Leading with the turmoil at the intrigue-wracked Tribune Co. for the second day running, the Wall Street Journal reported yesterday that Tribune’s board has since January “been seriously considering a restructuring that would include a spinoff of the company’s broadcasting group and could pave the way for the eventual sale of the rest of the company.”

The Journal reported that “all parties” — including the Chandler family trusts and the three Chandler-nominated board members who voted against the Tribune stock buyback plan announced last week — “appear to agree on exploring a broadcast spinoff. ”

Deep into the story, the Journal raised an even more intriguing possibility, writing that this week’s revelation of the Chandlers’ dissent “could prove a catalyst for other shareholders to move more aggressively on a breakup or sale” of the whole company.

Today’s papers reinforce that possibility, with the Chicago Tribune itself reporting that the volatility of the company’s stock — it rose 4 percent yesterday on speculation of a large restructuring to come — “threatened to disrupt the buyback plan and put the company in play.” The New York Times reports that three private equity firms have inquired recently “about buying the Chandlers’ 12 percent stake or joining with them to mount a takeover of the company.”

Meantime, the McClatchy Co. announced Wednesday that it had sold five more of the papers it purchased from Knight Ridder to four different buyers, all of them relatively small operators — meaning that within a few short months Tony Ridder’s cherished newspaper empire has essentially splintered into seven different parts, with the lonely Wilkes-Barre (Pa.) Times Leader still looking for a buyer. McClatchy has been able to sell the Knight Ridder papers that it doesn’t want for a higher multiple of their cash flows than it paid for them in bulk.

There are about 17 different ways that this could all break, but we can’t help but note that, with the dispersal of the Knight Ridder papers and Tribune’s possible breakup, we may be witnessing the beginnings of a decentralization of American journalism.

That may seem presumptuous, but consider the big picture, as pretty much every major newspaper company struggles against a flagging stock price, circulation fleeing to the Internet and advertising following only in fits and starts. Wall Street can’t figure out how anyone is going to make much money out of this over the next five or 10 years, which has caused the convulsions that beset first Knight Ridder and now the Tribune Co. — and which may eventually reveal new models for ownership of public trusts like America’s handful of truly enterprising newspapers.

Purely public companies — forced to satisfy the inherently conflicting demands of earning higher revenues each and every quarter while producing appealing and sustaining journalism — increasingly seem like a lose-lose proposition, and as journalism transitions to a new paradigm, smaller might be better.

The issue is not Tribune’s profits (in 2005 its profit margin was 20.5 percent), but its anticipated rate of growth. And after years of cost cuts, with more “cost savings” and efficiencies on the way, Tribune’s newspapers have all but abandoned “growth” as a target, and the company’s revenues are stagnant. Jim Cramer is hardly a journalism sage, but he made a compelling point last week on RealMoney.com following Tribune’s announcement that it would buy back a quarter of its shares by borrowing about $2 billion, sell $500 million in non-core assets, and cut costs by $200 million:

I look at this move and I think: Hold up here; Tribune’s been cutting costs for years. If it hadn’t, its cash flow would be downright ugly — and now it is borrowing cash to buy stock? Does the company really feel its stock is undervalued? Does anyone think its stock is undervalued?

We buy stocks for growth, not for self-tenders and not for cost cuts. There’s no growth here.

Others on the Street saw opportunity, however, and immediately after the stock buyback plan was revealed on Tuesday, the company’s stock, which had fallen nearly 40 percent over the past two years, shot up 7 percent. CEO Dennis FitzSimons presented the plan as a vote of confidence in Tribune’s future and its long-term value. It was widely viewed as an effort to preempt a Knight Ridder-like shareholder rebellion, and — in effect if not intent — helped to make the company less appealing to outside suitors by sending its credit ratings toward junk levels and by ensuring that Tribune’s debt would rise to nearly $6 billion.

But now the buyback plan has revealed a major rift on the Tribune board, creating the sort of uncertainty the plan was supposed to prevent. And by agreeing to make public the Chandlers’ disagreement through a SEC filing, Tribune has opened the floodgates to major press coverage about that rift, while the ensuing market speculation increases its stock price but decreases its control of the situation.

Tribune, for now, continues to insist that it is going ahead with the plan.

But a major reason given for the Chandlers’ dissent is instructive. As the New York Times put it yesterday, the three Chandler board members dissented from the buyback plan “because the move would not address the fundamental challenges facing the company,” adding that they “believed that Tribune first needed a strategy to create value before it took on significant debt, which they worried could limit the company’s options.”

Indeed, absent “a major shift in corporate strategy,” as Deutsche Bank analyst Paul Ginocchio wrote last week, the buyback “might have been the last arrow in the quiver.”

“I was struck by the fact that they didn’t lay out a very specific strategic plan associated with this,” said Tom Rosenstiel, director of the Project for Excellence in Journalism. “That, to me, stood out more than that they were doing it.”

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