2 Southland billionaires make case to buy Tribune
After months of planning, two of Southern California’s wealthiest men flew to Chicago on Saturday and made their case for buying a large and potentially controlling stake in Tribune Co., which owns the Los Angeles Times, KTLA-TV Channel 5, the Chicago Cubs and other newspapers and TV stations.
Eli Broad and Ron Burkle spent the day in a conference room with a special committee of Tribune directors, who have been assigned to sell, break up or otherwise remake the fortunes of the company, which has struggled after losing customers and advertisers to the Internet.
The special committee also must review an offer by The Times’ founding family, which has proposed spinning off the TV stations and joining partners to buy Tribune’s 11 daily newspapers. That offer, by California’s Chandler family, could open the door to another Los Angeles potentate, entertainment mogul David Geffen, who has made a $2-billion offer for The Times alone.
Company insiders said they expected Tribune’s review of the alternatives to continue for weeks.
William A. Osborn, the company’s lead independent director, released a statement Saturday saying Tribune also would consider “actions the company may take alone.”
Tribune offered no other details, although Wall Street has speculated that management might try to keep shareholders happy by paying a special cash dividend or by spinning off the TV stations.
Tribune’s drawn-out auction seems only to have fueled the chatter in Los Angeles power circles about the fate of the city’s largest media organization.
Mayor Antonio Villaraigosa is said to be following the contest closely. A meeting of civic business powers last year on bringing a National Football League team to L.A. got sidetracked when participants began talking, instead, about the future of The Times.
Ruth Seymour, general manager for nearly 30 years of public radio station KCRW-FM (89.9), called the showdown for The Times “a defining moment” for the city.
Antonia Hernandez, president of the California Community Foundation, said that, while not everyone loves the idea of having Broad and Burkle as owners, she’s optimistic. “They’re ours,” she said, “and they’ve shown that they’re invested in this community.”
Publicly, the billionaires have had little to say about the ongoing auction, muted by confidentiality agreements with Tribune or a desire to avoid alienating the company’s management as the auction continues. A decision is expected by March 31.
But privately, the two camps have grown hostile toward each other. Broad and Burkle’s backers earlier argued that they would build a large ownership base for the company, taking on partners to ensure that no single owner had too great a voice at The Times. “Geffen just wants to do his own thing. He doesn’t want to be part of a team,” said one of the duo’s allies.
Geffen’s side, meanwhile, has questioned the sincerity of the Broad-Burkle offer, noting that the two billionaires have committed only $500 million of their money for all of Tribune, while Geffen has offered $2 billion in cash for The Times alone.
Years of familiarity have bred both respect and contempt among the threesome.
Geffen and Burkle reside nearly side-by-side in famed estates in the leafy neighborhood above the Beverly Hills Hotel.
Broad’s Richard Meier-designed home is just a stroll up the sand from Geffen’s sprawling place on Carbon Beach in Malibu. And the pair each own a highly acclaimed modern art collection.
They might concede each other’s business brilliance (Broad’s net worth is estimated at $5.8 billion and Geffen’s is $4.6 billion). But their disdain was sealed when they helped host the 2000 Democratic National Convention in Los Angeles. Each ponied up $1 million to help sponsor the event. But several participants said Broad infuriated Geffen by seizing control of the planning sessions.
“Eli did it his way,” said one participant, who asked not to be named lest he antagonize the two men. “Geffen just washed his hands of the whole thing earlier than he would have if he was treated the way he is used to being treated.”
The billionaires’ involvement in the region’s civic and cultural life unnerves those imagining how they might use their power if they took control of The Times.
“When The Times’ theater critic says the season at the Geffen Playhouse has been bad but last night’s production was abysmal, how does he react?” said former Times City Editor Bill Boyarsky, now a lecturer at the USC Annenberg School for Communication.
“Or what does Broad do when someone writes that the greatest beneficiary of the Grand Avenue project would be the muggers, who could operate freely in the new park near the Music Center?”
With the billionaires’ vast webs of personal, business and political allegiances, the newspaper’s journalists would constantly be running up against topics close to their hearts. To cite just a few examples: As a result of the sale of DreamWorks SKG’s live-action unit to Paramount, Geffen, one of its founders, has an employment contract with the studio. The paper wrote about Paramount parent Viacom Inc. 205 times in 2006.
