Bowing to the headlines

30 May 2006 By Rob Cox Follow @rob1cox

The US newspaper group will buy back a quarter of its stock. Finally it has recognized it’s not in a growth business. Others should follow. The irony, however, is that the shareholderfriendly buyback could make the company impervious to KnightRidder style activism.

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Tribune said it will launch a buyback of up to 75m shares, or about a quarter of its outstanding equity, because it views its stock as undervalued.

The publisher of the LA Times and Chicago Tribune said it will buy 53m in a modified "Dutch auction" at prices between $28 and $32.50. Another 12m may be repurchased on the open market and 10m more will be tendered by the McCormick Tribune Foundation.

The company will finance the $2bn of repurchases through debt and the sale of $500m of assets, which have not been identified. In addition, Tribune said it will seek to cut $200m of additional costs at the company over the next two years.

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