No. 2 shareholder might bid for Tribune Co.

CHICAGO -- Tribune Co.'s second-largest shareholder, a trust created by the company's former chairman, might make a bid for the publisher of The Sun, Los Angeles Times and Chicago Tribune.

Robert R. McCormick Tribune Foundation said in a statement yesterday that it hired buyout firm Blackstone Group to help decide whether to make an offer for the Chicago media giant or sell its 12 percent stake.


The trust joined forces with the Cantigny Foundation, a related entity that holds 1.4 percent of Tribune.

A "wide range of options" are being considered, said Joseph A. Hays, a spokesman for the McCormick Foundation, which was set up in 1955 after the death of McCormick. The foundation "must look at its options to protect and enhance the holdings it has," Hays said.


Hiring Blackstone splits the trusts from the company, which has tried unsuccessfully to attract a buyer since September.

The decision is a rare separation between Tribune and the McCormick Foundation, which is chaired by Tribune chief executive Dennis J. FitzSimons. Former and current Tribune executives also populate the foundation's board.

"This move signals a vote of no confidence in current Tribune management," wrote Alexia S. Quadrani, an analyst at Bear Stearns & Co., in a note to clients yesterday.

Tribune Co., which is expected to receive final bids Jan. 17, may still not be attracting as much investor interest as anticipated, wrote Quadrani, who rates Tribune shares "peer perform."

The McCormick and Cantigny trusts probably aren't interested in buying Tribune and may instead sell their stakes on the open market, Quadrani said, likely weighing on the shares.

Tribune shares fell 11 cents to $30.89 on the New York Stock Exchange yesterday, giving the company a market capitalization of $7.4 billion. They advanced 1.7 percent last year.

Gary Weitman, a Tribune spokesman, declined to comment and referred questions to the foundation. Blackstone spokesman John Ford declined to comment.

Tribune offered itself for sale in September under pressure from its largest shareholder, the Chandler family, which acquired its stake with the $7.5 billion sale of the Times Mirror Co. to Tribune in 2000. The Chandlers' interests, which now own 20 percent of Tribune stock, pushed for a breakup of the company after a 19 percent slump in the stock over five years.


The company in November pushed back a deadline for bids until this quarter after failing to generate offers that were high enough as newspaper circulation waned. The Chandlers reportedly are weighing a bid for the company in conjunction with private equity firms.

Tribune typically has been able to count on the McCormick Foundation to support its decisions. McCormick and the Cantigny Foundation backed the board's plan last year for a share buyback in the face of opposition from the Chandler trusts.

"They are clearly expressing frustration with their ability to get actual guidance from management, and that they may believe that their interests are starting to separate from the interests of management," said Thomas A. Russo, of Gardner Russo & Gardner in Lancaster, Pa.

The McCormick and Cantigny foundations were successor trusts to charities created after the death of McCormick, editor and publisher of the Chicago Tribune. Known as "the Colonel," McCormick ran Tribune from the 1920s until his death. He was the grandson of Tribune founder Joseph Medill.

The McCormick Foundation said directors James C. Dowdle and John W. Madigan, a former Tribune CEO, would form an advisory committee. The three other foundation directors, including FitzSimons, are currently employed by Tribune and won't participate in the decision making.