When the battle for control of Tribune Co. got underway more than eight months ago, investors hoped that a sagging share price would be bolstered as bidders assessed the true value of marquee assets such as the Los Angeles Times, the Chicago Tribune and the Chicago Cubs baseball team.
But as it lumbers toward a conclusion in the coming weeks, the Chicago-based company's review of strategic alternatives has served, instead, to confirm the dim view that investors have of traditional media operators.
With no clear premium offered by a handful of bidders and its auction already extended once, Tribune management is expected Saturday to ask the company's directors to review a reorganization and recapitalization proposal. The plan would split the company into broadcast and newspaper divisions, pay a dividend of as much as $20 a share and sell two small Connecticut papers, said two people familiar with the proposal.
If approved, the "self-help" plan probably would leave on the sideline three Los Angeles-based billionaires -- David Geffen, Eli Broad and Ron Burkle -- who had hoped to return The Times to local ownership. None of the three, however, has conceded defeat.
And another business titan, Chicago-based real estate maverick Sam Zell, is pressing a late bid for the company, said a Tribune executive who was not authorized to speak publicly about the deal.
Zell's proposal would inject new capital into the company, perhaps in combination with funds from an employee stock ownership plan, according to the executive. The arrangement is designed for its tax efficiency.
Tribune would not comment, but several managers at the company said they were anxious about the self-help proposal because, like Broad and Burkle's plan, it would require heavy borrowing to pay the large dividend. They worried that the company would face new pressure from its lenders to cut costs and reduce staff. That situation could become even more severe if the company cannot find a way to take itself private and out of the aim of public shareholders.
One Tribune manager, who asked to remain anonymous so as not to anger his bosses, said, "It sounds like the worst of both worlds."
Others said the company still might find a partner, such as Zell, to go private. And they said the reorganization would be worthwhile if it helped Tribune begin to extricate itself from a troubled seven-year marriage with the Chandler family. The California-based family that once controlled The Times assumed a minority position in 2000 when Tribune bought Times Mirror Co.
