TRIBUNE TO TAKE OVER TIMES MIRROR

By: Staff Reports

CEO Mark Willes To Leave



Times Mirror’s stock price jumped 75.1% to 83 15/16 Monday morning on news of a takeover
by the Tribune Co.



Following a wave of media consolidation, the $6.4-billion deal would create a multimedia
powerhouse and the third largest U.S. newspaper company, with 3.6 million combined daily
circulation.



The combined company, to be called Tribune Co., would have annual revenues of more than $7
billion. It would include 11 daily newspapers, including the Los Angeles Times and Chicago
Tribune; 22 TV stations; top online sites in New York, Los Angeles, and Chicago; and four
radio stations.



Tribune’s stock fell 21.3% to 29 1/4 the morning of the announcement.



Tribune Chairman John W. Madigan would head the new company from Tribune’s Chicago
headquarters. Times Mirror CEO Mark Willes, who led the company for five years through
dramatic changes, said he will leave after the takeover is completed. Los Angeles Times
Publisher Kathryn Downing said she doesn’t intend to resign.



The takeover values Times Mirror at about 10.5 times EBITDA (earnings before interest, taxes,
depreciation, and amortization). Tribune expects the deal to initially dilute earnings by 16%
and then increase earnings per share growth by 1% to 2% within three years.



The deal is expected to be completed in the second or third quarter of 2000 and is subject to
approval of both companies’ shareholders. The Chandler family, Times Mirror’s largest group of
shareholders with 66% of the voting stock, said it would vote for the merger.



Following the deal, Tribune would have additional newspaper/TV station combinations in three
markets: New York, Los Angeles, and Hartford, Conn. The transaction may require a waiver from
the Federal Communications Commission if the ban on ownership of a newspaper and TV station in a
single market is not lifted by 2007, when those stations’ licenses will have expired.



The takeover marks the end of the Chandler family reign at the Los Angeles Times. The dynasty that
ran the paper for most of the past century would get four seats on a 16-member Tribune board and
40% of the membership of a new Los Angeles Times board, plus special rights including say over the
selection of the Times publisher, the Times reported. Times Mirror also owns a group of magazines
and a flight information division.



The deal also would mark the end of the sometimes tumultuous Willes period. A former marketer for
General Mills, he was brought in by the board to help pump up the stock price.



Willes deeply cut costs by slashing newspaper staff and closing New York Newsday and the Baltimore’s
Evening Sun, and streamlined the company by selling off assets. He also set dramatic circulation goals
and smashed down walls separating the news and business sides in search of new readers and revenues.
Wall Street rewarded him – the stock price tripled during his tenure.



But the price has been losing steam, and stock analysts have questioned where new growth would come
from. Circulation has improved only slightly and the new business-editorial cooperation led to
disaster last year when the Times broke a journalism taboo and entered a profit-sharing deal with a
source, the Staples Center sports arena.



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Staff reports















(c) Copyright 2000, Editor & Publisher

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