With Tribune Co. expected to emerge from bankruptcy soon, News Corp. Chairman and Chief Executive Rupert Murdoch is looking to acquire two of its trophy properties — the Los Angeles Times and the Chicago Tribune.

Tribune Co.'s debt holders — two investment firms and a bank — will become majority owners of the company after it exits bankruptcy, which could happen by year’s end. News Corp. executives have had preliminary talks with these debt holders about acquiring the Los Angeles Times and Chicago Tribune, according to two ranking News Corp. executives and others familiar with the situation.

These people cautioned that talks are in the early stages, and that a deal is by no means certain. Other potential buyers have expressed interest.

Murdoch heads the world’s largest news company, which includes the Wall Street Journal and the Times of London.


Acquiring the Los Angeles Times and the Chicago Tribune would give him strong footholds in the nation’s three largest media markets: New York, Los Angeles and Chicago.

Murdoch’s lieutenants say he has long wanted to buy The Times. On trips to Los Angeles, he is known to mark up the newspaper with a Sharpie pen to illustrate how he would design pages.

News Corp. and Tribune Co. have existing business ties. Tribune owns 23 television stations, including nine that carry the programming of News Corp.'s two broadcast networks. Tribune stations in San Diego, Sacramento and five other markets are Fox network affiliates.

The Los Angeles Times also prints more than 100,000 copies of the Wall Street Journal that are distributed in Southern California, and the Tribune prints the Journal in Chicago.


Still, regulatory concerns and potential rival bids could stand in the way of an acquisition by a Murdoch-controlled publishing company.

Federal Communications Commission rules prevent owners from owning a newspaper and TV stations in the same market. News Corp. owns two Fox stations in L.A. and two in Chicago.

The FCC has been considering eliminating the rule, and has granted exceptions in the past, including a waiver that has allowed Tribune to operate both KTLA-TV Channel 5 and the Los Angeles Times.

Murdoch isn’t the only one eyeing The Times, which by itself could fetch as much as $400 million, according to industry insiders.


Austin Beutner, the former venture capitalist and ex-deputy mayor of Los Angeles, said he has begun reaching out to civic-minded investors who would be willing to put up money to acquire the news organization.

“I would love to see The Times returned to local ownership … and provide a renewed commitment to serious journalism on issues that are important to Los Angeles and California,” he said.

Aaron Kushner, the former greeting card executive who bought the Orange County Register and six small papers this year for about $400 million, said Friday that he and the investors he assembled for that deal are also interested in The Times.

“We have tremendous respect for the L.A. Times. It is one of the few institutions in the country that has a tremendous history and heritage, and it is in an important market,” Kushner said. “There would be real challenges given what The Times has been going through … but we think there are enough synergies, on the advertising and content side, to make it a strategic fit.”


Doug Manchester, the San Diego real estate developer who last year bought the local Union Tribune newspaper for about $110million, may also be a potential bidder.

“We certainly are going to look at it,” Manchester told San Diego public radio station KPBS.

Tribune Co., News Corp. and Oaktree Capital Management, the leading debt holder, declined to provide any comment.

Newspapers are struggling amid shifting reader habits, migration to the Internet and a drop in advertising dollars. Newspapers collected nearly $21 billion in advertising last year, but that’s a drop of 56% from 2006.


Magazines are suffering too, with Newsweek announcing this week that it would end its print edition after nearly 80 years.

But Murdoch, 81, intends to stay in the business that forms the bedrock of his empire, which he grew from the single Australian newspaper he inherited in 1952 to the current $33-billion-a-year global media conglomerate.

“We must not, whatever we do, take our foot off the gas when it comes to our newspapers,” Murdoch said last month during a gathering of journalists in Australia. “Print will be with us for many, many years.”

Murdoch this summer announced plans to split News Corp. into two companies. The proposed breakup, which must be approved by News Corp. shareholders, was designed to mollify investors, who long have been sour on Murdoch’s newspaper holdings.


News Corp. shares have only recently recovered from a tumble that began five years ago when Murdoch paid $5 billion to buy the Wall Street Journal, which the company later conceded was worth less than half its purchase price. News Corp. shares have climbed 24% since the spinoff plan became public in June.

Murdoch has said the new company, which probably will be formed sometime next year, will start with cash for acquisitions and no debt to make it attractive to investors. News Corp. ended its last fiscal year with more than $9 billion in cash, and some of that would be transferred to the new publishing venture.

That venture would include the New York Post, HarperCollins book publishing, British newspapers, dozens of Australian newspapers, a coupon insert business, an educational materials business and News Corp.'s TV operations in Australia and New Zealand.

“Rupert Murdoch has an irrational love of newspapers,” veteran media analyst Alan Mutter said. “He is the last of the press barons … a red-blooded, swashbuckling, stop-the-presses kind of character.”


meg.james@latimes.com

Times staff writer Dawn C. Chmielewski contributed to this report.