richard Elgar Lyon Jr., recalled Stinehart as a basketball player with 'a great hook shot,' a water-skiing and volleyball buff, and an engineering student who decided he liked history better.
An usher at Stinehart's 1968 wedding, Lyon became his brother-in-law. A prominent attorney himself, Lyon said that when they get together these days their primary sports activity involves watching the Dodgers.
Stinehart earned his bachelor's degree from Stanford University and a law degree from UCLA, where he was a member of the Order of the Coif honor society.
Stinehart's connection to the Chandlers came through Los Angeles law firm Gibson, Dunn & Crutcher, which Stinehart joined in 1969.
For years the senior attorney for both the Chandlers and Times Mirror was Gibson Dunn's F. Daniel Frost, who married into the family and served on the company's board for a quarter-century. When Frost resigned as a director in 1992, Stinehart, a tax and estate specialist at the firm, took his place. Today, Gibson Dunn's website identifies Stinehart as retired.
Despite his close ties to the Chandler family, to some family members he remains an enigma.
'He serves on the board of the family trust, but doesn't interact with the rest of the family, as far as I know,' said Harry Chandler, son of the late Times Mirror Chairman Otis Chandler.
Saturday, June 24, 2006
May I humbly suggest Skip Barber or Bob Bondurant stay alive, don't let Wayne teach you to drive.
Times Pressroom Shift Supervisor Kal Hamalaianen contributed to this report.
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Friday, June 23, 2006
Sent: Friday, June 23, 2006 6:16 AM
Dear Fellow Employee:
As we close out what has been another busy week, here's a brief review and update:
On Tuesday we announced a management succession plan at the Hartford Courant. On July 10, Steve Carver from WATL-TV, Atlanta, will be joining the Courant as president. Jack Davis will continue serving as publisher and CEO through the end of 2006. At that time, Steve will succeed Jack in the publisher and CEO roles. Jack has skillfully guided the Courant for six years and before that served in key roles within the publishing group. Steve's leadership qualities, including strong sales and news experience, will bring a fresh perspective to Hartford.
As anticipated, the Federal Communications Commission announced on Wednesday that it will begin a formal review of the current media ownership rules. This is long overdue and we welcome a new rulemaking process. Nothing is certain, but we are optimistic that the FCC is now on a path that will ultimately grant permanent relief on the newspaper-broadcast cross ownership issue. You can expect to hear and see lots of media coverage on this subject in the next several months.
Tribune Broadcasting this week acquired the off-network syndication rights to "Two and a Half Men" from Warner Bros. Our stations will launch the hit CBS comedy in the fall 2007. Fewer high-quality sitcoms are available in syndication these days, and this one will help build local ratings and revenues.
On the diversity front, Tribune has been named a "Top 10 Company for Latinos" by DiversityInc, a wellregarded national magazine and online publisher. It was noted that Latinos account for 7.5 percent of Tribune managers and 17 percent of the company's board of directors.
Finally, our stock tender offer expires at midnight this Monday, June 26. We expect to issue a press release with preliminary results of the tender on Tuesday morning, and we'll see that you receive that information as soon as possible.
We are making progress. Thanks for your efforts.
From: Johnson, Jeff
Sent: Friday, June 23, 2006 4:11 PM
Subject: Dennis FitzSimons Town Hall Meeting on Tuesday
Dennis FitzSimons, Tribune Chairman and CEO, will be in Los Angeles next week and would like to hold a Town Hall meeting with employees on Tuesday, June 27, from 10:30 to 11 a.m. in the Chandler Auditorium. Dennis will have a few remarks about the Tribune stock tender offer and will answer questions.
Because of seating limitations in the Chandler Auditorium, we will be able to accommodate only about 350 employees at the meeting. If you want to attend this meeting, please check with your manager. Then you must RSVP by replying to this e-mail with your name, department and extension by 3 p.m. on Monday, June 26. The first 350 employees who RSVP will be contacted to confirm their participation in the meeting.
UPDATE I sent my RSVP to Jeff Johnson twenty minutes after his email was sent, I wonder if I'll be allowed to attend? If I am invited for the town hall meeting, I will do my best to have my picture taken with Mr. FitzSimons, and naturally share it right here.
