**Tribune board speaks

Two important developments. First, the Chandler partnerships that were complicating any effort to reshape the company have themselves been restructured - but not dissolved. The decision to restructure came on a unanimous vote (with Chandler family representatives abstaining). Second, the board has established an independent special committee "to oversee management's exploration of alternatives for creating additional value for shareholders," according to a news release. That process is to be completed at the end of the year.

**Update: Tribune's squabble with the Chandlers appears to be over, at least in public. "The Chandler Trusts are pleased that we reached an agreement that serves the interests of all Tribune shareholders. We will now work collaboratively with management and the board to build value for all shareholders," said Warren B. Williamson, chairman of the Chandler Trusts.

So what does it mean? Well, Tribune CEO Dennis FitzSimons said "the restructuring of these partnerships frees the company to move quickly to pursue strategic alternatives to further enhance shareholder value." That could mean most anything - from an outright leveraged buyout to selected asset sales to some sort of spinoff. By the way, there's no mention in the two-page release of the LAT problems - nor any indication of whether or to what extent it was brought up today.

The partnerships are a big deal because they carry major tax consequences for whatever it is that Tribune decides to do. They contain $3.5 billion in assets. But there would be other tax complications for the company, even if the Chandler partnerships were dissolved. That might explain today's decision to let the Chandlers maintain a 95 percent interest in the partnerships.

There's a good chance that at least some large shareholders will push for a major overhaul of the company. John Miller, senior VP for portfolio management at Ariel Capital Management, Tribune's fourth biggest shareholder, expressed support for a leveraged buyout. "Often times it's a much cleaner transaction," Miller told Reuters. "Management and the board can just spend a considerable amount of time ... concentrating on the long-term economics of the business as opposed to worrying whether or not they'll meet Wall Street estimates for the next quarter."

None of what happened today in Chicago suggests much interest in selling off the LAT itself - as many of us have been suspecting. It's a major revenue generator for Tribune Publishing and besides, there would be major tax hassles.

One big question is why were those partnerships just restructured instead of being dissolved. For the last few weeks, several media reports had both sides - the Chandler family and Tribune - close to deal. As noted by the Chicago Tribune last week:

The two partnerships, called TMCT I and TMCT II, were entered into by the Chandlers and Times Mirror Co. in 1997 and 1999, respectively. They allowed the Chandlers to diversify their Times Mirror holdings through a tax-free swap of family stock for company assets. However, the partnerships had to stay intact for seven years to preserve the tax benefits. In 2000, Tribune, which owns the Chicago Tribune, bought Times Mirror for $8.2 billion and inherited Times Mirror's 50 percent interest in the partnerships.

The seven-year date for TMCT II passed this month, freeing the two sides to craft an end to both agreements. But talks have stumbled over several issues, including the valuation of preferred stock in the partnerships and a tax liability of about $70 million Tribune would incur because of an IRS rule that kicked in when it bought Times Mirror.

Early AP story
Press release on jump
FitzSimons memo to Tribune employes on jump