Broad spends considerable time on Los Angeles Unified School District reforms and local politics -- subjects that appear virtually daily in the newspaper. Burkle’s Yucaipa Cos. has President Clinton on the payroll as a consultant and employed Villaraigosa in that capacity after his first, failed attempt to be elected mayor.
Many Times reporters and editors have said they welcome the idea of new owners, all of whom have vowed to stop cuts that have reduced the newspaper’s editorial staff to 940, from 1,200, over the last six years.
“The possibility of my newspaper being purchased by someone with no experience and no earthly idea what he’s doing is quickly becoming rather appealing,” Times columnist Steve Lopez wrote last summer.
But some at the paper thought that the potential of the magnates’ heavy hand was demonstrated last year, when word spread that Geffen was privately suggesting that he would fire business reporter Claudia Eller if he owned the paper. Eller has written critically about DreamWorks SKG, co-founded by Geffen, Steven Spielberg and Jeffrey Katzenberg.
All three of the billionaires have privately offered assurances that they wouldn’t meddle in news decisions. They have said that they are content with profits far below the roughly 20% margin The Times achieved last year.
However, the three men have diverged in their reasons for wanting the paper and their goals for its operation.
Geffen built his wealth by creating, and then selling, two record labels and then DreamWorks. Long before last week’s Golden Globe triumph of his pet project, the movie “Dreamgirls,” Geffen had told friends that, at 63, he was looking for a meaningful incarnation.
“He thinks remaking the paper and making it better would be a lot of fun and would help Los Angeles,” said one person familiar with Geffen’s thinking, who asked not to be named because the mogul is afraid of alienating Tribune executives.
A native of Brooklyn, N.Y., Geffen was not long out of high school when he launched a career as a talent agent that would lead him to work with some of the top acts in pop and rock -- Cher, Bob Dylan, the Eagles and Joni Mitchell.
“He is interested in quality in whatever he does,” the Geffen associate said. “He has said that Woolworth is a perfectly good business. But he would prefer to run Tiffany’s.”
The most specific thing Geffen has told associates is that he would like to enliven The Times’ opinion pages. He said he would pay handsomely to lure big names such as New York Times columnists Maureen Dowd and Thomas Friedman.
Broad built his $5.8-billion fortune at home-building giant Kaufman & Broad and with retirement and investment behemoth Sun America.
The Bronx-born son of Lithuanian immigrants has told friends that he would like to see more local coverage in The Times, although he also wants to maintain the paper’s ambitious national and foreign operations. Broad, 73, has echoed Times management pronouncements about the paper’s need to “own” entertainment coverage.
“He thinks that L.A. is the city of the 21st century and it needs a local paper to convey that kind of importance,” said a Broad advisor, who asked not to be named because he had not been authorized to speak on the record.
At 53, Burkle is the youngest of the trio. Only in that company would his estimated $2.5 billion net worth seem modest. The money he made mostly by buying and selling supermarket chains has allowed him to become one of the Democratic Party’s largest donors. Clinton sometimes flies aboard the billionaire’s Boeing 757.
Burkle has battled in the past to keep reporters from getting his divorce records, saying he wanted to protect his son’s privacy and safety. He has been known to sic his lawyer on publications he thought treated him unfairly. His most famous media imbroglio came last March, when he videotaped New York Post gossip writer Jared Paul Stern, who Burkle alleges tried to extort more than $200,000 from him to keep the mogul’s name out of Page Six. (Stern has not been charged.)
Burkle appears to be the most bullish of the trio about Tribune’s potential on the Internet. The Broad-Burkle partnership has touted the grocery executive’s position on the board of Yahoo and his stake in former Vice President Al Gore’s expanding cable channel as evidence that he understands media.
Further proof of the duo’s apparent resolve to own the paper came early in November.
Times Editor Dean Baquet had just announced his resignation after he refused to make staff cuts demanded by Tribune management.
The editor was still at the paper when the news broke, and first Broad, then Burkle, phoned to tell him not to take a new editing position too soon. The billionaires noted that they might be in a position to bring Baquet back to the paper.
Then a third call came through. It was Villaraigosa, who offered his support. Before getting off the phone, the mayor said people should make no mistake: Broad and Burkle were serious about buying The Times.
Times staff writer Christopher Reynolds and researcher John Beckham contributed to this report. Beckham reported from Chicago; Reynolds from Los Angeles.