Dec 19, 2007 12:16 pm US/Central
Tribune CEO Stepping Down
Dennis FitzSimons To Leave Right After Zell Buyout
CHICAGO (AP) ―
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Tribune Company CEO Dennis FitzSimons is stepping down.
Chicago Tribune
Tribune Co. Chairman and CEO Dennis FitzSimons will step down as soon as the $8.2 billion buyout of the media conglomerate closes and will leave the company at the end of the year, Tribune said Wednesday.
The announcement came on the eve of the day Tribune hopes the transaction will formally close, following reports its lenders were giving last-minute scrutiny to the deal.
FitzSimons' eventual departure had been expected since real estate magnate Sam Zell agreed in April to lead the buyout and take Tribune private. Zell is to become chairman once the deal closes, with $315 million invested in the company and the right to buy 40 percent of its shares.
The Chicago Tribune, citing anonymous sources, reported that Zell also will become chief executive. The company made no mention of a successor to FitzSimons as CEO in its release, and company spokesman Gary Weitman declined comment.
FitzSimons, 57, will leave Tribune with more than $32 million in severance and stock holdings, based on an analysis of corporate disclosure statements filed by the company.
"It's the right time for this transition and for Tribune's 20,000 employees to hear a single voice from the top," he said in an e-mail to staff shortly before the announcement was made.
Tribune shares initially fell more than 6 percent on investors' nervousness about a potential last-minute snag in banks signing off on the buyout, based on a Chicago Tribune report that said the lenders were questioning executives and scouring company records. But the stock recovered following the announcement that FitzSimons is leaving, an apparent signal that the closing was on track.
Shares were down $1.18, or 3.5 percent, to $32.13 in afternoon trading. Zell's deal in April was based on a price of $34 a share.
FitzSimons has headed the nation's second-largest newspaper publisher for a turbulent five years, a period coinciding with a historic decline in the industry as readers and advertisers flee to the Internet. A former marketing and sales executive, he has been with Tribune since 1982 and was promoted to head of its broadcasting operations in 1994.
The company's stock, which was at $45.46 when he took over as CEO on Jan. 1, 2003, lost more than half its value after climbing above $50 in early 2004. Pressure from its then-largest shareholders -- the Chandler family, which sold Times Mirror Co. to Tribune in 2000 -- forced him to put the company up for sale last year at a time when the market for newspapers was tepid at best.
Billionaire Zell stepped in to forge a debt-heavy deal after no strong bids emerged, setting up a complex structure under which Tribune will be formally owned by an employee stock ownership plan.
Zell did not comment on the transaction or his plans through a spokeswoman but issued a statement praising FitzSimons.
"He helped build the company into one of the nation's premier media businesses, and has been instrumental in guiding Tribune to the closing of this historic transaction," he said.
Analysts said they doubt the banks which pledged to provide financing for the deal earlier this year could back out now, even with Tribune's revenues and financial performance in continuing decline. They said it appears the company has met the necessary benchmarks to qualify for the loans.
"It looks like everything should be in place, but there are complex contracts and the banks could look for negotiating leverage from various clauses," said Jake Newman, an analyst for the research firm CreditSights.
Tribune owns nine daily newspapers, including the Chicago Tribune and the Los Angeles Times, along with 23 television stations and the Chicago Cubs baseball team, which it has agreed to sell under terms set by Zell. The buyout will result in the publicly traded company becoming private.
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