Game On!

So, the Tribune completed its "debt recapitalization" this week. The stock is up near $32.50. It's all over. Now, management has prevailed and the Cubs won't be sold. All the space devoted to this topic going back to last October has been a waste.

The Cubs won't be sold, game over. Right?

Not even close.

The game for control of the Tribune and the potential freeing of the Cubs is just starting. Now it gets interesting!

See, the Tribune biggest stock holder is, as we now all know, the McCormick Trust. And the head of that trust is one Denis FitzSimons. He's also the CEO of Tribune Corp. And there's no way he's breaking up his company.

'Cept, he's not the largest stockholder anymore. See, in July, 10 million McCormick Trust shares are set to be repurchased. If that goes as planned, the Chandlers will control 15.4% of the stock, compared to the McCormick foundation's 13.1%.

And the Chandler's want the breakup value of the Company, estimated by many to be $46 per share.

Well, if you only control 15% of the stock and want to start a proxy fight, you need allies. As the Trib notes:

With a raft of Wall Street analysts pricing Tribune assets as high as $46 a share in various breakup scenarios, many of the company's largest shareholders appear to be anticipating a bigger catalyst to drive the stock price higher. Speculation has run the gamut from a spin-off of the company's 24 television stations to a sale of one or more of its 11 daily newspapers. A source close to the Chandlers said recently that the family has discussed its options with various cash-rich private-equity firms possibly interested in financing a deal.

Guess what. It appears the Chandler's have a few big allies:

Ariel Capital Management LLC, the company Mr. Rogers founded 23 years ago, boosted its Tribune stake by 52% in the two months ended May 31, making it the largest shareholder without ties to management or Los Angeles' Chandler family, which is calling for a breakup of Tribune.

Known as a patient long-term investor loyal to companies' management, Ariel has supported Tribune executives and their plan for a $2-billion share repurchase opposed by the Chandlers.

But Ariel recently has shown an activist side at other local companies in its $18-billion portfolio, agitating publicly for the sale of both Hewitt Associates Inc. and ServiceMaster Co. A similar dose of activism at Tribune could tip the balance of power toward the Chandlers, just as Ariel's current stance buttresses management.

"They're the tiebreaker," says executive recruiter Peter Crist, president of Crist Associates in Hinsdale. "It's what swings the deal."

We've paid close attention here at Ivy Chat to Ariel. They want to get the Cubs out of Trib holdings. In fact, they were an early source of the $46 per share breakup valuation.

It's also interesting to note that Ariel, which is in the red $55 million(!) on Trib stock, recently, "boosted its Tribune stake by 52% in the two months ended May 31." Why would they do that unless they figured to make a big upside. Well, I'm sure they made some back in the buyback, right? Nope:

Ariel is in the paradoxical situation of supporting the buyback while declining to participate in it

Why would they support the buyback but not sell? Simple. To reduce the amount of shares outstanding and make a proxy fight that much easier.

Beyond Ariel, the repurchase plan only netted 45 million shares, about 8 million fewer than planned. Why would so many people hold back? Simple. They figure that $32.50 per share is not as good as they'll get in the near future.

Some people tell you, point blank, the Cubs will not be sold. They're right.

At least until July. After that, anyone who tells you anything with certainty regarding the future of the Tribune Corp. is either wrong or stupid.