Media giant gets bigger/ Tribune will buy Times Mirror, adding

Michael White

LOS ANGELES - Tribune Co. will buy Times Mirror Co. in a $6.3 billion deal that will create a coast-to-coast media empire including the Los Angeles Times, the Chicago Tribune, 22 television stations and Internet news sites.

With the acquisition, Tribune Co. becomes the nation's third- largest newspaper company after Gannett Co. and Knight Ridder.

The deal ends the newspaper dynasty of Los Angeles' Chandler family, which has controlled the Times since 1882. The Chandlers initiated negotiations with Tribune Co.

It also appears to end a controversial experiment conducted by Times Mirror Chairman and Chief Executive Mark Willes to maximize profits by relaxing the traditional separation between news reporting and the business side of the company. Willes said he wasn't told of the buyout talks until two weeks ago and will leave the company once the deal is complete.

Times Mirror decided to sell because of the high price it could fetch in an era of rapid consolidation in which media companies believe that to stay profitable they must grow larger, analysts said.

The purchase illustrates Tribune Co.'s strategy of linking newspapers with its existing television operations to create local news and advertising powerhouses.

"I can't predict what other people are going to do," said Tribune Chairman, President and CEO John Madigan. "But if other people look at the future of the business as we have, they'll see that consolidation is the future."

With the acquisition, Tribune Co. would own newspapers and TV stations in the nation's three largest media markets, New York, Chicago and Los Angeles, as well as Hartford, Conn.

The new company would own 11 newspapers with total circulation of nearly 3.6 million, including Times Mirror's Newsday on Long Island, The Sun in Baltimore and The Hartford Courant, along with Tribune's The Orlando (Fla.) Sentinel. Among Tribune Co.'s 22 television holdings are superstation WGN-TV in Chicago, WPIX-TV in New York, KTLA-TV in Los Angeles, and WTIC-TV in Hartford - it claims to reach 75 percent of U.S. households through broadcast or cable TV.

Both companies operate news and information sites on the Internet, and the Tribune also owns the Chicago Cubs baseball team.

TV-newspaper combinations will become especially attractive if the Federal Communications Commission, as expected, repeals regulations that prohibit one company from owning a newspaper and TV station in the same market, said Peter Appert, an analyst with Deutsche Bank Alex. Brown. Now, such arrangements are allowed only by special exemption.

However, the FCC allows merging companies to continue cross- ownership until a TV station's license expires - giving Tribune Co. six years or more in its major markets, the company said.

"If they're betting correctly here, and the rules change, which I think is going to happen, they are going to be in an extremely advantageous position," Appert said.

In a conference call with reporters, Madigan predicted more consolidation in the newspaper industry.

"Advertisers are looking at more and more of getting mass media coverage on a national basis without killing themselves, make as few stops as they can, and I think companies like we are building will be favored in that environment," he said.

Willes, the departing Times Mirror chief, was a former vice chairman of General Mills hired in 1995 to boost the company's lagging profits and share price. He had no journalism experience.

His policy of dismantling "The Wall" between business and editorial was widely criticized by journalists. It resulted in a major embarrassment for the Times when Publisher Kathryn Downing signed an agreement with a new sports arena, the Staples Center, to share revenue from a special issue of Los Angeles Times Magazine devoted to the arena.

Journalists shun such arrangements, saying they create a conflict of interest. Anger over Willes' moves caused some journalists to tag him with names like "Captain Crunch" and "The Cereal Killer."

"It's pretty obvious that Mark Willes was brought in to make money," said Ed Guthman, a former Times national editor who now teaches journalism at the University of Southern California.

The Chandler family's interest in journalism has dwindled since Otis Chandler, the former publisher who built the Times into a respected national newspaper, left in 1980, Guthman said.

"The important thing for Los Angeles is not so much who owns it but what kind of paper they put out," Guthman said. "It may be a plus that they're selling."

Guthman's sentiments were echoed by some Times employees. Brett Levy, who works in the Times' information technology department, said employees embarrassed by the Staples Center deal might welcome the merger.

Tribune officials said they didn't plan to cut staff or change editorial direction at the Times Mirror papers.

News of the merger agreement, which values Times Mirror shares at twice their recent price, sent Times Mirror stock soaring nearly 79 percent, or $37.683/4, to $85.621/2 in heavy volume on the New York Stock Exchange. Tribune shares fell $6.371/2, or 17 percent, to $30.811/4, also on the NYSE.

Under the takeover, Times Mirror shareholders will have a choice of taking $95 per share in cash from Tribune Co. or exchanging each of their Times Mirror shares for 21/2 shares of Tribune Co. stock. The Tribune Co. also will assume about $1.4 billion in debt.

The deal, approved by Times Mirror directors late Sunday, still must be approved by shareholders.

- Headline by Gary Houy, The Gazette

Holdings

TIMES MIRROR CO.

Newspapers:

Los Angeles Times

Newsday, of Long Island

The (Baltimore) Sun

The Hartford Courant, of Connecticut

The Morning Call, of Allentown, Pa.

The Stamford Advocate, of Stamford, Conn.

GREENWICH TIME, OF GREENWICH, CONN.

Magazines:

Field & Stream

Popular Science

GOLF Magazine

Outdoor Life

Today's Homeowner

SKI Magazine

Skiing

Senior Golfer

Salt Water Sportsman

Yachting

Motor Boating & Sailing

TransWorld SNOWboarding

TransWorld SKATEboarding

Snowboard Life

Ride BMX

TransWorld SURF

Snap BMX

Internet:

LATimes.com

Nonmedia:

Jeppesen Sanderson Inc.: a provider of flight information services, including computerized flight planning, pilot training systems and weather and navigation data.

AchieveGlobal: provides employee training programs in customer service, sales and other areas.

Allen Communications: provides employee training software for large corporations.

TRIBUNE CO.

Newspapers:

Chicago Tribune

Sun-Sentinel, of South Florida

The Orlando Sentinel, of Orlando, Fla.

Daily Press, Hampton Roads, Va.

Television:

WPIX, New York

KTLA, Los Angeles

WGN, Chicago

WPHL, Philadelphia

WLVI, Boston

KDAF, Dallas

WBDC, Washington

WATL, Atlanta

KHWB, Houston

KCPQ, Seattle

KTWB, Seattle

WBZL, Miami-Fort Lauderdale, Fla.

KGWN, Denver

KTXL, Sacramento, Calif.

KSWB, San Diego

WXIN, Indianapolis

WTIC, Hartford and New Haven

WXMI, Grand Rapids, Mich.

WGNO, New Orleans

WNOL, New Orleans

WPMT, Harrisburg-Lancaster-Lebanon- York, Pa.

WEWB, Albany, N.Y.

CLTV News, Chicago (cable)

Central Florida News 13 (cable)

Radio:

WGN-AM, Chicago

The Hawk, Denver

KOSI-FM, Denver

Internet:

Chicagotribune.com

Tribune Co. is an investor in a variety of Internet companies, including America Online, Excite@Home, Food. com and Replay Networks.

Sports:

Chicago Cubs

Other:

Tribune Education: publishes core curriculum materials for schools and consumer education programs. Subsidiaries include Everyday Learning/Creative Publications Group, NTC/Contemporary Publishing Group, Landoll, Inc. and Ideal/Instructional Fair Publishing Group.

Copyright 2000
Provided by ProQuest Information and Learning Company. All rights Reserved.