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Tribune to Press Ahead With Buyback

Jun 8, 2006  •  Post A Comment

Tribune will press ahead with its $2 billion stock buyback despite the protests of three board members who represent a major shareholder in the newspaper and broadcasting company.

The Chicago-based company in a Thursday statement said it is “proceeding expeditiously” with plans to buy back 25 percent of its outstanding shares and explore selling some assets. The company announced in late May that it would consider selling TV stations, investments and real estate to help finance the stock repurchase.

“Tribune’s recently announced tender offer was approved by a clear majority of its board of directors as being in the best interests of all shareholders,” the company said. “As disclosed in our filing with the [Securities and Exchange Commission], the board made this decision after considering a broad range of alternatives and the company is proceeding expeditiously with the tender offer, which will conclude June 26.”

Tribune’s statement came amid news that three board members appointed by the Chandler Trusts, Tribune’s second-largest shareholder with a 12 percent stake, are opposed to the buyback plan. The Wall Street Journal reported Thursday that Tribune has been considering since January a breakup of the company that would spin off the company’s 26-television stations.

The company in the statement said it would not comment on any board discussions.

The buyback is part of a broader effort by the company to jump-start a stock price that has been restrained by investor worries that the company faces dim growth prospects. In addition to buying back shares, the company said it would shed TV stations that don’t fit the company’s overall program-buying strategy. Of the 26 stations the company owns, 16 will become CW affiliates in September.

Earlier this week, Tribune sold a soon-to-be MyNetworkTV affiliate in Atlanta to Gannett for $180 million.

Any decision to spin off Tribune’s broadcasting division is likely to be a long way off, the Journal article said, because it would involve a series of complex and expensive steps, and could be affected by changes in the media landscape and the availability of financing.

Also complicating the matter is that the three Chandler-appointed board members aren’t 100 percent sold on this idea of a spinoff. According to the Wall Street Journal, the three board members–Jeffrey Chandler, Roger Goodan and William Stinehart Jr.-agree the company should mull a spinoff of the broadcasting assets, but disagree with Tribune executives over the timing and strategy.