LAT: Twisting in Chicago Wind

23 September 2006 |permalink | email article

After spending mere minutes to discuss a major budget-cutting controversy involving the Los Angeles Times, the Tribune Company board voted Friday after five hours to establish a committee of independent directors to explore alternatives “to create additional value for shareholders.”

The radical action was a significant reversal of the refusal by Tribune CEO Dennis FitzSimons to accede to the desire of the chain’s largest shareholder, the Chandler family, to raise the long stagnant stock price.

The deal increases the family’s stake in the company from 15% to nearly 20% and puts Tribune in play: selling any or all of its 11 newspapers, including LAT, the Chicago Tribune and New York’s Newsday, 25 TV stations and the Chicago Cubs, breaking up the company or taking it private.

(Many in Los Angeles and elsewhere in journalism hold the Chandler family, whose publishers ran LAT for much of the last century before selling Times-MirrorCorp. to Tribune for several billion in 2005, responsible for triggering a value battle which now threatens their former flagship’s future.)

While no decisions were made, Tribune said the exploratory process would be completed by the end of the year.

The delay further complicates resolution of the festering rift between one of the nation’s top three daily papers and its Chicago corporate parent over demands for further staff reductions. Times editor Dean Baquet has said additional layoffs would diminish the quality of the paper.

The controversy came to a head late last month when Baquet and Times publisher Jeffrey Johnson, a former Tribune executive, courageously risked defying Tribune Publishing President Scott Smith by refusing to present a list of steep editorial cost reductions he demanded.

The dispute escalated when 20 Los Angeles civic leaders publicly voiced their displeasure to Tribune management about the proposed newsroom cuts. Prior to that three local billionaires expressed interest in buying the paper which has drawn a mixed reaction on First Street from some concerned staffers about editorial integrity.

Despite the decision to consider alternatives, CEO FitzSimons said the sale of the Times, Tribune’s biggest newspaper, was unlikely. “The L.A. Times is part of the Tribune and not for sale.” However, his future role in the decision is unclear.

The special committee of seven independent board members in charge of the exploration process, including Pasadena corporate executive Enrique Hernandez Jr., excludes FitzSimons and the Chandler family’s three representatives.

Baquet and Johnson remain in the intolerable position of being left to twist in the wind into the winter without any satisfactory resolution of the dispute.

There is already some buzz, in a worse case scenario, that Tribune editor Ann Marie Lipinski, who shared a Pulitzer Prize with Baquet when he was at the paper before becoming a New York Times editor, could eventually succeed the charismatic newsman in Los Angeles.

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