The Chandler family called for breaking up the Tribune Company into separate newspaper and television units, and possibly selling off the papers. A strongly worded letter filed with the SEC says the Tribune has failed in its core strategy. Signed by family attorney William Stinehart Jr., the letter heaps criticism on management of the company the Chandlers joined six years ago through the sale of Times Mirror.
As you know, the basic strategic premise of the Tribune/Times Mirror merger was that the cross–ownership of multiple premium major media properties in the nation’s three largest media outlets would provide a platform to produce above-industry performance for both its newspaper and broadcast assets and for strong growth in interactive and other media opportunities. This strategy has failed and the regulatory change anticipated at the time of the merger to make legal the permanent cross-ownership of certain of key assets has not occurred. Over the past two years, Tribune has significantly underperformed industry averages and there is scant evidence to suggest the next two years will be any different. Clearly, it is time for prompt, comprehensive action.
In addition to the failure of its primary strategy, the company is confronted with a fundamental erosion in both of its core businesses and the consequences of failing to invest aggressively in growing new businesses....
Tribune should begin promptly exploring other strategic alternatives, including breaking up and selling, or disposing in tax-free spin-offs, some or all of its newspaper properties, or alternatively, the possibility of an acquisition of Tribune as a whole at an attractive premium.
Stinehart notes that the Chandler family trusts are the major holders of Tribune stock.
To make the obvious point, through their direct and indirect holdings, the Trusts are the largest investor in the company, and, more than any other shareholder, it is in their interests to see that either current value is maximized or a value enhancing strategic repositioning occurs.
We all have a vital interest in a cooperative effort among Tribune’s Board, major stockholders like the Chandler Trusts and all other stockholders. It is time for a strategic course of action to be set for Tribune, and stockholders apparently concur given the movement in the company’s stock price last week. As one shareholder said, “the train has definitely left the station but no one knows where it’s going."
Tribune, of course, owns KTLA Channel 5 as well as the Los Angeles Times, Chicago Tribune and a chain of papers around the country. It certainly gives new importance to the morning's report that the Chandlers told Eli Broad essentially to "wait until the fall."