Of Mergers, Chinese Walls and Captain Crunch

  • Share
  • Read Later
How do you kill three birds with one stone? Unload your media empire for $6.5 billion. That's what the Chandler family of Los Angeles has done in agreeing to merge the Times Mirror company — and its jewel, the L.A. Times — with media conglomerate Tribune Company, the parent of the Chicago Tribune. First, the move gives the Chandlers a quarter of the board in the third largest newspaper chain in the nation and entree to the coast-to-coast coverage provided by the Tribune Company's ambitious multimedia strategy (as well as owning newspapers and TV stations, Tribune is also one of the most developed Internet forces in the industry). Second, it allows the Chandlers, who own more than 60 percent of Times Mirror, to reap $95 per share for their holdings, a considerable increase from the $18 that a share fetched five years ago. And third, it rids them of the man responsible for much of that stock increase, Times Mirror chairman Mark Willes, who as well as being credited with reversing the fortunes of the L.A. Times in recent years also brought it into considerable disrepute.

Willes, imported five years ago from General Mills, soon found himself labeled variously as "Captain Crunch" and "The Cereal Killer" for his emphasis on downsizing. Upon taking over the company, he promptly closed two beloved newspapers, the Baltimore Evening Sun and New York Newsday. But he most drew the ire of media critics with his vow to take a "bazooka" to the "Chinese wall" that newspapers traditionally maintain to insulate the news department from the concerns of the business department. Matters came to a head last December, with the disclosure that the paper had split advertising profits from a special issue of its Sunday magazine with its subject, the Staples Center in downtown Los Angeles. In a long mea culpa, the paper later described the incident as "a flagrant violation of the paper's editorial independence" and, in an unprecedented move, the deal was criticized publicly by Otis Chandler, the former publisher and a major stockholder.

It appears to have been the last straw — according to his own newspaper, Mr. Willes was "totally surprised" when he learned of the negotiations with Tribune. Upon hearing the news, and as if to say "my work here is finished," Willes announced that he will leave the firm as soon as the merger is completed, which he expected to be in three to six months. Given his spectacular ability to please shareholders, he probably won't be without a job for long. However, it probably won't be at another newspaper company.