Niccolo Machiavelli taught that "a prince ought to take care never to make an alliance with one more powerful than himself for the purpose of attacking others." The Chandler family, which published the Los Angeles Times for 63 years, might have benefited from a re-reading of "The Prince" before they sold the paper to Tribune Co. in 2000.


For decades, the Chandlers were the royal family of Southern California. Coverage in the Times set the regional agenda in politics, sports, philanthropy, economic development, and of course advertising media. But now the family heirs, in a vitriolic letter filed last week with the Securities and Exchange Commission, called Tribune management a failure and called for the breakup in which the newspaper business would be separated from TV or outright sale of the company by year's end. In either case, the Chandlers could lose all connection to the venerable Times, a direct violation of the wishes of the dynasty's founder, Harry Chandler, and a perfect illustration of Machiavellian wisdom.


The political philosopher's logic was that if a weak partner joins a strong one in an act of conquest, it results in either victory or defeat. If the alliance wins, the strong partner will take the spoils and might then turn its aggression on the weaker partner; if the alliance loses, the weak partner will fare the worst.


It's hard to accuse the Chandler family of weakness. Its trusts control 12.2 percent of Tribune's shares, worth about $1.2 billion, a stake so large that at most modern corporations they would call the shots. But at Tribune Co., the McCormick Foundation, established by childless Chicago Tribune publisher Robert McCormick, owns 13.6 percent of the stock. Moreover, Tribune chief executive Dennis FitzSimmons also chairs the McCormick Foundation and thus controls both the company and its largest shareholder.


Tribune and the Times joined forces to win the war of media consolidation, but the strategy never quite worked. The national advertising market shrank after the dot-com bust and the terrorist attacks in 2001, and the presumed synergy of owning both newspapers and TV stations in major cities never jelled. The day before the merger finalized in June 2000, Tribune shares closed at $37.06. Today, the twice-sized company's shares trade slightly below $32.


Not surprisingly, the partners are turning on each other. In a board vote to approve a $2.2 billion stock buy-back, the three Chandler directors dissented while the rest of the board approved it.


Under the tender offer, Tribune will borrow money to buy its own stock. The McCormick Foundation has reached a deal to sell about 25 percent of its holdings to the company in order to diversify its portfolio. If those transactions occur, the Chandlers will end up the biggest single shareholder. But the combination of the foundation and the corporation both controlled by the same people will together have more shares, plus a lot of cash.


According to a company statement, "this tender offer allows the company to return value to shareholders who may be seeking some liquidity." In other words, its purpose is to benefit the McCormick Foundation.


Machiavelli wrote "The Prince" to teach Italian nobles how to keep foreigners from taking over their country. How sad that nearly 500 years later, the royals of Los Angeles didn't heed the book's advice. The prospect of outsiders owning the Times has prompted local luminaries Ron Burkle, Eli Broad and Peter Ueberroth to express interest in buying the paper, but its fate lies in Tribune's hands.


Cheaper Snacks, Too


A new study confirms what couch potatoes guessed and movie studios have long feared: People prefer to watch movies on their home TV, not in a theater. Even when it's a movie they want to see, 49 percent of respondents said they usually wait to purchase or rent the DVD, according to a report from research firm Guideline Inc.


Only about one-fourth (22 percent) of consumers still go the cinema. "Guideline's study affirms that DVD spending and consumption remain strong with more people enjoying movies from the comfort of their homes than in the movie theater," said Vice President of Marketing Frank Dudley. "However, despite the many movie-viewing options available, a quarter of consumers still prefer the big screen."


Favorite reasons for preferring to go to the movie house include seeing images on the big screen (cited by 46 percent of respondents) and enjoying the active fun of getting out of the house (46 percent), the biggest motivation among young movie-watchers.


While theatrical box office declined slightly last year, DVD sales continue to grow. In 2004, theatrical box office totaled $9.5 billion according to the Motion Picture Association of America, while DVD sales and rentals added up to $21.2 billion, based on research by the Digital Entertainment Group.


Despite the rosy figures however, many technology and media insiders see the days of the DVD as numbered, expecting wireless or broadband delivery to render the discs obsolete within the decade.


Lynch Squad


Eccentric film director David Lynch has found a new way to turn celebrity into cash: Sell "voice tones, strange tones, music tones, and wallpapers for mobile phones" from his cinematic ouvre.


The products, hawked on the Web site www.DavidLynch.com, include tone selections from the animated TV series "Dumbland," sound effects from the film "Eraserhead" and some of Lynch's favorite sayings. The site launched in 2001 with the goal of offering an Internet video channel of Lynch's original work.


"Cell phones are a handheld theater," said Lynch. "I like to experiment with sound and music ringtones and this is an opportunity to create something different. It's like an experiment to see what we can put through the phone when it rings."


Staff reporter Joel Russell can be reached at jrussell@labusinessjournal.com or at (323) 549-5225, ext. 237.

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