Real estate investor Sam Zell has bought Tribune Co., a media empire that includes the Chicago Tribune, Los Angeles Times and a chain of TV stations, for $8.2 billion US.

The Chicago Tribune tower in Chicago. Tribune Co. has accepted a buyout offer from real estate investor Sam Zell, one of a series of deals in the newspaper industry.
(E. Jason Wambsgans/Tribune/Associated Press)

Chicago-based Tribune had been seeking a buyer for more than six months as U.S. newspapers continue to suffer declining ad sales and readership.

Tribune is the second-biggest U.S. newspaper publisher after Gannett Co. and had been pressured by shareholders to find a way to boost stock prices.

Its board of directors also considered an offer from Los Angeles billionaires Eli Broad and Ron Burkle.

"These are clearly challenging times for all newspaper companies, but we're very pleased by today's announcement and plan to support the proposed transaction," said Charles Bobrinskoy, vice-chairman of Ariel Capital Management, which owns 6.1 per cent of Tribune shares.

Readership and profitability have been declining at U.S. newspapers, as readers turn to the internet. Newspapers such as the Tribune and the L.A.Times are investing heavily in internet coverage, but ad revenues from new media are not rising quickly enough.

The 160-year-old Chicago Tribune is the flagship of the company, which also owns the Orlando Sentinel and South Florida Sun-Sentinel.

It became a publicly traded company in 1983, and in 2000, it bought Times Mirror Co., owner of the Los Angeles Times, the Baltimore Sun and Newsday.

Bundles of the March 29 edition of the Chicago Tribune await delivery. Newspapers are losing readers and advertisers to the internet.
(E. Jason Wambsgans/Tribune/Associated Press)

There has been a rash of consolidation in the U.S. newspaper industry. In March 2006, McClatchy Co. of Sacramento bought Knight Ridder Inc., previously the second-largest chain by circulation, but that purchase sent its stock price lower.

The Chandler family, which owned the L.A. Times for more than a century, sold it in 2000 to Tribune. Their participation helped cement the Zell deal.

Regulators in Washington will have to review the deal because of Tribune's cross-ownership of TV stations and newspapers in the same media market.

"There will be fierce opposition to the sale and it will be used as a vehicle to underscore the fight over media consolidation at the FCC and in Congress," said Andy Schwartzman, president of Washington-based Media Access Project.

Tribune said it also plans to sell the Chicago Cubs baseball team at the end of this season and its 25 per cent interest in a regional cable sports network.

Zell, 65, made his fortune reviving moribund real estate and is said to be a quirky manager, who has never run a business with such a high public profile.

Zell plans to invest $315 million US in the deal and will eventually become chairman of the Chicago-based company's board when the buyout is complete sometime in the fourth quarter.

With files from the Associated Press