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The news out of Tribune Tower at the end of this week is big, with the Tribune Co. announcement that a special committee of directors will explore “alternatives for creating additional value for shareholders” — corporate-speak indicating that the company is now “on the path toward a sale or a breakup,” as the Los Angeles Times reports.
“The move effectively puts Tribune in play, and will likely prompt private-equity firms and other potential buyers to signal their interest in bidding for part or all of Tribune,” reports the Wall Street Journal. And suddenly everything is on the table, as Tribune CEO Dennis FitzSimons told the Journal and his own flagship newspaper, from going private, to selling off its TV stations, to selling off some of its newspapers, to a sale of the entire company.
Wherever it leads, we think, Tribune’s new willingness to change direction is an important, positive development.
The “formation of the committee is a significant reversal from Tribune’s stance earlier in the summer,” noted the Journal, “when the company rebuffed calls from the Chandlers to consider action such as splitting off the TV stations in favor of doing a $2 billion stock buyback and undertaking $500 million of asset sales. But since the buyback was completed, Tribune’s stock has weakened.”
That particular short-term strategy has left the company with $2.4 billion in additional debt, and a lawsuit. And while Tribune seemed to resolve its dispute with the Chandlers yesterday, the fires have been mounting, from the still-lingering conflict with the Times‘ newsroom leaders over Tribune’s latest demand for budget cuts, to the 20 civic leaders in L.A. who have called for Tribune to sell the Times, to “growing pressure for drastic action from shareholders frustrated with the company’s long stagnant stock price,” as the Journal said.
“I think they bought a little time here,” says David Laventhol, the former Times publisher and president of Times Mirror Co. “But it sounds like they’re certainly thinking about a breakup, and with all the forces pushing at them, a lot of the stockholders felt that they’re better off with their money with a sale of the company or individual pieces of the company.”
Moreover, Tribune’s recent struggles come against the backdrop of an industry-wide decline in print circulation and advertisers — and the conclusion that the strategy guiding the company since its $8.3 billion purchase of Times Mirror in 2000 (of “a local-media conglomerate with a stable of TV stations complementing one of the nation’s finest collections of newspaper titles,” as the Journal put it in June) has failed. Synergy has not paid off, revenues are stagnant, and Tribune’s stock has fallen 36 percent since FitzSimons took over in 2003.
The purely public newspaper company, at least in Tribune’s case, has satisfied no one.
“I’m not sure there’s any choice but to change direction at this point,” says John Carroll, the former Times editor who resigned last year. His “amateur’s understanding” of the financial issues and pressures Tribune faces notwithstanding, Carroll says, “I think it’s very difficult for them to stay as they are — probably impossible.”
Asked if the potential breakup of Tribune is a good thing, Carroll not surprisingly says yes: “I think the record of Tribune’s influence on journalism is pretty clear. The Times Mirror papers have all been badly damaged by six years of Tribune’s stewardship.”
Carroll points to “a staggering talent drain” at the Baltimore Sun. And while the Times had more resources to begin with, he adds, “it’s been teetering on the brink, and another year or two of Tribune management will knock it out of the top tier of American newspapers.”
This is not to advocate a wholesale return to local, private owners by any means. The slashing of the Akron Beacon Journal by its new owner — one result of the breakup of Knight Ridder — is evidence enough that smaller or private ownership is no panacea.
But whatever benefits public ownership brought to media companies in terms of funding have been overwhelmed by the market’s slavish devotion to short-term profits. The time is long overdue for a serious exploration of alternative ownership models. Knight Ridder is gone, Time Inc. is fraying, and Tribune is teetering. Let’s get on with it.
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