FitzSimons Grasping For Continued Control In Tribune Stock Buyback
There are elements of this plan that could have a severe adverse impact on the Los Angeles Times, which FitzSimons has treated consistently badly.
For one thing, the buyback is said to involve another $200 million in cost cutbacks, layoffs, and so forth. There have already been destructive layoffs at the Times and other Tribune newspapers. Further layoffs could well be devastating to a product which has already suffered greatly in the Tribune ownership.
The last thing that motivates FitzSimons is serving the California public with a high-quality newspaper.
Also, in the Joseph Menn story in today's L.A. Times, it is revealed that some of the stock buyback will be from the Chicago Tribune Foundation, which nonetheless will retain its 13.7% share of the voting Tribune stock. FitzSimons heads the foundation as well as the Tribune Co., and this represents, as reported last week, a conflict of interest which fortifies his control.
Although stories in the LAT and NYT report that some Tribune television stations may be sold, it seems highly likely that FitzSimons has every intent to keep control of the L.A. Times, despite the fact there are reports of local interests seeking to restore the paper to local control.
Menn says in today's story, "One analyst described the moves as a 'preemptive strike' against any demands from unhappy stockholders to break up the company or sell it." One thing we can be sure of is that FitzSimons who has increased his own salary while laying off hundreds of Tribune Co. employees, will be acting in his own interests.
Another possibly significant element in the developing situation at Tribune Co., is the fact that pursuant to the sale of Times-Mirror Co. to the Tribune, 12% of the stock was left in the hands of the Chandler family, the former owners of Times-Mirror.
The three Chandler family members on the Tribune board have said nothing publicly. But they could well be crucial in any resale of the L.A. Times. No one outside the company now knows what they may be thinking, but the Chandler family has always been interested in the value of its investments, and the value of Tribune stock has slid 40% in the last two years. The family may now feel it could do better under new owners.
Under these circumstances, it might be friendly to a sale, and that might help explain FitzSimons' desperate control move, which had the effect of raising the stock price by about three points, but at the same time resulted in a downgrading of the Tribune's debt rating.
One would like to think the Chandler members of the Tribune board could have some residual loyalty to California, and might not like the way the Chicago interests have been treating the Times. But maybe that is an unrealistically hopeful assessment.