- The Washington Times - Tuesday, March 14, 2000

The Tribune Co. announced yesterday that it will buy Times Mirror Co. for $6.8 billion, creating a massive multimedia company with several major newspapers and 24 television stations.

The new company would have a combined circulation of 3.6 million, making it the third-largest national newspaper chain after Arlington-based Gannett Co. Inc. and Knight-Ridder Inc. of San Jose, Calif.

Company officials called the deal an inevitable result of industry consolidation as media companies scramble to boost advertising dollars by branching into media markets like television and the Internet.

"Our company will be the best-positioned local-market media company for the future," said John W. Madigan, chairman, president and chief executive of the Tribune Co. "National scale and local depth across media will drive our top-line growth."

The deal is the latest in a wave of mergers of big media companies seeking to broaden the information they provide and the customers they serve. Sterling, Va.-based America Online Inc. in January said it would buy Time Warner Inc. for $135 billion, the largest media-industry combination so far.

Similarly, Walt Disney Co. in 1996 bought Capital Cities/ABC for $19 billion, creating a media conglomerate in movies, television and publishing.

Many of the mergers, like the AOL/Time Warner deal, have involved companies from different media combining customers and content. The Tribune-Times Mirror deal is the largest merger between two newspaper companies.

The last big newspaper merger occurred in 1993 when the New York Times Co. bought Boston Globe parent Affiliated Publications Inc., for $1.1 billion, which at the time was the biggest takeover in U.S. newspaper history.

The new company announced yesterday it would retain the Tribune name and maintain headquarters in Chicago.

The deal would bring to an end a family dynasty that dates back to 1882. The Chandler family, which has controlled the Los Angeles Times for 118 years and owns a majority of Times Mirror voting shares, initiated the negotiations and supports the deal, according to company officials.

One industry analyst expects the newspaper merger wave to continue.

"There has been an ongoing concentration of ownership in the industry since World War II. Now it is happening at a much higher pitch," said John Morton, president of Morton Research Inc., a Silver Spring media company.

"The families that own the other media companies must now be asking themselves: 'How do we survive on a dance floor filled with elephants?' "

The new company would boast 11 daily newspapers including the Chicago Tribune, the Los Angeles Times, the Baltimore Sun and Long Island Newsday, 24 television stations, 17 national magazines and three radio stations. The combined companies would have a presence in 18 of the nation's 30 top markets.

Mr. Madigan, who will continue as Tribune's chairman, agreed that more such mergers are likely in the newspaper industry as big chains continue searching for opportunities to lure advertisers with the promise of national exposure through several media.

"Advertisers are looking more and more at how they can get mass media coverage on a national basis, and they want to make as few stops as they can," Mr. Madigan said.

"Companies like the one we have created will be favored in that market," he added.

He and other Tribune officials were particularly excited about the reach that the new company would have on the Internet. The World Wide Web sites operated by the various publications under the new company would be viewed by 3.4 million people and generate $55 million in revenue this year, company officials predicted.

Officials of both the Tribune and Times Mirror told reporters during a conference call that the deal likely would not result in layoffs at the flagship newspapers in Los Angeles, Chicago, Baltimore or New York.

Under the deal, Times Mirror shareholders would be allowed to take $95 per share in cash from Tribune Co. or exchange each of their Times Mirror shares for 2.5 shares of Tribune Co. stock.

News of the merger sent Tribune stock down 17 percent to $30.81 after falling as much as 25 percent early yesterday in trading on the New York Stock Exchange. Times Mirror stock, meanwhile, rose $37.69, or 79 percent, to close at $85.63 on NYSE.

The deal was approved by Times Mirror directors late Sunday night, but it still must be approved by shareholders.

The Federal Communications Commission will not need to approve the acquisition since Tribune's television station licenses are not up for renewal until at least 2006. While the FCC prohibits companies from owning a newspaper and television station in the same city, industry experts expect those rules to be relaxed in the next several years.

The acquisition, however, will be subject to Department of Justice or Federal Trade Commission antitrust review.

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