As I logged onto Wells Fargo Online Banking early this morning while sipping on a cup of coffee, I noted my checking account balance was much larger than what my checkbook reflected. Had I made a mistake with my math?
When I reached my account statement page, I had a very large smile from ear to ear from what I was seeing online. My Federal tax return was deposited into my checking account this morning, as well as my paycheck.
Four weeks ago I wrote on my blog that my fereral tax return was rejected by the taxing authority, and when I called the Internal Revenue Service to see what error I had made, I was informed my children were used on someone else's tax return.
After checking my passed years returns, I was told to mail in a hard copy of my tax return, and I would have my money within twelve weeks. But it only took four weeks, YEAH.
The person that attempted to write off my children will be getting a letter from the IRS very soon, with penalties, and fines, and also a tax bill attached.
The good guy wins once again.
By Steve Lopez
June 23, 2006
Dick Riordan called my house Wednesday morning to repeat that he was willing to give me a tryout as a waiter at his restaurant, even though there wasn't much support for the idea among his staff. I showed up at the Original Pantry on Thursday and was given an apron, a bowtie and a paper hat, which could very well become my new uniform if I keep writing about the gentlemen who sign my checks.
The Pantry, a greasy spoon and downtown fixture since 1924, may outlast the newspaper industry anyway.
Riordan himself thought about starting a newspaper once but then came to his senses. And yet he'd like to see someone else — someone local — dip into their own piggy bank and buy the place, if only the current owners would put up a For-Sale sign.
The paper, as you may know, is owned by the Tribune Co., whose leaders have given no indication that they will go down as giants in American publishing history. By that I mean that if they owned a wine company with a 20% profit margin and wanted to bump it up to 22%, they would never think of improving the wine. They would instead put less wine in the bottle and slash the promotion budget to save costs.
And these are people who make a living by convincing businesses to advertise, even in the worst of times.
I figured that since I was going to be at the Pantry during the noon hour, I might as well invite some of the Southern California heavyweights who have jingled the change in their pockets and talked about buying the L.A. Times. I left messages for David Geffen, Eli Broad and Peter Ueberroth, and Riordan said he would try Ron Burkle, if not Haim Saban and Steve Soboroff.
Riordan's first move was to show me the dishwashing station, and if I'd left it up to him, I would have been scrubbing grease all afternoon. I told him I thought I was more of a people person, and he took me out to the grill to flip a few pancakes.
"You're wasting batter," Riordan scolded when some of the pancake mix flew off the grill.
Assistant Manager Jose Valdez thought I might do less damage as a waiter or maitre d', so I was moved out to the dining area to seat a few people and take drink orders. It quickly occurred to me that if I schmoozed the customers I could avoid hard work of any kind. One customer, Ron Rogers, liked my approach. He took my notebook and scribbled out a message.
"To Mr. Riordan: Please hire Steve Lopez as a waiter. He has a great personality and will be good for the establishment."
But Riordan found another customer, Rick Ovieda, who told him to get rid of me.
"He talks too much," said Ovieda.
I almost quit after waiting on my first table. Three women came in and one of them took so long to give me her order, I could have watched a World Cup soccer game.
The eggs had to be scrambled soft, but not just soft. They had to be very, very soft, please don't forget, with a hamburger steak patty not just medium but medium well, and the toast had to be buttered and tossed onto the grill just so, and how about some grilled onions on the side, with a diet coke but no ice, also some jalapeno peppers, and does that come with the breakfast potatoes?
It comes with a new waiter.
Riordan was quickly losing faith in me and said I was better as a maitre d', and I kept looking toward the door for the Billionaires Club. Not only was I going to escort them to their table, I was going to give them a little pep talk and lay out a game plan for the takeover of The Times.
That reminds me, by the way, of an e-mail I got from a reader regarding my Wednesday column, in which Broad said the newspaper ought to be owned by a local foundation more interested in community service than profits.
"Do you honestly think anyone outside the LA Times 'Family' gives a rip about all this?" asked a regular reader named Terry, who lives in Westlake Village. "Who cares?"
This is a fair question, Terry. Now pay attention to the answer.
A newspaper is not a bottle of wine, a widget or a grand slam breakfast. Whether in print or on the Web it's a voice, a forum, a cheerleader, a scold, a guide, a member of the community. This one is as imperfect as any and better than most, and there is not a more thorough and objective news report west of the Mississippi or you'd be able to name one, wouldn't you?
