CHICAGO -- Tribune Co., responding to news coverage about the Chandler Trusts' opposition to its plan to buy back up to 75 million shares of its stock, said yesterday that the repurchase program was "approved by a clear majority" of its board of directors and it is "proceeding expeditiously" with the tender offer.
In a filing with the Securities and Exchange Commission late Tuesday, Tribune said eight directors approved the newspaper publisher's buyback, but that Jeffrey Chandler, Roger Goodan and William Stinehart Jr. of the Chandler Trusts had dissented.
The Chandler Trusts own 12.2 percent of Tribune's outstanding shares, the filing said.
"As has been our long-standing policy, we will continue to decline comment on private board discussions," Tribune said yesterday.
A Wall Street Journal article Wednesday indicated that the Chandler family's objections could lead other shareholders to question Tribune's strategy.
The Journal reported yesterday that Tribune's board has been considering spinning off its broadcasting division -- including the TV "superstation" WGN -- in a move that could lead to a sale of the entire company.
Tribune Co. owns such newspapers as the Chicago Tribune, Newsday, The Los Angeles Times and The Sun. It also owns 26 television stations and the Chicago Cubs baseball team, among other properties.
The company said last month that it expects to sell at least $500 million in certain broadcasting and publishing assets outside its top three markets. This week, it began that process with the sale of an Atlanta TV station to Gannett Co. for $180 million.
There is at least a 50-50 chance that Tribune Co. could be sold, says Ed Atorino, an analyst at Benchmark & Co.
Atorino says it makes sense for Tribune to sell the broadcast properties separately from its newspapers, so potential buyers would not be stymied by current federal rules that prohibit the ownership of a newspaper and a broadcast station in the same market. The company owns a newspaper and a TV station in the Chicago, Los Angeles, New York and Hartford, Conn., markets.
"If you sell the broadcast business, you eliminate those regulatory hurdles," Atorino said.
Newspaper publisher Knight Ridder's recent sale to McClatchy Co. was driven by Knight Ridder's two largest institutional shareholders, who demanded that the company do something to lift its flagging stock price. Tribune may now be facing similar pressures.
Newspaper companies have been hampered for the past two to three years by a choppy advertising environment that has weakened revenue, and a steady decline in circulation as more readers get their news online. Since 2003, the do-not-call registry has made it difficult for newspapers to solicit new readers. Meanwhile, the cost of newsprint keeps rising.
However, investors seem to be missing the bigger picture, says John Morton, a newspaper analyst.
"Unfortunately, they don't understand the Internet impact very well," he said. "Internet advertising revenues at these papers are growing 30 percent or more at all of these companies. And it's highly profitable revenue, much more so than newspaper print advertising revenue. And in the future, it's going to be what makes newspapers able to show continued earnings growth, and eventually the stock prices will recover."
In the meantime, though, "institutional investors are notoriously impatient," Morton said.
Tribune Co. stock rose $1.27 to close at $31.58 yesterday. It has gained 13.2 percent since the last trading day before its May 30 buyback announcement.