Tribune Investor Sues 8 Directors
A disgruntled investor has sued eight Tribune Co. directors, alleging they hurt the company’s shareholders by refusing to consider a sale of the Los Angeles Times and by pursuing a “suicide pill” stock repurchase program that has left the company saddled with $2.4 billion in additional debt.
Missouri investor Frank Garamella asked the U.S. District Court in Chicago to create an independent committee to review the media conglomerate’s strategy and to consider alternatives. The lawsuit also asks for compensatory and punitive damages.
A Tribune spokesman called the accusations meritless.
The legal action comes as Tribune’s board prepares to meet Thursday in Chicago to discuss how to resolve similar complaints by its largest shareholder, the Chandler family of California, whose three board representatives were not part of the suit because they opposed the stock buyback.
The lawsuit claims that Tribune’s $2.4-billion buyback of its stock this summer was a defensive action by company directors intent on preserving the current management.
“Instead of pursuing a course of action that would benefit the company,” the lawsuit states, directors saddled Tribune with a “risky and costly share repurchase program.”
“The share repurchase plan was designed to and has had the effect of creating a defensive barrier ... akin to a ‘suicide pill,’ that significantly decreases the likelihood that any potential acquirer will make an offer for the company,” the suit said.
The suit seeks class-action status in an attempt to represent other shareholders.
Meanwhile on Tuesday, more than 300 editorial employees at the Los Angeles Times signed a petition expressing their support for the paper’s publisher and editor, who have defied orders from their Tribune managers to make more staff cuts.
Employees inside The Times -- the single biggest holding of Tribune, which owns 10 other newspapers and 26 television stations -- planned to deliver their petitions to the Chicago parent company today.
Their statement came in response to reports that Tribune would seek to cut dozens of jobs from a newsroom of about 940, which has been reduced by more than 200 positions in the last six years.
The newsroom employees state that “further budget cuts will only serve to harm the integrity of an institution that many of us have labored to build over a number of years.”
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The Associated Press was used in compiling this report.
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