Three billionaires hoping to buy the Los Angeles Times expressed their interest in separate letters this month to the paper's owner, Tribune Co. But each was told The Times was not for sale -- at least for now, according to several people who have seen the letters.
Since a schism in June on the Tribune board put the company's future into question, reports have circulated that philanthropist Eli Broad, music and movie mogul David Geffen and former supermarket magnate Ron Burkle would like to buy the newspaper.
A purchase by any of the three Los Angeles billionaires would put the newspaper under local ownership for the first time since 2000, when the Chandler family agreed to sell the paper's then-owner, Times Mirror Co., to Chicago-based Tribune. Relations between the newsroom in Los Angeles and the corporate office have grown increasingly strained since then, especially as Tribune has squeezed the budget and cut staff in response to declining revenue.
"It would be in the best interests of Tribune and the best interests of Los Angeles if a sale was completed," former Mayor Richard Riordan said.
Tribune's directors considered the three letters at a July 19 board meeting. Tribune Chairman and Chief Executive Dennis J. FitzSimons has since replied in writing to each of the prospective suitors, informing them that the board "unanimously asked me to advise you that at this time we are not prepared to discuss the possible transaction described in your letter," according to someone who saw the correspondence.
"If our perspective changes we will contact you," the FitzSimons letter concluded.
One person close to the situation, who spoke on condition of anonymity because the matter was confidential, said he considered FitzSimons' reply more hospitable than Tribune's previous posture, which was simply that The Times was not for sale.
A sale of The Times, arguably Tribune's single most valuable asset, would probably not occur except as part of a breakup or outright sale of Tribune, according to investors and analysts who follow the company. The presence of willing buyers for a number of Tribune properties, however, could increase pressure on the company to consider a breakup.
Sources said investors in Baltimore and New York had begun exploring the possible purchase of two other Tribune newspapers: the Baltimore Sun and Newsday.
Frank G. Zarb, former head of Nasdaq Stock Market and a New York-based managing partner of private equity firm Hellman & Friedman, is interested in Newsday, the dominant paper on New York's Long Island, according to two people with knowledge of the situation. Zarb did not return a call Friday seeking comment.
In Baltimore, Robert C. Embry Jr., president of the Abell Foundation, which has ties to the former owners of the Sun, said Friday that although he had publicly stated his interest in the paper, he had not written to Tribune's board.
Tribune shareholders have been leaning on management to boost its stock price, which is languishing at less than half its 1999 high of $60.88. As of Friday, the stock market valued all of Tribune's shares at almost $9 billion, which a number of investors believe is far less than the company's parts could bring in a breakup.
Some analysts believe that The Times could be sold on its own for as much as $3 billion. Tribune owns two dozen television stations, including KTLA Channel 5, as well as the Chicago Cubs baseball team and newspapers including the Chicago Tribune.
FitzSimons and other Tribune executives declined to be interviewed for this article.
"We never comment about speculation regarding board business," company spokesman Gary Weitman said.
The board's unanimity in the July 19 meeting is significant because it came six weeks after a boardroom battle between FitzSimons and California's Chandler family, whose trusts control about 15% of Tribune shares -- the largest single stake. Chandler representatives hold three of the company's 11 board seats.
Descendants of the family that founded The Times, the Chandlers last month publicly attacked management's plan to repurchase 25% of Tribune's stock and said the company should instead spin off its TV stations or put the company up for auction. With the Chandler directors opposed, the board voted 8 to 3 to go ahead with the stock buyback.
Through a spokesman, the Chandlers also declined to comment for this article.
After the flurry of news reports surrounding the Chandlers' broadside, public rancor quieted down. Behind the scenes, however, according to people involved, private equity firms and individuals interested in Tribune newspapers or other assets began discussing possible deals. The Chandlers started trying to rally support among key Tribune shareholders for a breakup.