The Tribune Company is a large American multimedia corporation based in Chicago, Illinois. It is the nation’s second-largest newspaper publisher, responsible for the Chicago Tribune, Los Angeles Times, Newsday, Hartford Courant, and the Baltimore Sun, among others. Through other subsidiaries, the Tribune Company also owns Tribune Broadcasting, Tribune Entertainment, Tribune Media Services, and the Chicago Cubs baseball team.
Tribune is a media industry leader reaching more than 80 percent of U.S. households through newspaper publishing, television and radio broadcasting and the Internet. Operations are concentrated in the nation’s major markets, including the top three, New York, Los Angeles and Chicago.
On April 2, 2007, Tribune accepted Zell’s bid — slightly more than $13 billion, including debt — to buy Tribune and take the company private with the aid of an employee stock-ownership plan. Zell’s bid loads the troubled company with a debt 10 times greater than its 2007 anticipated cash flow nearly twice that of the most highly leveraged newspaper companies
As a consequence, Zell has been forced to sell Tribune properties or take on partners to reduce debt. He already has spoken to entertainment mogul David Geffen, who wants to buy the Los Angeles Times or enter into a joint-venture partnership with Zell for control of the paper.
After Tribune accepted Zell’s bid, Zell said the current arrangement between newspapers and search engines “can last for a short time,” but not longer. “We’re going to see new formulas in the immediate [future] that reflect the cost benefit,” he said. The billionaire said newspapers could not economically sustain the practice of allowing their articles, photos and other content to be used free by other Internet news aggregators. “If all of the newspapers in America did not allow Google to steal their content, how profitable would Google be?” Zell said during the question period after his speech. “Not very.”
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On December 20, 2007, Zell took the company private. He plans to sell the Chicago Cubs, rename Wrigley Field, and sell the company’s 25 percent interest in Comcast Sports Net Chicago. On December 21, 2007 Zell became the Chairman and CEO of the Tribune Company.
After the bid Tribune Co. announced that new owner real estate mogul Sam Zell will have the right to veto any major business transactions, while the employees that own the majority of the company will have much less say.
The employee stock ownership plan (ESOP) will have control of the company when the deal goes through, but Zell will have a warrant to buy 40% of the company and will select two of the six directors. Zell will have veto power over all corporate moves. Zell insists that he plans to build Tribune Co., saying, “We didn’t do this deal to figure out what to get rid of.” Zell’s real estate practice has often included purchasing and flipping distressed assets. Zell seems to view Tribune Co. the same way, and thinks that the company needs to pay particular attention to where it invests. He says Tribune Co. needs to ask itself, “Are we trying to do too much? Are we trying to do too little? Should we allocate more capital to interactive, and if so, what do we get for it?”
Zell thinks that Tribune Co. will be out of it’s over $8.2million debt within 10 years. “I just think newspapers are extraordinary brands,” he says. “They’re world-famous, and I just don’t think the newspaper industry as a whole has figured out how to capitalize or maximize those values.”
Top Competitors for Tribune Co are
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Plans to purchase the Tribune Company. Zell seems confident:
“I’ve had offers on every single asset in the [Tribune] portfolio. Chuck Schumer”—the New York senator—“calls me, because he’s hustling for some people who want to buy Newsday. Baltimore people are calling, Allentown’s calling, Florida’s calling, and, in L.A., David Geffen and Eli Broad. So all I can tell you is that for a dead industry with no future there are an awful lot of schmucks who want to take it away from me!”
Zell on business:
Randy Michaels, whom Zell hired as Jacor’s C.E.O., recalled his first meeting with Zell, in 1993. He wanted to acquire a [radio] station in Denver that was losing money and could probably be bought cheaply, for perhaps four million dollars. He showed Zell “a deal book that looked like the Manhattan white pages. He said, ‘Oh, no! Put it on one piece of paper or you don’t understand it!’ He threw the book on the floor.” Michaels told Zell that he thought they could buy the station for the value of its license, or less. “He said, ‘Listen, business is easy.
