Chandlers, L.A. billionaires vie for Tribune

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NEW YORK - Tribune Co.'s biggest shareholder and a group led by two Los Angeles billionaires have submitted rival bids for the company priced at only a small premium, reflecting concerns over the future of the newspaper industry.

Tribune, which owns the Los Angeles Times and the Chicago Cubs baseball team, said it received a bid from the Chandler family, its largest shareholder, that values the company at $31.70 a share, a 4.5% premium to its Wednesday closing price.

A group led by Los Angeles billionaires Eli Broad and Ron Burkle also made a higher offer for Tribune at a 12-percent premium of $34 a share, according to a source familiar with the matter. The Broad and Burkle offer values the company at $8.2 billion, versus the Chandlers' $7.6 billion.

The bids come after several private equity firms looked at Tribune and either submitted bids without a substantial premium or decided not to bid.

"Lo and behold, there is a Santa Claus," Benchmark Co. analyst Edward Atorino said.

While neither bid is as high as what some analysts say the company is worth, they show that there is interest in Tribune, he said. Some experts have said there may be no sale at all.

"There may be some room for negotiation here to squeeze out another buck or two (per share)," Atorino said.

Tribune said in September that it would explore its options, which could include a sale, after the Chandler family complained about the falling value of the company's stock amid weak advertising sales and declining newspaper circulation.

Burkle and Broad's offer is made up of a $27 dividend and equity valued at $7 a share. They propose to put $500 million of their cash into Tribune, and own about 30% of the newspaper and broadcasting group, said the source.

Existing management would run the company, but Burkle and Broad may take board seats. As there would be no change of control, such a deal would be completed more quickly than a pure takeover. Tribune would continue to be publicly traded.

Grocery magnate Burkle owns private equity firm Yucaipa. Broad founded home builder KB Home.

The Chandler family's proposal would give shareholders $19.30 in cash and all the outstanding shares of a new company that would contain Tribune's broadcasting business. The newspaper publishing business would be taken private.

"The spin-off of Tribune Broadcasting as a separate company will unlock substantial value for Tribune stockholders other than the Chandler Trusts and is an important component of our overall proposal," said a letter signed by William Stinehart Jr., a co-trustee of the trusts and a Tribune board member.

Acquiring Tribune and holding the newspapers would mark an unexpected return to the publishing business for the Chandlers. The family owned and ran the Los Angeles Times for more than a century before selling it, along with Times Mirror Co., to Tribune in 2000 for $8.3 billion.

A spokesman for the Chandler Trusts declined to comment. Spokespeople for Tribune, Burkle and Broad were not immediately available for comment.

Tribune's shares rose 62 cents, or 2.02%, to $30.96 in early New York Stock Exchange trading. Atorino valued the company at close to $40 a share, including its investments in the cable television Food Network and the Careerbuilder.com online jobs site.

Tribune had hoped to recommend some action to its board by the end of 2006, but the closely watched auction was delayed after a disappointing round of bids. The new deadline was set for January 17, according to sources.
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