Extra, Extra! Tribune Buys Times Mirror

SAN FRANCISCO (03/15/2000) - In the never-ending quest for ever-bigger media monoliths, the Tribune Company is acquiring Times Mirror in a deal worth some $8 billion. Assuming the merger meets regulatory approval, it will create the nation's third-largest newspaper company. But like most media mergers these days, there's also a potentially valuable Internet gem at the center.

Although the companies are known primarily for flagship newspaper properties like the Chicago Tribune and the Los Angeles Times, they also own numerous Web properties that together will make one of the country's largest Net publishers.

"It's huge," boasts Jeff Scherb, Tribune's CTO and head of Tribune Interactive.

He says the combined company's unique visitors will nearly double, to 3.4 million unique visitors from 1.9 million unique visitors. That boost should help the company compete with national news sites such as Usatoday.com and CNN Interactive. While not nationally known as a major Internet player, the Tribune company has been actively involved in the Internet business for years.

In 1991, for example, Tribune bought a 9 percent stake in a company called Quantum Computer Services. Shortly after Tribune's $5 million check cleared, Quantum officially changed its name to America Online. Today, Tribune Interactive operates a few dozen Web sites and has invested in many others. The owned sites primarily are affiliates of Tribune's daily newspapers and TV stations. But its investments have been much more creative than that of most daily newspaper publishers, and include Net broadcaster iBlast and the memorial site Legacy.com.

Tribune also runs demographically tailored sites, such as Blackvoices.com and SiliconPrairie.com. Last year, the interactive unit had $21 million in revenues, and projects $30 million for the current year. Times Mirror has been less aggressive in the Internet space, but because it has newspapers in the nation's two largest markets - Long Island's Newsday and the L.A Times - its sites get impressive traffic. Times Mirror cites recent Media Metrix data showing that the L.A. Times site has 940,000 unique visitors. One area where Tribune's Internet strategy has yet to prove itself is in television-Net convergence. The company owns 22 TV stations. Its Web sites - like most local TV station sites - consist primarily of program notes.

The merger, which the companies hope to complete by the third quarter of 2000, might accelerate plans to spin off the combined companies' Web properties into a single unit. "We've been watching the [New York] Times Company digital progress very closely," Scherb says. "If we believe that Tribune shareholders are not providing the adequate financing to do necessary acquisitions, we'll take appropriate action." Tribune shares closed down $6.38, or 17.14 percent, to $30.81 today, while shares of Times Mirror jumped an astounding $37.69, or 78.62 percent, to $85.63.

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