Saturday, April 29, 2006

BusinessWeek Publishs Speculation Tribune Co. May Be Sold

Where there's so much smoke, maybe there's a fire somewhere.

Earlier this week, former L.A. Times editor John Carroll said he had been approached by prospective local buyers of the Times. Now, BusinessWeek magazine in a short entitled "Tribune Tribulations" speculates that the Tribune may follow Knight-Ridder on the block.

The item notes the Tribune Co., which we all know is headed by unimaginative people, has seen Tribune stock slump by 25%, "beaten to a pulp" it says based "on poor earnings caused by a slump in ads and readership." It is now below $30 a share, a critical price level in the opinion of some analysts, when it used to run above 50. That's actually a 40% drop, not 25%.

Of course, there's been a slump in readership. Tribune officers seem not to be willing to fight for circulation in any of their markets. And the Tribune leadership seems little interested in maintaining the quality of many of these papers, including the L.A. Times, which has been forced to make severe cutbacks, perhaps by Chicago jealousy of Los Angeles.

While BusinessWeek says 16 of 19 stock analysts who follow newspaper fortunes are down on the stock, Lawrence Haverty of Gabelli Global Multimedia Trust sees the low stock price as takeover bait, because with all its newspapers obtained from Times-Mirror and its 26 television stations and the Chicago Cubs, Tribune has excellent assets, justifying a stock price of perhaps $40.

If only Tribune management knew what to do with the assets. But they have not had a constructive thought or policy since King Canute rolled back the tide.

Just as with Knight-Ridder, the item speculates that unhsppy stockholders could exert pressure to bring about a sale.

But since`12% of Tribune stock is owned by the Chandler Trust and this represents the family that may have forced Otis Chandler from the L.A. Times publisher job, it seems doubtful to me that the pressure to sell would come from these dunces.

We're obviously going to have to wait to see what transpires, but the stock analysts say the potential value of the Tribune Co. makes the present stock price cheap. And nature abhors a vacuum. What we have now is a vacuum of leadership at Tribune. It doesn't take advantage of its opportunities. It knows but one operative word: Cutback.

In all this, let's hope the L.A. Times can surmount its indentured status and emerge free and influential once more under the direction of local buyers.


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