Tribune Ready for Battle With Chandlers

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When Tribune Co. Chief Executive Dennis FitzSimons made the decision in late May to move ahead with a restructuring plan vehemently opposed by his second-largest shareholder, he took up a fight that may end up defining his career, according to the Chicago Tribune.

The private battle went public last week when California’s wealthy Chandler family made it known that Tribune had acted against its wishes. But FitzSimons is in no mood to back down. Sources close to the situation say, if anything, his position has hardened.

“We are not going to be intimidated,” said one source, expressing Tribune’s view. “I don’t think they know well who they are dealing with.”

To Tribune management, this week’s blowup is just one more insult from an $8.3 billion merger that analysts say has gone seriously awry. Since Tribune, the Chicago-based media company that owns the Chicago Tribune, acquired Times Mirror Co. in 2000, readership has fallen, circulation scandals have erupted, and, most damaging of all, Tribune got hit last year with a $1 billion tax bill related to a complex Times Mirror transaction that occurred before the merger. The Chandlers were the controlling shareholders of Times Mirror, the parent of the Los Angeles Times and other newspapers.

At issue today, according to sources on both sides of the battle, is who would bear further tax consequences from a multifaceted Tribune restructuring. FitzSimons is determined that it won’t be his company and its shareholders.

“We are not going to absorb any additional tax liability,” said the same source. “This is about a negotiation that went on for several months where the Chandlers didn’t get their way.”

Attempts to reach the three Chandler directors on Tribune’s board–Jeffrey Chandler, Roger Goodan and William Stinehart–at deadline were unsuccessful.

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