For two thin quarters, you get more than 900 reporters and editors who take seriously their mission to inform, entertain, and hold people in power accountable, including their own bosses. Who owns the paper matters. It matters almost as much as what the owner values, and the near-sighted hog butchers in Chicago are threatening another round of cuts that could diminish the power and purpose of a great local institution for the sake of kicking the stock up two points.
If our so-called civic leaders love Los Angeles as much as they claim, they'd be screaming that very message loud enough to turn heads in Chicago. And that's why I'm at the Pantry cafe, where I've got a takeover plan to share if the money men bother to show up for lunch.
The Tribune board includes three disgruntled representatives of the Chandler family that once owned The Times, and they think the Tribune survival strategy of buying back stock and slashing $200 million more out of the budget is a loser.
Since the Chandlers owe Los Angeles for selling off the paper to out-of-towners (can anyone imagine a New York Times owned by someone in Chicago?), they ought to be lining up a local buyer and arguing that the Tribune company can make a fortune by selling The Times.
Will this be easy? No, and it won't be cheap either, but we need the Chandlers and the local big shots to spark an investor revolt. Like I said Wednesday, I favor the St. Petersburg Times model, as does Eli Broad, in which one or more local nonprofit foundations would own the newspaper in conjunction with a journalism school.
"Come on," Riordan called out over lunch, making a plea to his no-show friends. "The city needs a home-grown owner of the L.A. Times."
I may too, after this column. If you don't see me back in this space, come by the Original Pantry and I'll get you the best table in the house.
By Michael A. Hiltzik
June 22, 2006
In 1994, a top executive at Times Mirror Co., then the parent of the Los Angeles Times, crafted a $2.3-billion sale of the company's cable subsidiary that so brilliantly eliminated taxes on the deal that it won him an instant following on Wall Street - and ultimately provoked Congress to close the loophole.
The executive was Chief Financial Officer Thomas Unterman, a wizard at crafting highly complicated corporate transactions that stymied the Internal Revenue Service. A boon for Times Mirror's controlling shareholders - the Chandler family - the 1994 deal also marked the beginning of a long, mutually profitable and controversial bond between the family and the Chicago-trained lawyer.
That relationship has made Unterman perhaps the most important behind-the-scenes figure in the current battle over the future of Tribune Co., which acquired Times Mirror in 2000. As Tribune's second-largest shareholder, the Chandlers have called for a breakup or sale of the company after a bitter conflict with management over some of the financial structures Unterman put in place.
Unterman's financial acumen long has been a byword among investment bankers.
'I've followed his work for more than 20 years,' said Robert Willens, a tax expert and managing director at Lehman Bros.
Willens especially admires the sale of Times Mirror's cable unit to Cox Enterprises Inc. The structure was so widely copied that 'it was deemed a threat to the Treasury, and Congress had to close the loophole,' Willens said. 'That's pretty much the definition of a successful tax-planning technique.'
Unterman, 61, left Times Mirror in 1999 to run Rustic Canyon Partners, a Santa Monica venture capital and private equity firm that mostly invests the Chandlers' money. But before leaving, he played a key role in the sale of Times Mirror to Tribune, acting without the knowledge of many of his executive suite colleagues - including Times Mirror's chairman and chief executive, Mark H. Willes.
Unterman also engineered the creation of two partnerships between the family and Times Mirror that now present obstacles to a Tribune financial restructuring. Two 1998 Times Mirror divestitures that he was behind have since saddled Tribune with a $1-billion tax bill.
Several sources suspect Unterman had a hand in an explosive June 13 letter to the Tribune directors in which the family, which holds three board seats, accused management of 'strategic missteps' and poor execution that had reduced Tribune shares by 40% in the last two years. In the letter, the Chandlers, who own 12% of Tribune, labeled the merger a failure.
Although the Chandlers say the conflict is based on a dispute over corporate strategy, Tribune executives say it's over money and taxes.
In a speech Tuesday in New York, Tribune Chairman Dennis J. FitzSimons complained that the Chandler proposals for restructuring the company could trigger a corporate tax bill that some sources have said could be as much as $70 million. He remarked that the inherited $1-billion tax bill had already 'damaged our stock's performance' and that Tribune 'has no intention of assuming any additional tax liability' attributable to the Chandlers' interests.
