Family Business Magazine E-Newsletter
April 17, 2007

Contents
1.  Chandler family exits newspaper business after 120 years.
2.  Investor group advises N.Y. Times shareholders to withhold votes.
3.  Family president to step down from Sanyo.
4.  Business troubles add stress to family relationships.
5.  Integrate leadership development into your business strategy.





1.  Chandler family exits newspaper business after 120 years.  Earlier this month, the Chandler family agreed to sell its 20% stake in Tribune Co., publisher of the Los Angeles Times and other newspapers. A partnership led by investor San Zell agreed to buy all the stock and turn Tribune into a private company. The more than $1.6 billion pretax gain for the approximately 170 beneficiaries of the Chandler Trusts is a "considerable comedown from the value of their shares just three years ago, when Tribune stock was 36% higher," noted a recent article in the L.A. Times. The Chandlers, who held three seats on the company's 11-member board and were the largest single holder of Tribune stock, "instigated the sale and pushed for its conclusion," the paper reported. "With the core group of the family that propelled the newspaper to prominence having died or lost interest, the extended Chandler clan gradually lost its devotion to the media business," the article said. "The Chandlers acted like any other investor, seeking the maximum price for a declining asset." Robert Gottlieb, an Occidental College professor who wrote a 1977 history of the Times, told the paper, "The Chandlers had a kind of public trust obligation and by failing to look out more closely for the future of the newspaper, that writes an epitaph of a family." Alex Jones, director of Harvard's Shorenstein Center on the Press, Politics and Public Policy, said in the article, "The Chandler family seems to be interested mostly in maximizing its profits from a property that it seems to them could just as well have been a shoe factory." Tribune CEO Dennis J. FitzSimons "told associates that the family had become a far too disruptive force in the Chicago-based company's boardroom," the Times reported.  (Source: Los Angeles Times, April 3, 2007.)

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2.  Investor group advises N.Y. Times shareholders to withhold votes.  Institutional Shareholder Services, a shareholder advisory firm, recommended that investors of the New York Times Co. withhold their votes for four of the company's directors at the April 24 annual meeting to protest the Times' poor performance and dual-class ownership structure, according to articles in the Times and the Washington Post. ISS "said it no longer thinks the two-class stock structure works for the Times Co.," the Post article said. The firm's report urged shareholders to withhold their votes for the four directors elected by Class A investors, who hold more stock but less voting power than Class B shareholders do. "While we do not advocate removal of [the four] directors, we believe that a strong message to effect change is necessary," the ISS report said. The Post article noted that in 2004, 43% of investors in the Walt Disney Co. followed ISS's advice to withhold their votes for Disney chairman Michael D. Eisner, who resigned six months later.  (Sources: New York Times, Washington Post, April 6, 2007.)

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3.  Family president to step down from Sanyo.  Sanyo Electric Co. president Toshimasa Iue, grandson of the company founder, announced that he would leave his post after less than two years, ending an era of family leadership of the company, the Wall Street Journal reported. The article cited "disagreements with Goldman Sachs and the other financial firms, who have majority control over the company and have been pushing for faster changes." Iue's departure "opens the door to a sale of some units" of the company, which expects to post a loss of about $420 million this year, the Journal reported. According to the article, the 44-year-old Iue said at a news conference, "I was unable to gain the trust of the financial firms and investors that are crucial to Sanyo's recovery." The newspaper noted that "Since the company was founded 60 years ago as a bicycle-lamp maker, it has continued to add new products and services without getting rid of weak businesses.... It didn't want to shed businesses that were started by the revered founder, and it wanted to remain in mainstay domestic products.... Having vast portfolios allows companies to take profits from successful businesses to move into new growth businesses, but it also limits the resources that can be devoted to any one product."  (Source: Wall Street Journal, March 29, 2007.)

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4.  Business troubles add stress to family relationships.  "Family business conflict is heightened during times of economic challenge and transition," write Gary Brooks and Lynn D. Diamond in The Family Business Conflict Resolution Handbook. "Unresolved conflict is more prevalent and interpersonal issues heightened in an unstable financial environment as the reins of control tighten." How can you ensure that your family ties are strong enough to withstand business pressures? "Families who permit individuals to express their views, and whose members have learned to listen to each other, are better able to work through challenges and crises," Brooks and Diamond write. "In these families, relatives' roles are clear, their contribution visible and the support system ever-present, and therefore changes or transitions are better absorbed. Among members of families who fail to plan for change, there is more likely to be anxiety, intrafamily tension and conflict between family and non-family constituents. In environments where equilibrium is critical to minimizing conflict (where 'Don't rock the boat' is the motto), demands to change may be subverted, sabotaged or ignored. This is often the case in the troubled enterprise."



For more information on preventing conflict among family business stakeholders -- including parents and children, siblings, cousins, spouses and others -- see The Family Business Conflict Resolution Handbook. Learn more about the book and see the table of contents here.

All ten handbooks in the Family Business Handbook Series are on sale -- more than 25% off -- for a limited time only. Further discounts are offered for quantity orders. See our Bookstore Order Form for sale price information.

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5.  Integrate leadership development into your business strategy.  The time to plan for the future of a business is not when an illness strikes, a death occurs or someone from the next generation of family is knocking loudly on the door, notes Barry S. Cain in the current issue of Family Business Magazine. Cain, who is managing director of the Family Business Center at Blackman Kallick, a Chicago accounting and business advisory firm, notes that planning now for future "what ifs" allows time to identify and groom future leaders. He recommends development of a plan to integrate leadership development into your business strategy:


For more information, see "Don't pin all your hopes on one family successor" by Barry S. Cain in the Spring 2007 issue of Family Business Magazine. Visit our website for subscription information.

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