Tribune Co. on Monday sought to assure the independence and journalistic standards of the Los Angeles Times, amid fears that its deal to acquire the newspaper would result in layoffs and undermine civic leadership in Southern California.
At the same time, Tribune scrambled to counter adverse investor sentiment resulting from the Chicago-based company's huge investment in the slow-growth newspaper business. The company highlighted its new-media strategy, claiming that together with Times Mirror Co. it would reach more Internet surfers than the New York Times and USA Today combined.
Tribune, the nation's fourth-largest television station operator and owner of the Chicago Tribune newspaper, announced an agreement early Monday morning to buy Los Angeles Times' parent company, Times Mirror, in a stock and cash deal worth $5.8 billion. Tribune will also assume $1.37 billion of Times Mirror debt if the deal is approved by shareholders and federal antitrust regulators.
Times Mirror shares, which have slumped more than those of other newspaper companies this year, soared $37.69 on Monday, to close at a 52-week high of $85.63 on the New York Stock Exchange.
Tribune shares took a pounding as investors interpreted the move as a reversal of its recent promise to move away from newspapers in favor of growth-oriented broadcasting and new-media properties. After falling to a low of $27.88 in heavy trading, Tribune stock bounced back to close at $30.81, down $6.38 a share.
The transaction comes amid wrenching changes in the media landscape, marked most vividly by America Online Inc.'s proposed takeover of Time Warner Inc. that would bring together the biggest name in new media with a world-class symbol of old media.
New technologies, splintering audiences and government deregulation have spurred a wide-ranging consolidation of media over the last decade, with a handful of global conglomerates emerging with both entertainment content and an array of channels for its distribution to consumers, including the Internet.
Mid-sized companies such as Tribune are scrambling to compete as a panoply of media choices fragment consumer attention as well as the advertising pie. Tribune envisions giving advertisers a one-stop shop by delivering a range of local outlets such as television, radio, newspapers, cable channels and Internet sites in the same city.