The two sides are at a stalemate over how to unwind the partnerships, which include Tribune shares, real estate and venture investments.
Earlier this year, Tribune proposed removing its shares from the partnerships and substituting a new security that would eliminate or reduce the tax consequences, said a source who asked not to be named because the negotiations are confidential. The Chandlers objected, claiming the proposal would reduce their voting and dividend rights and limit their ability to sell Tribune shares for at least a year, leaving them vulnerable to any further downturn in Tribune's fortunes.
The Chandlers proposed terminating the partnerships. But that would require placing a value on the entities' illiquid holdings. FitzSimons said Tuesday that the gap between the sides was 'material.'
The partnerships were designed to enable the Chandlers to diversify their assets - then consisting largely of Times Mirror stock - without selling the shares outright. As the original owners of Times Mirror, the Chandlers' acquisition price for their shares was effectively zero for tax purposes, making virtually their entire holding subject to capital gains taxes in a sale.
The first partnership, dubbed TMCT I for 'Times Mirror Chandler Trust,' was created in 1997. The family and the company each contributed about $475 million. The family contributed Times Mirror common and preferred shares, while the company put in $249 million in cash and eight pieces of real estate valued at $226 million, including the Times' downtown headquarters, as well as properties housing the Baltimore Sun and Newsday.
The company paid about $24 million a year in rent to lease the real estate from the partnership. The family pocketed 80% of the rent and in return gave up dividends on 80% of the shares, saving the company $16.6 million a year. Times Mirror said the deal was a financial plus because the rent, unlike the dividends, was tax-deductible.
The Chandlers, at least initially, received more income from rent than they had from dividends, but they theoretically sacrificed the potential for higher dividends in the future for a steady guaranteed income from rent. The value of the real estate in that partnership is now a bone of contention between Tribune and the Chandlers.
Tribune has appraised the real estate at $325 million based on their use as newspaper facilities, according to a person who requested anonymity because talks are continuing. The family has offered Tribune an option to buy the real estate for $175 million, possibly as compensation for the tax bill Tribune would face from terminating the partnership. Tribune rebuffed the offer for reasons that are unclear.
The second partnership, created in 1999, was similar but larger. This time the Chandlers and the company each contributed $1.24 billion. As before, the Chandlers provided Times Mirror shares. The company provided $635 million in cash and several real estate investment trusts worth $600 million.
The two parties swapped income streams: Times Mirror was relieved of the burden of paying $23.5 million in dividends a year on 80% of the Chandler-contributed shares. The family received 80% of the income from the cash and real estate.
Whether the arrangements financially benefited the Chandlers over time is uncertain. Tribune documents indicate that in 2005, the family collected $79.3 million from the two partnerships while Tribune got $76.5 million, giving the family slightly more than its 50% share.
For Unterman, the 1999 deal marked a turning point in his relationship with the Chandlers. Around that time, he announced he would leave Times Mirror to manage a venture fund stocked with $500 million from the company's contribution to TMCT II.
TMCT Ventures, as the fund was named, allowed Unterman to pursue investments in new media and high technology that he considered crucial to Time Mirror's future but that had been thwarted by Willes.
'Tom was really the most informed and most interested in expanding new media of anyone' at corporate headquarters, Harry Chandler, a former Times executive and a son of Otis Chandler, the last family member to serve as the newspaper's publisher, recalled in 2000.
Even before leaving Times Mirror, Unterman became involved in the Chandlers' next major financial move: The sale of their company to Tribune. Discussions between Tribune executives and Unterman began in late 1999 and continued with the participation of family representatives until a deal was announced the following March.
At first Unterman and Tribune management saw eye to eye. An advocate of new media and high technology, Unterman endorsed Tribune's vision for marrying TV stations and newspapers in the same markets, and using the combination as a way to attract users and advertisers to the Internet and other new media. After the merger, Unterman joined Tribune's board as a Chandler family designee. But the relationship soon soured.
For one thing, the cross-platform strategy proved to be flawed as well as untimely. 'Advertisers couldn't be trained to buy that way,' said a person familiar with events. When Internet stocks crashed, Tribune backed away from new-media investments where Unterman still saw opportunities. He left Tribune's board in 2001.
