Tribune Looks to Shed Assets as It Buys Back Stock

May 30, 2006  •  Post A Comment

Tribune Co. said Tuesday it will buy up to 25 percent of its outstanding shares, and might sell some television stations to help finance the purchase.

In a statement the Chicago-based owner of TV stations and newspapers said it will look to sell assets it sees as nonessential, including TV stations that are not core to its program-buying strategy. Tribune owns 26 TV stations, 16 of which are CW affiliates and three of which recently became MyNetworkTV affiliates. The company hopes to raise around $500 million from the asset sales, which could also include newspapers, investments and real estate.

The company made clear that assets in its top three markets of New York, Los Angeles and Chicago are not for sale. In addition, Chairman and CEO Dennis FitzSimons said Tribune’s 31 percent stake in Food Network is not likely up for sale either.

The stock repurchase program and the asset sales are part of a strategy by Tribune to focus on its core newspaper and TV station assets. The company has been having difficulty generating growth from its stable of products. Tribune officials hope the stock buy-back and the asset sales will enable it to focus on making investments that will lead to improved results.

Tribune said the stock repurchase program will happen in three steps and total up to 75 million shares. First, the company plans to buy back 53 million shares in a modified “Dutch auction” tender offer, in which an offer price is lowered until a sale is reached. The company will also buy back 10 million shares from the Robert R. McCormick Tribune Foundation and the Cantigny Foundation, which together are Tribune’s principal shareholders. Another 12 million shares will be repurchased on the open market after the tender offer concludes June 26.

The company said the total price of the stock buy-back is estimated at around $2 billion and will be financed through bank debt and debt securities in addition to the station sales.