Tribune Went Around Willes on Deal
Mar. 15, 2000
LOS ANGELES (AP) _ The media company Tribune Co. tried to buy competitor Times Mirror Co. as early as last spring, but was rebuffed by managers and the board of directors, a former Times Mirror executive said Tuesday.
Eight months later in January, Tribune found a more welcome reception when it went around chief executive Mark Willes and approached the controlling Chandler family directly, said Tom Unterman, the former Times Mirror chief financial officer who is now advising the family.
``The first discussions were in January over lunch'' in Los Angeles, he said.
The Chandler family, which has operated the flagship Los Angeles Times for more than a century, controls about 65 percent of Times Mirror stock.
Merging with Tribune _ owner of the Chicago Tribune _ would create the nation's third-largest newspaper company with a combined circulation of 3.6 million.
With Times Mirror's other papers _ including New York's Newsday and The Sun of Baltimore _ and Tribune's 22 TV stations, magazines and Internet news sites, the combined company would also be a diversified coast-to-coast media empire.
The deal is worth about $6 billion in cash and stock. Tribune also will assume more than $1.3 billion in Times Mirror debt.
Unterman said he was part of a small group of people who knew of Tribune's initial offer last May, including Willes.
``Mark and I knew, but I don't think anybody else at Times Mirror knew,'' said Unterman, now partner and CEO of Rustic Canyon Group, a company that manages a venture capital fund.
They told the attorney for the Chandler Trust, and then Willes discussed it briefly in June with the board, which at the time chose not to pursue it, Unterman said. At the time, Times Mirror stock had more than doubled since the day Willes took over in June 1995, closing at more than $58 a share on the last day of trading in May.
Tribune Co. general counsel Crane Kenney confirmed that his company first approached Times Mirror through Willes last spring.
``Mr. Willes was not inclined to pursue it on behalf of the company,'' he said. ``I think in part he felt the Chandler Trust could not sell their interest.''
Willes has said he was surprised when he heard about the renewed overtures two weeks ago because he believed the paper could not be sold or merged under the terms of the Chandler family trust.
That impression made the offer last spring ``a difficult thing to pursue,'' Unterman said.
``There isn't language in the trust that forbids it (selling). There's a sense that they wouldn't do it,'' Unterman said. ``It required unanimity of all the trustees, and there were some trustees on record as saying they would never do it.''
It's not clear what changed their mind, but Willes has been unable to maintain growth in Times Mirror's share price.
After reaching its previous high of $72.63 last fall, Times Mirror stock plunged in value, closing below $48 a share on Friday. It soared after the deal became public and sold for at $88.25 on the New York Stock Exchange late Tuesday.
A message left for Times Mirror on Tuesday was not returned, and members of the Chandler family could not be reached for comment.
The Los Angeles Times reported Tuesday that Camilla Chandler Frost, one of seven trustees of the two Chandler Trusts, said many on the Times Mirror board were becoming ``disillusioned'' with Willes' leadership.
Some board members were unhappy with Willes' concentration on the company's core newspaper business, feeling Times Mirror needed to diversify into other media to remain profitable.
``We were not doing what we should be doing _ looking toward the future,'' Frost said. ``Everything we had that wasn't absolutely core was sold off.''
Unterman said the family opted to merge largely because of the Tribune Co.'s extensive holdings in electronic media. The decision had little, if anything, to do with the controversy over The Times' controversial arrangement with the Staples Center sports arena to share advertising revenue from a Times supplement on the center, he said.
``Diversification in media type was an issue in the Chandler family's mind and a plus as an investor,'' Unterman said. ``I think for every one of them, the No. 1, 2 and 3 reason was the fit and the strategic importance.''
The family will continue to have a say in the Times' fortunes. An expanded Tribune Co. board gives four seats to the Chandlers, who also will have 40 percent of the membership on a new Los Angeles Times board.
The Chandlers likely concluded that the time was right to sell because newspaper properties are in demand but might not be in the near future, said John Morton, president of a Silver Spring, Md., media consulting firm.
``There's greater risk that newspaper values will decline than they will rise,'' he said. ``How that turns out depends on how the Internet develops.''
On the Net: http://www.timesmirror.com