CHICAGO (AP) — Tribune Co. remained silent as its board of directors reportedly met yesterday to vote on competing buyout offers for the media company.
Tribune’s 11-member board appeared to favor a $7.9 billion buyout offer by real estate mogul Sam Zell, the Chicago Tribune, which is owned by the media conglomerate, reported in its editions yesterday.
Chicago-based Tribune had set a Saturday deadline to announce a spinoff, buyout or reorganization.
The newspaper, citing an anonymous source, said Los Angeles billionaires Eli Broad and Ron Burkle had all but conceded a Zell victory.
Tribune spokesman Gary Weitman declined to comment yesterday. Zell spokeswoman Terry Holt, who has declined to comment throughout the buyout process, did not return a message seeking comment. Neither did a representatives for Mr. Broad and Mr. Burkle.
Members of a special committee of board members spent much of the week sifting through dueling offers for the nation’s second-largest newspaper publisher by circulation.
Mr. Broad and Mr. Burkle made an eleventh-hour bid for the company Thursday, offering $34 per share, or $8.2 billion, said a person familiar with the offer who asked to remain anonymous.
The Burkle-Broad bid includes $500 million in cash and would use an employee stock ownership plan (ESOP) to raise money for a buyout. It is thought that Mr. Zell proposed an investment of $300 million and would use an ESOP.
An ESOP resembles a profit-sharing plan, but allows the company to borrow money and repay loans using pretax dollars. Payments of both interest and principal are tax-deductible and would create more leverage for a buyer.
Tribune also is said to be considering a “self-help” plan that would involve spinning off the company’s broadcast division and borrowing money to pay a one-time cash dividend to shareholders.
Like most newspaper companies, Tribune has been struggling with declining profits, circulation and advertising revenues.
Last month, the company announced that revenue fell 3.4 percent in February as its publishing division continued to struggle.
In addition to the Chicago Tribune, the company owns nine daily newspapers, including the Los Angeles Times, as well as 23 TV stations and the Chicago Cubs baseball team.
Tribune’s share price fell about 50 percent from early 2004 until last spring and has languished at just above $30 for months, down from an all-time high of $60.88 in November 1999.
Mr. Zell, 65, has earned a reputation as an astute investor, making his fortune reviving moribund real estate. After a bidding war culminated in February, he sold his company, Equity Office, to the private equity firm Blackstone Group for $23 billion.
He has proposed using an ESOP as a way to lower the taxes of any sale but has said he had no plans to break up the company.
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