Chandlers reportedly mulling Tribune Co. bid

By David B. Wilkerson, MarketWatch


CHICAGO (MarketWatch) -- Tribune Co.'s largest shareholder, which has pushed the newspaper publisher and broadcaster into a possible sale, is considering making a buyout offer of its own, according to a published report Wednesday.

The Chandler family, which owns 20% of Tribune (TRB) shares, is mulling a plan to head a consortium of private-equity firms that would either acquire the company's assets in a leveraged buyout or fuel a bidding war, the New York Times reported, citing unnamed people familiar with the situation.

The company owns 11 newspapers, including such publications as the Chicago Tribune, the Los Angeles Times and Newsday, as well as 26 television stations, most of which are affiliated with the new CW Network formed when the WB and UPN networks were shut down prior to the current television season. The company also owns the Chicago Cubs baseball team.

Since it began to solicit potential bids in September, the offers that have come in have been disappointing, according to various reports. As a result, the Chandlers are "frustrated" by the process, the New York Times said.

Tribune late last month extended a self-imposed deadline to complete its strategic review, a move that analysts said was an indication that it was struggling to attract bids that offered a significant takeover premium.

The company now expects a special board committee to submit a final recommendation to the full board during the first quarter of 2007. Previously, Tribune had said it planned to complete its review by the end of 2006.

The Chandler family would still prefer to see Tribune acquired by an outside bidder, the Times reported Wednesday.

In July, the Chandlers demanded that Tribune take dramatic steps to lift its stock price, which had lost more than half its value since early 2004. The family said Tribune should either sell its broadcasting division, pursue tax-free spinoffs of its newspaper assets or try to sell the company as a whole.

The Chandlers' ultimatum came just weeks after Knight Ridder was sold to McClatchy Co. (MNI) in a deal that was forced by angry Knight Ridder shareholders. McClatchy's winning bid of $6.5 billion was historically low by the standards of previous buyouts in the newspaper industry.

Newspapers are besieged by a variety of difficulties. More readers are using the Internet to get their news, depressing print circulation, particularly in tech-savvy large metropolitan markets. Online revenues are rising as a result, but not nearly fast enough to offset print losses.

The Do Not Call registry, implemented three years ago, has blocked newspapers from one of their most traditionally reliable sources of new subscriptions -- telemarketing calls.

Meanwhile, some of the biggest traditional newspaper advertisers, such as automakers and airlines, have fallen on hard times in recent years, causing them to curtail ad spending. Consolidation among major retailers has also had an impact.

Tribune's shares were up marginally in Wednesday trading at $32.52.
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