David Geffen must have read the sale tag on the Los Angeles Times incorrectly because according to reports, the billionaire was about $1 billion short on his offer.

Tribune shareholders, including the influential Chandler family, believe the value of the L.A. Times is closer to $3 billion and have said any sale of the paper would have to be done as a tax-free transaction, sources said.

Taxes on a $3 billion sale of the L.A. Times could be as much as $900 million, some analysts estimate. But sources said the newspaper could be sold tax-free by engaging in a so-called "sponsored spin-off," in which Geffen or another buyer owns about half of the newspaper and public shareholders own the rest.