Not long after, Tribune executives had another reason to resent Unterman: a 1998 deal by Times Mirror that turned into a $1-billion tax liability for Tribune.
The original transaction involved Matthew Bender & Co., Times Mirror's underperforming legal publishing subsidiary. Willes was determined to sell the unit in a tax-advantaged way. Accounting firm Price Waterhouse, possibly working from an Unterman template, came up with a format that broke down the simple sale of a business unit into five complicated parts, obscuring its fundamental nature.
In essence, the seller and buyer pooled their interests into a new entity. The seller contributed the business, and the buyer contributed cash. Although labeled as a tax-free 'corporate reorganization,' the buyer ended up with full control over the business unit and the seller had full control over the cash.
Anglo-Dutch publishing company Reed Elsevier, which won Bender with a $1.35-billion bid, agreed to the format in finalizing the deal. Times Mirror used much of the huge tax-free gain to capitalize the venture fund in TMCT II, giving Unterman a hand in generating the capital that he was later given to invest on the Chandlers' behalf.
Still, Willes and Unterman knew their tax-free claim was vulnerable to an IRS challenge. They lined up opinions as to its legitimacy from Times Mirror's auditing firm, Ernst & Young; its law firm, Gibson, Dunn & Crutcher; and its investment banking firm, Goldman Sachs & Co. The company also created a reserve of $180 million in case the tax-free claim didn't fly.
Tribune executives were aware of the controversial transaction when they bought Times Mirror in 2000. But they decided to accept the certifications of Times Mirror's professional advisors. Their faith was misplaced: In 2001 an IRS audit rejected the claim and billed Tribune, as Times Mirror's successor, for roughly $400 million.
Tribune exacerbated the situation through its own misjudgment, sources said. Rather than pay the tax while it appealed, the company chose to litigate aggressively while interest charges mounted. Last September, a U.S. Tax Court judge ruled against Tribune on grounds that any transaction in which one side starts with a business and ends up with cash while the other side starts with the same cash and ends up with the business is a taxable sale, no matter how the parties label it.
By then, the delinquent bill for Bender and a second nearly identical deal had risen to $1 billion. Tribune forked over $880 million after deductions and said it would appeal.
'It's hard to feel confident that the appeals court will overrule the tax court,' Willens said. 'That was one deal that went over the line.'
Thursday, June 22, 2006
As I ran to my press today, I was delayed by a traffic accident, there were three electricians working on my Ferag. They told me they found a board causing the problem, and it was sending everything we printed to the mailroom, instead of the waste conveyor.
After swapping out the board, the Ferag ran great, so today we had a happy ending.
6/22/2006 10:47 AM EDT
Newspapers and local TV stations aren't necessarily a match made in heaven, big media companies are learning.
A number of big newspaper outfits bought into the TV business in a bid to reap supposed advertising synergies. But while some operators have succeeded -- E.W. Scripps (SSP:NYSE - news - research - Cramer's Take) and Belo (BLC:NYSE - news - research - Cramer's Take) come to mind -- such cases are proving to be the exception, not the rule.
Hard-won experience shows both the paper and the TV station must be market leaders for the owner to enjoy the benefits of cross-ownership. And of course, both properties must be in the same market.
The turmoil at Tribune (TRB:NYSE - news - research - Cramer's Take) is a case in point. The Chandler family, a 12% shareholder, has demanded a breakup at the Chicago-based company, arguing that the cross-media strategy behind 2000's Tribune/Times Mirror merger has failed.
One industry veteran says the Chandlers are asking the right questions.
"We've always tried to have the No. 1 or No. 2 station in each of our market," says one media company manager at a rival company. "If you have the fifth TV station and a newspaper, the synergies just aren't there." This source says the Chandlers question whether management's plan to sell some assets goes far enough.
Tribune's properties in New York City serve as case in point. The company may have hot properties in L.A. and Chicago, but coupling the fifth or sixth most popular TV station in New York City with a print property like Long Island's Newsday just isn't likely to yield many advertising or cost-saving benefits.
To be fair, Tribune has sold two local TV stations in the last two weeks. One of which, a station in Atlanta, will give Gannett (GCI:NYSE - news - research - Cramer's Take) its third duopoly TV market. Duopolies are widely acknowledged in the broadcasting industry as being economically advantageous.
