Tribune Co. Eyes Major Changes Under Pressure

Wall Street has reacted well to dramatic changes planned at the Tribune Co., which owns the Los Angeles Times and 10 other daily newspapers, (By Nick Ut -- Associated Press)

Tribune Co., under pressure from shareholders to boost its stock price, is signaling that it is considering a sale or breakup, or going private.

The owner of the Chicago Tribune, the Los Angeles Times, the Baltimore Sun, television stations and the Chicago Cubs is targeting potentially transforming changes by the end of the year after a five-hour meeting of its board of directors Thursday.

Under chief executive Dennis FitzSimons, the struggling media company is moving quickly beyond the plan it outlined in May calling for a combination of select asset sales, a $2 billion stock buyback and further cost cuts. Since then, revenue has continued to decline, and the stock price has not increased as much as the company had hoped.

To enable the upcoming changes, Tribune needed to restructure two complex partnerships with the Chandler family that were a legacy of its takeover of the parent company of the Los Angeles Times in 2000. That cleared the way for a new board committee of seven directors to work with FitzSimons on the makeover plan.

The Chandlers will retain 95 percent interest in the partnerships and will increase their holdings of Tribune common stock to approximately 48.7 million shares from approximately 36.9 million.

The partnerships contain some $3.5 billion in assets and have hampered Tribune's ability to make transactions because of major tax consequences.

A rift surfaced in the spring when the Chandlers, who hold three board seats, criticized the stock buyback strategy and called for the company's breakup. As evidence that those differences have been patched up, Warren Williams, chairman of the Chandler Trusts, said Thursday night that the trusts would "now work collaboratively with management and the board to build value for all shareholders."

Tribune's holdings include 11 daily newspapers, 25 television stations and Internet ventures as well as sizable stakes in the Food Network and the online classified advertising venture CareerBuilder.

The company said it expected to record a one-time gain of approximately $45 million because of the transaction.

Wall Street reacted positively yesterday. A day after Tribune shares rose more than 4 percent, they gained $1.94, or 6 percent, to close at $33.99 on the New York Stock Exchange.

But Standard & Poor's lowered its credit ratings on Tribune to the "junk" category. The ratings agency said the possibility of another stock buyback or sale of parts of the company suggests Tribune won't be focusing on reducing its huge debt, which totaled $4.9 billion as of July.