Friday, June 09, 2006

Chandler Family Members On Tribune Board In Rift With FitzSimons

There remains some doubt as to the exact nature of the rift that has been exposed between the three Chandler family members of the Tribune Co. board and Dennis FitzSimons, the grasping CEO of the company, who has been treating the Los Angeles Times so miserably.

Joseph Menn, the able L.A. Times writer who reported on the rift in the Times, said in one lead this week, "A boardroom split over Tribune Co.'s stock buyback plan had investors wondering Wednesday whether the disagreement was the first move toward putting the media giant into play for a possible takeover, or simply a negotiation between the company's most powerful players."

Then, this morning, both Menn in the L.A. Times, and Richard Siklos and Andrew Ross Sorkin, writing in the New York Times, report FitzSimons' buyback plan is in jeopardy, due to a speculative rise in the Tribune stock price, stemming from stockholder feelings that the company may be broken up. Since the stock buyback plan was first publicized, Tribune stock has risen from $27 to close to the $32 level, near the most Tribune said it was willing to offer in the stock buyback.

The New York Times article reports that three investment firms -- the Blackstone Group, Thomas H. Lee Partners and Providence Equity Partners -- have approached the Chandler interests to inquire about either buying the 12.2% the Chandlers own of the Tribune Co. stock, or joining with them, to mount a takeover of the company.

Menn quotes analyst Paul Ginocchio of Deutsch Bank as saying that if not enough stockholders come forward to accept the buyback terms so far offered, Tribune directors would have to consider breaking up the company.

Three options being discussed today have the Tribune selling some or all of its 26 television stations, taking the company private, or selling some of the 11 Tribune newspapers as well.

Another option, not discussed in the articles, could entail a takeover that would move the company headquarters to the old Times-Mirror corporate headquarters in Los Angeles, now partially empty. It would only be fair California revenge, if the Times became the flagship of the company and the Chicago Tribune the poor stepchild, a reversal of the present situation.

The New York Times article on the rift by Katherine G. Seelye quoted "a person with knowledge of (the three directors') thinking," as saying that the Chandler board members who opposed the stock buyback "believed the company first needed a strategy to create value before it took on significant debt, which they worried could limit the company's options."

There is also indication the dispute may revolve around differing valuations of certain property that was part of the original deal under which Times-Mirror was sold to the Tribune Co. in 2000.

Regardless, the important fact, it seems to me, is that there is a dispute, which the Chandler members of the board insisted be officially reported, as it was, to the federal Securities and Exchange Commission.

We also learn this morning from Menn that the Chandlers are being advised by Tom Unterman, who as chief financial officer of Times-Mirror was instrumental in arranging the sale to the Tribune Co. in 2000. This may be an indication that a major restructuring or breakup of the Tribune Co., is a possibility, because Unterman is too skilled and sly an operator to waste his time on FitzSimons and the present Tribune board majority unless he was going to assist in doing them in.

It does seem clear that in initiating the $2.4 billion stock buyback, FitzSimons was trying to protect his own position as the high-paid chief executive of a company that has been faltering. He doesn't want to sell the Times back to local investors. Rather, he seems to hope to continue to mistreat it and its employees.

Just this week I was told that some Times employees are hopping mad, because the Tribune Co. has welshed on an earlier commitment to give employees who joined the Times from other Times-Mirror papers pension credits for their prior service. Also, I'm told, another complaint at the Times is that efforts to improve the Times web site and its marketing have been vetoed on the grounds they would cost too much.

Under Tribune control, circulation of the L.A. Times has dropped by nearly 250,000, and there is little effort to build back circulation or even stop the slide.

As I said in a blog last week, we can hope that the Chandler family members on the Tribune board, Jeffery Chandler, Roger Goodan, and William Stinehart, Jr., might have some residual loyalty to California that leads them to oppose FitzSimons' attitude and conduct toward the Times.

The Chandler family trust's share of the Tribune Co. stock is not enough to force a sale of the Times back to local interests, but certainly is enough to put some pressure on the board for such a sale, especially given FitzSimon's poor performance.

Meanwhile, I note that in communicating with the employees, FitzSimons has taken simply to signing himself as "Dennis," without giving his last name.

FitzSimons may be psychologically comparing himself in this gesture with Napoleon and Michelangelo, great geniuses who became universally known by their first names. Or even Willie Brown, the former speaker of the California Assembly, who was often known simply as Willie.

However, to paraphrase the late departed Texas senator, Lloyd Bentsen, we know a lot about Napoleon and Michelangelo, and even Willie, and FitzSimons can't lay an authentic claim to be like any of them. He is certainly no genius, except when it comes to raising his own salary.

FitzSimons, in fact, has lost all claim to be on familiar terms, such as using only his first name, with employees he continues to layoff or otherwise mistreat.

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