The Chandler Family escalated its attack on Tribune management over a planned stock buyback by threatening a proxy fight to oust company management.
In a harsh letter to the to Tribune's board, the Chandlers blasted a planned $2 billion stock buyback as misguided and ignoring major strategic problems inside the company.
The Chandlers, who became Tribune's second-largest shareholders when they sold their Times Mirror to Tribune in 2000, argue that the major motivation of that deal has failed.
The letter says that the basic strategic premise of the original deal was to leverage cross-ownership of newspapers and TV stations in New York, Los Angeles and Chicago to "provide a platform to produce above-industry performance for both its newspaper and broadcast assets and for strong growth in interactive and other media opportunities. That strategy has failed." Further, regulatory action to make some elements of the deal permanent “ownership of Times Mirror's Newsday and Los Angeles Times in markets where Tribune owned TV stations" hasn't' materialized.
Rather than buying back an enormous 25% of its equity, The Chandlers prefer to spin-off the TV stations, sell a piece to a private equity firm, and let the firm run the group.
Tribune management rejected the proposal, instead favoring the buyback. "The primary expressed objection to a third quarter spin-off of the broadcasting business appears to be the desire to wait to see how the new CW network performs," the letter says. "This is not a valid basis for inaction."