The Abell Foundation - started by the families that long owned The Sun - is interested in joining with other local investors to buy the newspaper if a shareholder fight at its Chicago owner forces a sale.
Robert C. Embry Jr., president of the foundation, sees an opportunity to get The Sun back into local hands. The foundation has called the paper's owners - first Times Mirror Co. and then Tribune Co. - once a year for about a decade to see if it was for sale, and the answer was always no.
"I think it's important that The Sun be locally owned and be separate from a larger corporate conglomerate," Embry said yesterday. "I'm sure it would be of interest to a great many people. ... It's not important that we be involved with it, but it's important that The Sun aspire to its previous level of excellence, and I think that's more easily done when the paper's focused on quality rather than on return to stockholders."
The Chandler family, majority owner of the Los Angeles company that bought The Sun from the privately held A.S. Abell Co. in 1986, sold the operation to Tribune in 2000.
Representatives of the family's trusts said in a securities filing this week that they are unhappy with Tribune management and want major change. The Chandlers' suggestions include selling the company's television broadcasting division or some or all of its 11 daily newspapers, which include the Chicago Tribune, Los Angeles Times and Newsday.
Because the family is Tribune's second-largest shareholder, a major change is a real possibility, industry experts say. Tribune did not return calls seeking comment.
Already this week, several prominent California businessmen - including billionaire Ron Burkle and former baseball commissioner Peter V. Ueberroth - have expressed interest in buying the Los Angeles Times, that paper reported.
Tribune's travails are "eerie echoes" of the investor revolt that touched off the breakup of newspaper chain Knight Ridder Inc. in March, said Rem Rieder, editor of American Journalism Review.
A subsidiary of Baltimore's Legg Mason Inc. helped force the sale of Knight Ridder to McClatchy Co., which resold some of the papers, including The Philadelphia Inquirer.
The Chandler interests' letter came after Tribune announced last month that it would buy back about $2 billion in stock, a move designed to show its confidence in the company's long-term prospects.
Tribune's independent directors said in a statement yesterday that they stand behind the company's plan, which they said was "in the best interests of all Tribune shareholders." They accused the three Chandler directors of pushing a strategy primarily to ensure the restructuring of partnerships that the family members have with the company on terms more favorable to them.
But the buyback plan, which would require the company to borrow money, prompted credit-rating company Moody's Investors Service yesterday to downgrade Tribune's debt rating to noninvestment grade - commonly referred to as "junk."
"If they get enough support, they can probably force the board to do something," newspaper industry analyst John Morton said of the Chandler Trusts, which hold 12.2 percent of Tribune stock. "Once this sort of thing gets started, it's like a virus - you can stomp it out in one place, and it pops up someplace else. In effect, what the Chandlers have done is put the company into play."
The Abell Foundation, which reported about $200 million in assets at the end of last year, is not the only group watching closely. The Newspaper Guild said it is interested in forming a partnership to buy The Sun and possibly other Tribune newspapers.
The Guild, a union that represents some workers at The Sun, including many in the newsroom, bid unsuccessfully for some Knight Ridder properties with Burkle's Los Angeles investment firm Yucaipa Cos. LLC.
"We would be keenly interested in the Baltimore Sun for sure," said Linda K. Foley, international president of the Guild, who said Yucaipa remains open to pursuing future deals together. "We think employee ownership is something that should be considered."
Embry said a couple of individuals have called him to express interest in buying The Sun, but he declined to name them.
In the past he has talked informally to "a number of institutions" about the idea of forming a group to buy the newspaper and drew some interest. But, he said, "a lot turns on the asking price if indeed it is ever put up for sale."
T. Rowe Price Group Inc. says it was not one of the interested institutions. The Baltimore mutual fund company was the fourth-largest holder of Tribune stock in March, owning almost 5 percent of the company.
"That would be a far cry from what we do," said company spokesman Steve Norwitz, who did not know Price's position on the tug-of-war between Tribune and the Chandlers. "We have always stuck to our knitting, which is managing investments."
The Chandlers' Times Mirror Co. paid $600 million for The Sun, The Evening Sun - now closed - and two television stations in 1986. That year it sold the stations for $209 million.
What The Sun is worth now is an open question because Tribune does not disclose the paper's financial details. The Sun is a major metropolitan daily with 15 Pulitzer Prizes to its name, but its circulation is well below that of the combined papers in 1986 - a decline mirrored across the industry.
The Sun's daily circulation fell 3 percent from a year ago for the six months ending in March, to about 235,000, with about 400,000 on Sundays. It reaches additional readers with its Web site and has worked to beef up its offerings there.
The size of the newsroom staff has declined in recent years as Tribune, pressured by slumping circulation and stagnant advertising revenue, looked to cut costs - a familiar story in the industry.
"I think The Sun is a good newspaper, but I think there's no doubt that the financial cutbacks have reduced its scope," said Rieder, the American Journalism Review editor.
Bill Kovach, founding chairman of the Committee of Concerned Journalists, hopes the $562 million sale of The Philadelphia Inquirer and Philadelphia Daily News to a group of local investors signals an upturn in their fates. He would like to see more buyers that veer away from the model of ownership by big publicly traded companies.
"Different kinds of ownership that see journalism not just as a business but as a purpose ... could revitalize American journalism," Kovach said.