Chandlers' Interest in L.A. Times Now Strictly Business

By Frank Ahrens
Washington Post Staff Writer
Saturday, February 17, 2007

Who are the Chandlers, the family seemingly intent on breaking up one of the industry's oldest and most venerated newspaper companies?

For more than a century, the family played a central role in the Los Angeles Times and the building of modern L.A. The Chandlers' patriarch, Gen. Harrison Gray Otis, took over the Times in 1884 and built Times Mirror, a vastly successful family-run newspaper chain. Today, the Chandlers are once again agents of change in the newspaper business -- this time as shareholders, rather than as editors and publishers.

Seven years after a merger with Tribune Co. made them the largest shareholders of the Chicago-based media empire, the Chandlers have watched the value of their stake in Tribune decline along with the newspaper industry's circulation and advertising revenue. They have forced the company onto the block and submitted their own bid to split it up and extract much of their investment.

Tribune, which has 11 newspapers and 25 broadcast stations, may spin off its television division, be forced to take on huge amounts of new debt, sell the company's beloved Chicago Cubs or make more cuts at its newspapers in the coming weeks. The Tribune board's decision on the Chandlers' plan could come as soon as next week, a source close to the company said.

Similar scenes are playing out at other large newspaper and TV companies. What most don't have, however, is a family shareholder as large, varied, powerful and provocative as the Chandlers.

Today's Chandlers are 170-some descendants of Otis and his son-in-law, Harry Chandler. Once a straight line of succession, father-to-son owners and publishers of the Times, the Chandlers are now a diverse collection of sons, daughters, cousins and in-laws that sprawls like the great city itself and who relate to each other about as well as Compton does to Beverly Hills.

They are the beneficiaries of two trusts set up by Harry Chandler during the Depression that now are worth at least $3 billion, half of which is tied up in flat-lined Tribune stock.

The last Chandler to run the Times left in 1980, turning the paper over to professional management and effectively ending most of the family's interest in journalism as anything other than an investment.

Twenty years later, the Chandlers sold Times Mirror, which included the L.A. Times and several other papers, to Tribune for $8 billion in stock. They got three seats on Tribune's board and came to own 20 percent of the company.

But the combined company's stock, which traded as high as $60 a share after the merger, has lost half of its value in the seven years since. That helped splinter the Chandlers, souring many of them on journalism as a source of income and amplifying their differences.

"Many members of this extended family live outside Southern California; most are not named Chandler," Harry B. Chandler, son of the legendary Otis Chandler, the last Chandler publisher of the L.A. Times, wrote in an op-ed article in the Times in November.

A photographer and one of only seven current family members to work at the paper, Harry Chandler lamented how Tribune's troubles affected the Times. After Tribune forced out the paper's editor and publisher in November, Chandler wrote: "My point is that a family of this size, largely personally disconnected from this newspaper, is unlikely to act in concert toward a solution for The Times. What a shame that is."

Members of the Chandler family declined to speak publicly for this article. Tribune had no comment on the Chandlers.

The two family trusts, originally a Depression-era emergency fund for Harry and Marian Chandler's eight children, provide wealth and income for today's Chandlers, who receive dividend checks from their investments.

"The only way the family could get its money was by the payment of dividends, and if the business wasn't performing, they weren't going to get a lot of dividends," said David Laventhol, a former publisher of the L.A. Times and former president of Times Mirror. "They couldn't just go up to the treasurer of the company and say, 'Write me a check for a million dollars.' "

The Chandler trusts are controlled by a board that has little interaction with family beneficiaries, many of whom receive only a yearly audit report with their dividend checks, according to a source familiar with family business who spoke on condition of anonymity because of continuing dealings with the Chandlers. Despite their combined wealth of at least $3 billion, no single member or small group has the resources to mount a buyout for Tribune, even combined with other investors.

The Chandlers are among three bidders for Tribune. Their offer would spin off Tribune's broadcast unit into a new business and take the newspapers private with equity backing that would pay the Chandlers for about half of their investment in the company. The Tribune board will either accept one of the bids or restructure the company on its own. Tribune says the decision will be made by the end of March.

The four key players connected to the family trusts are Warren "Spud" Williamson, a Chandler cousin and director of the trusts; William Stinehart Jr., a Los Angeles lawyer and member of the Tribune board; Thomas Unterman, the family's longtime financial adviser; and Jeffrey Chandler, a Chandler cousin and Tribune director.

Williamson is a philanthropist, horse enthusiast and political conservative who has given millions of dollars to such Southern California institutions as the Los Angeles Philharmonic. He sits on the five-person L.A. Times board that also includes three Tribune appointees. The board approves the choice of publisher.

The Chandlers' chief legal representative to Tribune is Stinehart, the longtime family lawyer and retired partner with Gibson, Dunn & Crutcher in Los Angeles. Stinehart forbade his high school from showing a L.A. Times reporter his 1961 yearbook featuring him, the paper wrote last year.

Unterman, who is not related to the Chandlers, is the family's top lieutenant and a former Tribune director. Managing partner of private-equity firm Rustic Canyon Partners, he is described by some as having a casual mien that belies a fierce business acumen. Unterman was the primary architect of such Times Mirror deals as the sale of its cable assets to Cox Enterprises for $2.3 billion in 1994 and its merger with Tribune in 2000.

In addition to newspapering, much of the Chandler trusts' wealth came from real estate. For most of the past century, for example, the family owned a California ranch one-third the size of Rhode Island. In 1936, the Chandlers struck oil on the property. The family's push to bring water to Los Angeles is fictionalized in the 1974 movie "Chinatown."