- The Washington Times - Wednesday, June 14, 2006

NEW YORK (AP) — The second-largest shareholder of the Tribune Co. yesterday called for a breakup of the Chicago-based media company, saying its strategy of combining broadcasting and newspaper properties in large cities has failed.

The Chandler family, which owns 12 percent of Tribune’s shares, also said in a regulatory filing that they would not tender their shares as part of a major buyback the company is undertaking.

The company, owners of several daily papers including the Chicago Tribune, the Los Angeles Times and the Baltimore Sun, had disclosed earlier that the Chandlers opposed the buyback, but didn’t detail their reasons.

In a letter to the company’s board of directors included in a regulatory filing yesterday, the Chandlers called the process by which the board considered the buyback “fundamentally flawed” and “a purely financial device that fails altogether to address the real business issues facing Tribune.”

The Chandlers also have the right to name three of Tribune’s 11 directors. Those three directors had voted against the buyback.

Tribune’s shares have risen in recent sessions after the disclosure of the Chandlers’ dissent as expectations grew among investors that Tribune may have to consider more dramatic action beyond the buyback to boost its long-lagging share price.

After the disclosure of the Chandlers’ letter, Tribune shares rose again, jumping 75 cents, or 2.4 percent, to $31.80 in active trading on the New York Stock Exchange. Tribune’s tender offer has a maximum price of $32.50.

In their letter, the Chandlers said Tribune must find a way to separate its broadcasting holdings from its newspaper business, saying that the company’s strategy of owning both broadcasting and newspaper properties in the same cities has failed to deliver growth.

They also noted that an anticipated change in regulations that would have made the cross-ownership of television and newspaper properties in the same cities permanently legal has not occurred.

The Chandlers became significant holders of Tribune after its purchase of Times Mirror Co., of which they were major shareholders, in 2000.

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