Tribune delays decision on asset sale to next year

Tribune Co. announced Tuesday that it would take longer than originally planned to review buyout proposals in the wake of what observers described as tepid bidding and investors’ demands for more detailed information about the company.

The Chicago-based media company -- owner of the Los Angeles Times and KTLA-TV Channel 5 -- now expects to complete its review sometime in the first quarter of next year rather than by the end of 2006, as it had announced.

Tribune Chief Executive Dennis J. FitzSimons said in a statement that the extra time was needed “to ensure thorough consideration of all proposals.” He added, “This process has generated strong interest from a number of parties.”

But others suggested that lukewarm bids had increased the chances that Tribune would be sold in parts or that it would be reduced in size and taken private by current management.

“I think Tribune management and the Chicago-centric directors of the company intend for it to come through this fairly whole,” veteran newspaper analyst John Morton said.

The Chandler family of California pushed Tribune into play in June, when its three representatives on the company’s board protested what they called “disastrous” management decisions and an expensive stock buyback plan.

Since Tribune began in September to explore alternatives, nonbinding indications of interest have been submitted by Los Angeles billionaires Eli Broad and Ron Burkle; the nation’s largest newspaper operator, Gannett Inc.; and several private equity firms and consortia.

The bids reportedly would offer Tribune shareholders little premium over recent share prices. The stock closed up 32 cents Tuesday at $32.10 before the company announced it had extended the auction.

“Clearly bids are not coming in as high as expected, so Tribune needs more time to figure out what to do,” said one person involved in the auction who asked not to be named because the process was confidential.

Representatives of some of the private investment firms are concerned about whether they could find enough cost cuts or new revenue sources to allow a resale of Tribune assets in the time frame they prefer.

“The question we have is: Is there an opportunity for cost cutting here or are things already being operated as tightly as they can be?” said an advisor to one of the investment firms who requested anonymity because he was not authorized to speak about the deal.

A Tribune executive said the additional time was needed because of “incredibly complex” issues surrounding a potential deal, such as taxes, antitrust limitations and uncertain future revenue. A would-be buyer of one Tribune property was more skeptical, saying it was likely that none of the bids would be high enough to warrant the sale of the whole company. “Then they’ll be forced to take the next step -- and that’s a sale of the individual assets,” predicted the potential bidder, who declined to be named for fear of alienating the company’s leaders.

Tribune has thus far been unwilling to field formal offers for individual properties, which include the Chicago Cubs, 10 daily papers and 23 TV stations.

james.rainey@latimes.com

Times staff writer Thomas S. Mulligan contributed to this report.