U.S. News

Tribune Reviews Bids But 'Considers All Alternatives'


Newspaper publisher and broadcaster Tribune confirmed it was reviewing offers from third parties, but added it was also looking at actions the company could take alone.

"Assisted by our outside legal and financial advisors, we are carefully considering all alternatives for creating additional shareholder value," William Osborn, Tribune's lead independent director and chairman of the special committee, said in an e-mailed statement. "These alternatives include potential transactions involving third parties as well as actions the company may take alone."

It is the first statement the company has made since receiving takeover bids earlier this week.

The Chicago Tribune, citing sources close to the situation, reported that Tribune, the newspaper's parent company, may be leaning toward options such as taking on a substantial amount of debt to fund a special dividend, selling or spinning off broadcast assets and perhaps taking the rest of the company private in a smaller leveraged buyout than originally anticipated.

Other Altnernatives

A report in The New York Times said the alternatives could include management buying the company, which also owns the Los Angeles Times and the Chicago Cubs baseball team.

A spokesman for Tribune declined comment beyond the statement on Saturday.

Under pressure from restive shareholders worried about falling newspaper circulation and weak advertising sales, Tribune invited bids four months ago when it said it was reviewing its strategic options.

The move drew initial interest from private investors keen on Tribune's strong cash flow and the prestige of owning a newspaper, although most private equity firms ultimately dropped out amid the publishing industry's doldrums.

This week, three offers were made--two for the whole company and one for part of the company, sources said.

One, from its biggest shareholder, Chandler Trusts, is to take the troubled newspaper business private and spin off the broadcasting business. That values Tribune at $7.6 billion based on $31.70 a share, a 4.5% premium to its closing price on Wednesday, when the auction wrapped up. The bid was outlined in a filing with regulators.

Separate Bid

A separate bid, according to a source familiar with the situation, consisted of a leveraged recapitalization offer from Los Angeles billionaires Eli Broad and Ron Burkle. That group offered $34 a share, consisting of a $27 dividend and equity valued at $7 a share. They proposed putting $500 million of their cash into Tribune and owning about 30 percent.

A third is a bid for only the TV station assets by private equity firm Carlyle Group, said a separate source familiar with the situation.

Some analysts said it was possible Tribune could reject all three bids, none of which was priced at a large premium to its current stock price.

"We are not sure any of these alternatives will prove acceptable to the board committee assigned to evaluate the proposals," Barrington Research analyst James Goss wrote in a note to clients.

Tribune said in Saturday's statement the independent special committee of its board of directors was continuing its strategic review following the submission of proposals from prospective investors.

It added the special committee would make a recommendation to the full board of directors and that the board expected to announce a decision during the first quarter of 2007.