March 30 (Bloomberg) -- Tribune Co. suitors Ron Burkle and Eli Broad sweetened their $8.2 billion offer for the owner of the Chicago Tribune and Los Angeles Times, topping a bid by Sam Zell, a person familiar with the situation said.

Burkle and Broad, both billionaires from California, changed their $34 a share offer to include an employee stock ownership plan, said the person, who declined to be named because the discussions are confidential. Zell, a Chicago-based real-estate billionaire, made a similar bid at $33 a share, or $8 billion.

Tribune received the offer from Burkle and Broad yesterday, two days before the company's March 31 deadline. Directors had been poised to accept Zell's proposal, which was the only bid in contention after a six-month auction.

``This indicates maybe more interest than Wall Street thought,'' said Edward Atorino, managing director of Benchmark Co. in New York, who has a ``buy'' rating on the shares. ``Suddenly the bids are getting more respectable. We'll see if Zell comes back with another bid. Maybe we'll get into the mid- $30s.''

Tribune spokesman Gary Weitman declined to comment, saying he can't confirm communications with the board. Terry Holt, Zell's spokeswoman, had no comment. Broad spokeswoman Karen Denne declined to comment. Burkle spokesman Frank Quintero wasn't available.

Shares of Chicago-based Tribune, also owner of the Chicago Cubs baseball team and 23 television stations, rose 58 cents to $32.11 in New York Stock Exchange composite trading. The stock has risen 4.3 percent this year is up from $28.81 10 days ago. The Standard & Poor's 500 Publishing and Printing Index has fallen 5.5 percent this year.

Favoring Zell

Burkle, 54, and Broad, 73, made their offer after Tribune was poised to accept Zell's offer by the end of the week. Zell had pledged not to sell the company's TV stations, newspapers and Internet businesses including CareerBuilder Inc.

``It's getting a little more interesting,'' said Ken Doctor, an analyst at Burlingame, California-based OutSell Inc., which consults with media companies. ``Now we are getting close'' to $35 a share.

Burkle and Broad changed the structure of their offer, which had initially relied on the company taking on $11 billion of debt, to be more like Zell's. Both would use the $1.76 billion in Tribune's employee pension to create an employee stock ownership program that would help finance the purchase.

``From an employee point of view, given the plight of the newspaper industry, putting all the pension funds into an ESOP is worrisome,'' Doctor said.

Tribune already has $4 billion in long-term debt and $9 billion in liabilities. Zell offered to invest $300 million of his own money. Burkle and Broad are offering $500 million, the person said.

Default Swaps Jump

The perceived risk of owning Tribune's bonds rose to their highest on record, according to traders who bet on the company's creditworthiness.

Credit-default swaps based on $10 million of the company's bonds advanced $12,500 to $242,500, according to prices compiled by CMA Datavision.

The contracts, which are used to speculate on the company's ability to repay its debt, have surged $79,500 this week amid reports of that the company was close to accepting a Zell buyout, London-based CMA data show.

An increase indicates deterioration in the perception of credit quality.

Chandler Pressure

Chief Executive Officer Dennis FitzSimons put the company up for sale under pressure from the Chandler family, which became a shareholder with the 2000 sale of Times Mirror Co. to Tribune. The family is now the largest investor.

Zell's interest in Tribune didn't emerge until February, after a deadline for bids had passed. Offers from Broad and Burkle, as well as the Chandlers had fallen short of the company's goal.

The board then began working on a ``self-help'' plan to spin off the TV stations and borrow money to pay a special dividend to shareholders. That plan lost momentum when Tribune's operating results deteriorated.

The offers had disappointed newspaper analysts, who said a $33-a-share price for Tribune would indicate that shares of most publishers were too high. The price would be about 9.2 times Tribune's 2006 earnings before interest, taxes, depreciation and amortization. That's lower than the average 9.8 times earnings that competitors' stocks are fetching, according to Alexia Quadrani, an analyst at Bear Stearns Cos.

Tribune said this month that newspaper advertising fell 5.1 percent in February to $233 million, led by a 13 percent drop in classifieds.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: March 30, 2007 16:23 EDT