Chandlers, Eli Broad Bid for Tribune Co.
RENEE MONTAGNE, host:
Bids are in for the country's second-largest newspaper company, The Tribune. Some potential bidders have shied but one of the bids is coming from the company's largest shareholder. The Chandler family, which owned the L.A. Times for decades, is offering $7.6 billion dollars. That would give the family a controlling stake but it's not the only offer.
Here to talk to us about what's going on with the Tribune Company is NPR's media correspondent David Folkenflik. Good morning.
DAVID FOLKENFLIK: Good morning.
MONTAGNE: So get us how - how did the Tribune get here? Tell us about the auction.
FOLKENFLIK: Well, this is a real mess. I mean the Tribune Company, as you know, is one of the nation's most prestigious papers - the Los Angeles Times, The Tribune, Newsday in Long Island, the Baltimore Sun. This larger company was formed when the Chandler family actually sold off the Times Mirror Company in late '99 - went through about seven years ago.
Well, newspapers stocks have kind of changed since then - that was the height of kind of a bubble, the excitement of the market, the Internet. They haven't figured out how to get money for the readers that they get online but who aren't paying to get it. They have lost advertising money. They've lost circulation money. And this virus has seized the industry.
Analysts are very concerned about it. The Knight Ridder newspaper company, which used to be one of the nation's largest chains, was - has been forced to sell off to McClatchy last year. This virus of this idea took hold. The Chandler family thought they weren't getting the value they wanted, so they put it on the auction block.
On the other hand, nobody's really bidding a lot of money. Nobody's desperate to take over a newspaper company at a time that the newspaper industry hasn't figured out a way to turn the corner on this Internet issue.
MONTAGNE: So what are the Chandler's who again, as you said, sold the L.A. Times and other parts of their group, what are they trying to do here?
FOLKENFLIK: Well it seems as though they're trying to resolve, in a sense, a crisis that they helped to precipitate. That is, they were the motivating force behind forcing Tribune management to solicit offers last year for the company. They now are seeing that nobody's really coming forward with big premiums. So they're saying we can spin off the broadcasting assets here. We can protect the newspaper assets, and we'll pay for this and retain a controlling share of this newspaper unit, as we understand it from reports this morning.
But, of course, as you mentioned, they're not the only guys coming forward. These two billionaires - these magnates in Los Angeles, Ron Burkle who made a ton of money with grocery stores, and Eli Broad who's a huge developer in Los Angeles - has come forward with their own offer, interestingly at below market value. They've suggested offering about $500 million to pump in to Tribune as a way of getting control of about 30 percent of the company.
It's not clear why Tribune would take this offer, but it may be that they feel that they don't have a lot of options left.
MONTAGNE: Now what does this mean for the reporters at the L.A. Times and the other newspapers the company owns?
FOLKENFLIK: Well that's the real question, both for the legacy of the newspaper like the Times and also for the readers of papers like the Times and the Tribune. If Eli Broad and Ron Burkle were to get control of Los Angeles Times, they have talked about the notion of running it a bit more like a public trust. That is, they want it to make money, but they want it to serve the public - and this is a big issue.
If this were an opportunity for private investors to get wedged in, to get a more advantageous offer, sort of, after the supposed end of the auction, you could see people who wanted to take it over and perhaps sell the company off for parts. Not clear exactly how this is going to be resolved. These are not great options for Tribune management and its shareholders.
MONTAGNE: NPR media correspondent David Folkenflik, thanks very much.
FOLKENFLIK: You bet.