Two of the Southland’s wealthiest residents made a bid for one of the nation’s largest media companies Wednesday in an attempt to restore local ownership of the Los Angeles Times.
Billionaire philanthropist Eli Broad and Ron Burkle, who made his fortune in the supermarket industry, submitted an offer for Chicago-based Tribune Co. In addition to The Times, Tribune owns KTLA Channel 5, three dozen other newspapers and television stations and baseball’s Chicago Cubs.
The pair would not disclose details of their offer, which was made through companies they control. The bid was “competitive” with at least four offers made for Tribune last week, said a person who was familiar with the proposal but not authorized to discuss it publicly.
Broad and Burkle have repeatedly expressed interest in owning their hometown paper. Their main goal: reestablish local ownership of The Times, which has lost two publishers and two editors in as many years in battles with Tribune over staff cuts.
The company has been under pressure from its shareholders, including the Chandler family of California, to substantially increase its sagging stock price through a sale of all or some of its holdings.
The Broad-Burkle offer came a day after Times Editor Dean Baquet was ousted by Tribune executives and more than a week after the end of an initial round of bidding for the company, which produced lackluster proposals from investment firms.
The offers, none of which has been made public, amounted to little more than the company’s current market value. That is likely to frustrate the Chandlers and other shareholders.
News of the new bid boosted Tribune shares 2.7% on Wednesday, to $32.48, which values the company at $7.75 billion.
Observers of the bidding process were surprised that the local magnates made an offer for the entire company instead of just The Times, Tribune’s largest asset. Without additional details, experts said it was impossible to judge the viability of the offer or what the duo would do with Tribune’s 11 daily newspapers and 25 television stations.
“This is an interesting option for the Tribune Co. and for the Los Angeles Times,” said George Kieffer, a downtown lawyer who helped organize a group of civic activists that is lobbying Tribune to halt cuts of the paper’s editorial staff. “But what it means ultimately is just not clear at this point.”
Potential solo bid
Broad and Burkle have been working together for weeks while entertainment mogul David Geffen has been pondering a solo bid for The Times, whose weekday circulation of 776,000 is the fourth-largest in the nation. That has created tension between the two sides.
Geffen remains intensely interested in buying the newspaper, associates say, but he believes that Tribune may expect too high a price. The creator of Geffen Records and co-founder of the DreamWorks SKG studio has told these people that he thinks The Times is worth $1.75 billion to $2 billion.
Broad and Geffen’s mutual dislike has been well-known in the city’s power circles, and that animosity appears to be fueling a competition over The Times. Each side has questioned the seriousness of the other’s attempts to acquire the paper, say those who have spoken to the men independently.
Geffen’s backers tout his fortune, estimated by Forbes magazine at $4.6 billion, and suggest that a cash purchase would avoid the complications that come with partners and bank loans. Geffen often raises The Times in conversation, these people say, and talks about how he would improve the paper’s look and its coverage of the arts, among other things. He has said the would try to get New York Times star columnist Maureen Dowd to jump to the Los Angeles Times.
“He seems to care deeply about it and to be working at it,” said another investor, who has discussed The Times with Geffen.
Those pushing the Broad-Burkle proposal note their considerable means as well -- Forbes estimates Broad’s net worth at $5.8 billion, Burkle’s at $2.5 billion -- and Burkle’s previous interest in newspapers. He joined with a newspaper workers union this year in making an unsuccessful offer for papers being sold by McClatchy Co. of Sacramento.
Broad and Burkle are competing with at least four bids from investment firms: Bain Capital, Carlyle Group, a partnership of Texas Pacific Group and Thomas H. Lee Partners, and an alliance of Providence Equity Partners, Madison Dearborn Partners and Apollo Partners.
Tribune executives have expressed a reluctance to give up The Times, and it’s possible that Burkle and Broad believed their best hope was to buy the entire company.
Two newspaper executives who know Tribune Chief Executive Dennis J. FitzSimons said the Broad-Burkle bid did not alter their long-held belief that FitzSimons, working with a Tribune management team, will join outside investors in an attempt to take the company private.
There has been no evidence that Tribune management would attempt such a maneuver. But speculation has persisted, in part because former Tribune Chief Executive John W. Madigan is a partner at Madison Dearborn. (Madigan has taken a leave from the firm for the duration of the Tribune auction.)
“If I were handicapping it, I would still put that scenario at the top of the list,” a Tribune executive said of the possibility of management taking the company private. The executive asked not to be named because he was not authorized to talk about such a deal.
That has not quelled Los Angeles civic leaders’ interest in bringing The Times back under local ownership. The paper was founded 125 years ago and sold to Tribune in 2000 by the Chandler family, along with the rest of Times Mirror Co.
Broad has been outspoken about the need for such a change. After making his fortune in the home building industry and a second fortune in financial services, Broad has taken on a host of civic projects, such as improving the Los Angeles Unified School District and revitalizing downtown Los Angeles. Burkle was one of the nation’s top supermarket operators and now runs Yucaipa Cos., an investment firm that still has supermarket holdings and manages funds for public employee retirement programs.
Broad, Burkle and other prominent Angelenos have said that The Times would be less subject to staff reductions if it were locally owned. They have touted the idea of a large investor group buying the paper.
“If you are going to put five, six or more people together to own the paper, then no one person is in charge or has too much influence,” said an associate of the businessmen, who asked not to be identified because he was not authorized to discuss their bid.
Burkle and Broad have not identified other potential partners.
The seriousness of the various bidders should become evident soon; Tribune executives have said they would like to conclude a deal before the end of the year.
“Anyone can say there is an offer on the table,” said a Burkle associate who asked not to be named because he wasn’t authorized to speak on behalf of the magnate. “Maybe then [they] get there and it doesn’t happen. We’ll see.”