By Frank Ahrens
Washington Post Staff Writer
Thursday, April 26, 2007

The tempestuous, sometimes bitter seven-year relationship between the Chandlers of Los Angeles and the Tribune Co. of Chicago is coming to an end.

Yesterday, Tribune announced a tender offer of $34 per share for 126 million shares -- about half of the company's outstanding stock -- at a total cost of $4.3 billion. The price represents a slight premium on Tribune shares, which closed yesterday at $32.78, up 23 cents.

The tender offer would allow the Chandler Trusts -- Tribune's largest shareholders and most publicly contentious -- to cash out their $1.6 billion stake in the media empire.

Tribune agreed this month to sell the company to Chicago real estate magnate Sam Zell in a $13 billion, debt-laden deal. Zell plans to take the company private via an employee stock-ownership plan that would buy back most of the company's outstanding shares.

In a news release, Tribune said the Chandler Trusts -- which own 20 percent of the company -- would accept the tender offer and sell back their shares. That would satisfy the Trusts' goal liquidating their flagging Tribune holdings.

Tribune owns 16 newspapers -- including the Los Angeles Times, Baltimore Sun and Newsday on Long Island -- 26 television stations and a number of other properties. It is valued at $7.9 billion.

"With Sam Zell's initial investment completed, and the tender offer launched, the first stage of our transaction that will result in Tribune Company going private is underway," Tribune chief executive Dennis J. FitzSimons said in the release. Earlier this week, Zell invested $250 million of his money, part of a promised $315 million, in Tribune stock.

A flurry of activity has followed Tribune's acceptance of Zell's offer. A source close to entertainment mogul David Geffen confirmed that he wants to buy the Los Angeles Times from Zell or at least enter a joint-venture partnership that would give him editorial control of the newspaper, which is Tribune's largest and biggest moneymaker. Geffen's office said yesterday that he had no comment on his talks with Zell.

Earlier this week, Tribune announced that it would cut 250 jobs at the Times and Tribune via buyout offers.

More than a year ago, the Chandler Trusts began agitating for a sale or breakup of Tribune, believing that the company -- and their stake -- would be worth more in such a scenario, perhaps as much as $46 per share.

In September, the trusts forced Tribune to hang out a for-sale sign, launching an auction that drew tepid interest. The company settled on Zell's bid, which came in more than a month after the auction's original deadline.

The two Chandler Trusts were set up about 70 years ago by Harry Chandler, the father of the modern Los Angeles Times, as a safety net for his children. Today, the trusts are a principal source of income for 170 of his descendants.

When Tribune bought the Times and parent company Times Mirror in 2000 for $8 billion in stock, the Chandler Trusts got 15 percent of Tribune (they later added 5 percent) and three seats on the board. Since the acquisition, Tribune stock has plummeted. Because the Chandler Trusts took payment all in stock, rather than stock and cash, their net worth dropped with the stock price.