Times Mirror to Tighten Focus on Core Business, Recapitalize

Times Mirror Co. on Friday announced several strategic moves designed in part to further focus the company on its core publishing operations and strengthen its capital structure.

The Los Angeles-based media concern, publisher of the Los Angeles Times and other newspapers and magazines, announced financial and stock transactions, under a so-called recapitalization, that are expected to boost its earnings-per-share growth rate next year, cut its overall dividend outlays and enhance its ongoing stock-repurchase program.

The company also said it plans to sell the Sporting News newspaper and its related Internet site; AchieveGlobal, a professional training company; Allen Communication, a developer of software and training materials; and StayWell, a health-improvement information company.

“The anticipated sales will result in a highly focused company building on our core strengths in newspapers, Jeppesen Sanderson and magazines,” said Mark H. Willes, Times Mirror’s chairman, president and chief executive officer. Jeppesen Sanderson provides print and electronic flight-information services to the airline industry.

Times Mirror already has divested several other assets to focus on its core holdings, which boosted its cash level to $813 million as of June 30. The recapitalization and its impact on the company’s performance are “a very cost-effective way for us to redeploy our cash,” Willes said in an interview.

In turn, the recapitalization would enable trusts affiliated with the Chandler family, Times Mirror’s controlling stockholder, to diversify their holdings and perhaps boost the value of their remaining Times Mirror shares.

Indeed, in response to the announcement, Times Mirror’s common stock jumped $3.88 a share, to close at $61.50, in New York Stock Exchange composite trading.

The recapitalization involves a transaction between Times Mirror and the Chandler Trusts, and is similar to a transaction two years ago between the parties.

The Chandler Trusts currently own various Times Mirror common and preferred stocks that give them a combined 73% voting control of the company. The stake has risen that high because of Times Mirror’s aggressive share-repurchase program.

This transaction will lower the trusts’ voting stake to 65% and will create “a better balance” between the public’s and the Chandlers’ ownership, Willes said.

The actions also will slash Times Mirror’s dividend payments--based on current payout rates--by $9.9 million a year on common shares and $13.6 million on preferred shares.

Also, the moves will mean “an increase in next year’s earnings-per-share growth rate to the mid-teen levels,” Willes said, up from the single-digit growth rate in earnings from continuing operations that Times Mirror has reported in recent quarters. “We expect earnings-per-share growth will return to a normalized rate in 2001.” The recapitalization also will help “maximize the benefits of our stock-purchase plan,” he said.

Times Mirror and the Chandler Trusts plan to create a new company, TMCT II, and each will contribute assets worth $1.24 billion to the company, including common and preferred stocks, cash and interests in real estate. Part of the contribution from Times Mirror and its affiliates, for instance, will be $635 million in cash.

Each also will share in the cash flow, profits and losses from TMCT II and its investments, and the new company will give the Chandler Trusts a “very substantial way to diversify their holdings,” Willes said.

As a result, the number of Times Mirror common shares outstanding will drop 17%, to 59.5 million from 72 million. The lower figure will include 39.4 million Series A shares--the stock that’s publicly traded on the NYSE--and 20.1 million Series C shares. The Series C stock, which is controlled by the Chandler Trusts, does not trade publicly, carries superior voting rights and is convertible into the Series A shares.

Times Mirror also said that Thomas Unterman, its executive vice president and chief financial officer, will become a principal of the general partner of TMCT Ventures, a partnership being created to invest up to $500 million of the funds being contributed to TMCT II. He will remain Times Mirror’s chief financial officer until the end of this year.

Times Mirror also owns the Baltimore Sun, Newsday in New York and the Hartford (Conn.) Courant, among other newspapers. Its consumer magazines include Golf, Outdoor Life, Field & Stream and Popular Science.