Chandlers Had Eye On Assets Of Tribune

Representatives of Family Approached Private-Equity Firm

SANTA ANA, Calif., Dec. 13 -- Representatives of Chandler family members on Tribune's board of directors approached one private-equity firm about a possible partnership to buy the embattled media giant several months ago, even before the family began pushing for the sale of the company that is now underway.

The Chandlers, former owners of Times Mirror and the Los Angeles Times, gained three seats on Tribune's board when the two companies merged in 2000. They say Tribune has underperformed and forced the company to put out a "for sale" sign in September, believing that Tribune would be worth more sold off or split up.

Private-equity firms -- including Providence Equity Partners and Bain Capital and Thomas H. Lee Partners -- have put in bids for the company, which owns 11 newspapers, 24 broadcast stations and the Chicago Cubs.

The papers include the Baltimore Sun, Newsday, the Chicago Tribune and the Orlando Sentinel. The company also owns flagship Cubs television and radio station WGN.

But a lack of broad interest in acquiring Tribune as a whole combined with underwhelming offers from private-equity bidders -- and the potential tax penalties of selling individual properties -- has led some in the industry to begin calling the attempted sale a "busted auction."

The bidding that began in September has not gone as well as the family would have liked.

The Chandlers had already approached Providence months ago, before the bidding began, to float the idea of a partnership to buy Tribune, said a source with knowledge of the situation who spoke on condition of anonymity because the process is ongoing.

Reports in yesterday's New York Times said the Chandlers were once again reaching out to private-equity firms to explore the possibility of a partnership to buy certain Tribune assets.

Not all of the bidders have been approached by the Chandlers this time, the source said.

One possibility for Tribune is to spin off the broadcast assets -- and perhaps the Cubs -- to another company and take the newspapers private, with cash supplied by equity firms.

Tribune had set a deadline of the end of the year to make a preliminary decision on the bidders but recently extended the date into 2007.

After examining Tribune's assets, the private-equity bidders have been unable to determine how to extract more shareholder value out of the company, said an industry source who spoke on condition of anonymity because the process is ongoing.

Tribune shares closed up 13 cents yesterday, at $32.62. The stock opened the year trading at less than $32 per share but climbed as high as $34 in September, when the company said it would seek bidders.

There is interest in Tribune's individual properties. For instance, a group of Baltimore business leaders would like to buy the Sun.

But Tribune probably would face a substantial tax burden if it sold off its pieces one by one, unless it employed certain exotic finance mechanisms.