Tribune Co. Heading for the Block?

PaidContent alerted me to two stories in the NY Times and the WSJ that point the way to a potential future breakup and/or outright sale of the company in the spirit of Knight Ridder. From the NY Times:

A boardroom feud at the Tribune Company escalated today as the Chandler family — the billionaire former owners of The Los Angeles Times and now major Tribune investors — called for a breakup of the company.

In a letter sent to the Tribune Company's board, trustees representing the Chandler family accused Tribune's management, led by its chairman and chief executive, Dennis J. FitzSimons, of implementing a failed strategy for melding local television stations and newspapers, and failing to keep pace with industry rivals in everything from revenue growth to Internet strategy.

Newspapers are suffering from low share prices because Wall Street analysts think they're not executing in their online strategies and their traditional products, though valuable, appear increasingly vulnerable to advertiser defections. There's some justification for this as some national advertisers (especially in the Autos category and some retailers) are starting to consider alternatives and/or spend ad dollars online.

Some of this thinking is overheated and some of it is real, i.e., consumers adopting the Internet and national advertisers starting to respond to that consumer behavior. But the consequences of the pressure on share values are grave, as we saw with the sale and dismantling of Knight Ridder.

I think we can expect some sort of shake up at Tribune Co. for sure. Exactly what form that takes remains to be seen.

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