But other media players, such as New York Times (NYT:NYSE - news - research - Cramer's Take), own TV stations in markets that don't even hold tangential links to their print-media properties. New York Times owns five stations in such must-have localities as Wilkes-Barre, Pa., Moline, Ill., Fort Smith, Ark., and Oklahoma City, Okla.
At the Newspaper Association of America's midyear media review Tuesday, Times management was asked why it didn't sell the stations and return the cash to shareholders. Management's answer: TV stations produce cash.
But while some execs still see value in the local TV business, others are looking to move elsewhere. News Corp.'s (NWS:NYSE - news - research - Cramer's Take) Rupert Murdoch is likely to powwow with Liberty Media's (LINTA:Nasdaq - news - research - Cramer's Take) John Malone about unwinding the latter's 18% stake in his company. That deal seems likely to involve News Corp. selling 10 noncore TV stations in small to midsized markets, plus a boatload of cash.
Similarly, CBS (CBS:NYSE - news - research - Cramer's Take) is in the process of selling some 35 or so smaller-market radio stations and focus on larger markets.
Newspaper companies that don't enjoy significant efficiencies from local TV assets might be smart to follow suit. Murdoch and Moonves, like 'em or not, have been known to make a smart move now and again.
Published June 22, 2006
The Federal Communications Commission said Wednesday it will begin the process of reviewing media ownership rules, kicking off a new debate on media consolidation and the impact it has had on diversity of news coverage.
For the FCC the review is a chance to decide whether a trend in the media business should be restrained.
At stake is the issue of how many television stations and radio outlets a company can own and whether they can control newspapers and broadcast outlets in a single market. For media companies, including Chicago-based Tribune Co., which owns the Chicago Tribune, the rules are of critical importance. It is testing the limits of cross-ownership in several markets, including New York and Los Angeles.
Without a loosening of FCC restrictions, it could be forced to sell off some of its properties. Its ownership of TV and radio stations and newspapers in Chicago is grandfathered and not in jeopardy.
"Ten years ago we talked about ourselves as being a newspaper publisher or a TV broadcaster. Today we'd say we're an information provider in markets," said Marshall Morton, president and chief executive of Media General Inc., a Virginia-based company that owns more than two dozen TV stations and several newspapers."
To be restricted from giving you the information that we've got because the FCC decides it's not a good idea we think is like tying an arm behind our back. So cross-ownership is very important," he said.
In 2003 the FCC adopted new rules giving media companies more freedom to own multiple media properties in the same markets. That led to a firestorm of comments from groups concerned about the lack of diversity in the media, while media companies lobbied aggressively to retain those rules.
A year later a federal appeals court in June 2004 overturned key aspects of those rules.
The issue is being revisited because the FCC must conduct a review of its broadcast ownership rules every four years, and because the commission needs to address the concerns of the appeals court.
The rulemaking process starts anew as the media landscape has changed dramatically in recent years. Now, nearly 75 percent of homes that connect to the Internet have high-speed access, allowing for all sorts of new and emerging media content to enter the living room.
Whether or not that will have an impact during this review of ownership rules remains to be seen, even though the FCC said it will study the growth of the Internet.
Democratic Commissioner Jonathan Adelstein called the plans "thin gruel to those hoping for a meaty discussion of media ownership issues."
"The large media companies wanted, and today they get, a blank check to permit further media consolidation," Adelstein said.
The 2003 vote passed 3-2, with the Republican commissioners, led by then Chairman Michael Powell, voting in favor of less restrictive ownership rules. Republicans still are a majority on the five-member commission.
The FCC plans a 120-day period to seek public comment on the new rulemaking process. In a statement, FCC Chairman Kevin Martin called the review of media ownership rules "a topic of vital importance to our democracy." He added that the commission "should take into account the competitive realities of the media marketplace while also ensuring the promotion of the important goals of localism and diversity."
Paul Levinson, a professor and the communications department chairman at Fordham University, thinks there is great danger if a handful of broadcasters control the U.S. media.
"This is one situation where I think it is good for the government to get involved," he said. "When you're talking about monopolies of information, the media is central to our democracy and to our freedom of exchanging ideas."