Zell Wins Tribune In Bid to Revive A Media Empire

ZELL WINS TRIBUNE IN BID TO REVIVE A MEDIA EMPIRE
[SOURCE: Wall Street Journal 4/3, AUTHOR: Sarah Ellison sarah.ellison@wsj.com]
On April 2, the Chicago Tribune, Los Angeles Times, several other newspapers and 23 television stations fell into the hands of an unlikely newspaper baron, iconoclastic real-estate magnate Sam Zell, whose bid had come at the eleventh hour. Mr. Zell's plan suggests that he has some degree of confidence in the beleaguered newspaper business. He has told people he sees promise in the company's Internet assets. But the deal leaves many unanswered questions about the future of Tribune. company's board accepted a revised $34-dollar-a-share proposal from Mr. Zell to take the company private. The complex deal is structured around an employee stock-ownership plan, or ESOP. When it is completed, most of the company's shares will be held by Tribune employees. Although he has no background in journalism, Mr. Zell will become chairman of a media company that will be carrying a heavy debt load, which will force its new owners to face tough questions. How Mr. Zell will be received remains to be seen. He has said he doesn't intend to break up the company, but Tribune said it will sell off the Chicago Cubs after the completion of the current baseball season. One person who has spoken to Mr. Zell about his plans says he is likely to seek further budget cuts, a move that will likely be unpopular with staff, particularly at the Los Angeles Times, where the editor and publisher both stepped down last year to protest budget cuts ordered by Tribune's headquarters.
http://online.wsj.com/article_print/SB117551431653956734.html
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WHAT THE TRIBUNE SALE MEANS
[SOURCE: Broadcasting&Cable, AUTHOR: Paige Albiniak]
Sam Zell’s $8.2 billion purchase of the troubled Tribune Co. is going to put more pressure to perform than ever on the company’s 23 TV stations. While the TV stations represent only one-quarter of the company’s total revenue, they turn in healthier cash flows than Tribune’s 11 newspapers. And their profit margins range in the low- to mid- 30% range, while the papers hover around 20%. The company is going to depend on those cash flows to handle the huge amount of debt -- between $12 billion and $13 billion, up from $5 billion in existing debt -- Tribune is taking on to complete this deal. “They don't have a large margin of error when they take on that much leverage,” says James Goss, senior investment analyst with Chicago-based Barrington Research. “But their cash flows and revenue base, which people presume are just falling off the cliff, are really not. They've just leveled off.” Pressure to improve efficiencies at the stations, and thus throw off more cash, may result in layoffs, for which employees at Tribune’s Los Angeles Times have been bracing for months now. Tribune executives say they do not expect widespread cutbacks, but that’s going to depend on TV-station performance in coming months.
http://www.broadcastingcable.com/article/CA6431678.html
* Zell Gets Veto Power at Tribune
although Sam Zell will control only a minority of the board, he will have the right to veto any major transactions. The employees, who will get company shares but who will no longer get 401(k) contributions from Tribune, will have far less control.
http://www.nytimes.com/2007/04/06/business/media/06tribune.html

PAPERS, WEB FIRMS NEED 'A NEW DEAL,' ZELL SAYS
[SOURCE: Los Angeles Times 4/6, AUTHOR: David Streitfeld david.streitfeld@latimes.com]
Sam Zell, who agreed to a takeover this week of Tribune Co., came to the heart of Silicon Valley on Thursday evening and said there needed to be "a new deal and new formulas" between newspapers and Internet companies. Journalists produce the news that search engines such as Yahoo Inc. and Google Inc. seamlessly and freely make available to anyone with a computer, Zell said during a presentation on corporate governance at Stanford University. "If all the newspapers in America did not allow Google to steal their content for nothing, what would Google do, and how profitable would Google be?" the Chicago real estate maverick mused. His answer: Not very. He said he had been in the news business for less than a week, so he wasn't a genius at it yet. Told that many people didn't think that newspapers were a good business because of declining circulation and falling ad revenues, he fired back: "A lot of people didn't think the railcar business was a good investment. I made a quarter-billion dollars. A lot of people didn't think container leasing was a good investment. I made a half-billion. Should I go on?" "The Tribune deal, no matter what happens, is not going to change my life," Zell said. "But it's a fascinating challenge. And it's even more of a challenge when I see other people haven't been successful in figuring it out."
http://www.latimes.com/business/printedition/la-fi-zell6apr06,1,2129698....
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ZELL IN TALKS WITH GEFFEN ON DEAL FOR LA TIMES
[SOURCE: Washington Post 4/5, AUTHOR: Frank Ahrens]
Chicago real estate mogul Samuel Zell, whose $13.2 billion bid for the Tribune Co. media empire was accepted April 2, has already talked to entertainment mogul David Geffen about a possible deal for the Los Angeles Times and dismissed a pair of rival bidders as backstabbers. Zell said Eli Broad and Ronald Burkle, Southern California billionaires who also bid on Tribune, approached him late in the process about forming a partnership to buy the company. Zell said in yesterday's Chicago Tribune that he put them off until his bid was accepted. Broad and Burkle then complained in a letter to the Tribune board that Zell's bid got preferential treatment over their original offer. "If somebody calls me and says 'I want to be a partner' and the next day tries to stick a knife in my back, tell me again why I would want to do business with him?" Zell told the Tribune.
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/04/AR200704...
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* FCC member raises potential issue for Tribune sale
FCC Commissioner Robert McDowell is raising some additional worries for Tribune Co. in its sale to Sam Zell, saying the FCC shouldn't be granting waivers to its newspaper-broadcast cross ownership ban just because it's reviewing media ownership rules.
http://chicagobusiness.com/cgi-bin/news.pl?rssFeed=news&id=24498
* FCC could force company breakup
http://www.chicagotribune.com/business/chi-0704050146apr05,0,1569133.sto...