Los Angeles Times Reporters File Class-Action Lawsuit Against Sam Zell, Tribune

Portfolio:

It would be hard to argue that Sam Zell really knows his way around the newspaper business. But does his floundering constitute grounds for legal action?

A group of former Los Angeles Times staffers say it does. Calling Zell's takeover of Tribune "a scam" and "a classic grift," they filed a class-action suit in federal court today, seeking to force Zell to hand over control of the company.

"This is basically a workers'-rights issue," says Dan Neil, a former car critic who won a Pulitzer Prize for his work at the Times. The suit hinges on what he and his fellow plaintiffs allege is Zell's misuse of the employee stock ownership plan through which Zell was able to acquire a controlling interest in Tribune for a mere $500 million. "The ESOP law was not written so companies could be taken over like this. It's an abuse of the ESOP structure and, I think, a fairly obvious effort to avoid paying taxes."

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Comments

[larry278]

Since I started using a computer, I don't want to use a newspaper again. The paper is old news by the time it's delivered or you buy it. If a paper doesn't have a site, often another site covers the same story. All media have a point of view & that view is evident in every story a media outlet prints or posts. When I use a computer I select a site which has the views that I have. A paper's point of view is used by editors to select which stories a paper will cover. I have a better chance of seeing stories which are news worthy but not used by a paper because it doesn't fit the paper's views of what is news. Sam Zell knows this. If he didn't think that he could make more money from folding a paper & selling the paper's real estate, he would not have bought the Trib & its papers. Even if the reporters win; they will have to rent or buy the real estate & hardware from Zell. Zell stands to make money & if the LA TIMES fails.
One can expect that Sam will fold any paper if he can sell the paper's real estate at a profit. Sam has the mind of a devoloper. That is how he makes money.
Reporters will learn to sell their skills & stories to web sites. If they don't their skills are obsolete & they must learn a new occupation. Capitalism is

[piquet]

this guy is the barry diller of print...

[totalliberal]

Using his employees own shares to take over the company? Class guy. Wonder which regulators came up with that idea being OK.

[dustino]

On a depressing news day, this is the best thing I've heard. People like Sam Zell have ruined America, weakened the role of a free press, and destroyed journalism all in the name of adding to their already embarrassing riches. I pray this goes to trial and Zell goes down hard. Every L.A. Times employee should sign on (can all Tribune companies get on board?)

[MilwaukeeMike]

Zell's take over of the Tribune Company, Murdoch's taking over of the WSJ and others, the defamation campaign against the NY Times and a lesser extent the Washington Post, the "buying off" of the AP News Editor, the Mooney Washington Times buying distressed UPI, and so forth, was never about making money. It was about controlling the news, the wires, and limiting dissent. Zell paid next to nothing (look at the private equity players that kicked in the reset (debt)--you'll be amazed) to take over the largest newspapers in 2 of the three top markets: Chicago and LA, as well as Baltimore, Orlando and Palm Beach (FLORIDA). Pretty important political places, don't ya think? This control includes Editorial content and wire feeds. He's a raider, and he'll destroy the independence and journalistic integrity (which was always the plan). In the process he'll make a nice little return at the expense of others.

[Marcee]

The Pulitzer-prize winning LA Times is a shadow of what it once was. Since the sale of the paper by the Chandler family, once careful stewards of the paper, and especially now with Zell's brand of ownership, the paper makes excellent cat box liner. What a loss for the city of Los Angeles! This suit is exciting news and leaves me hopeful. Eli Broad, philanthropist and founder of insurer SunAmerica, supermarket magnate Ronald Burkle, and entertainment industry mogul David Geffen once showed interest in buying the paper. If only this class action suit would motivate Zell to sell the paper to one of these investors. We want our world-class newspaper back.

[Sloopydrew]

Think LA Times is bad now? If you want to see where it's headed, check out it's horrendous Top of the Ticket blog. It's so far to the Right it makes Fox look fair. If I were a LA Times subscriber I'd cancel immediately and cite that blog as the reason.

[johnnygoodwud]

sam is hemmoraging $$$$ and about the only thing left to sell and make a profit are the chicago cubs. the way the economy is, that price is falling fast.

[SailFree]

That doesn't even look like Zell Miller! Oh, never mind...

[jsinclair]

I've appreciated the high quality of the LA Times for so many years, and agree with every word (and then some) that this suit alleges about Zell.

I hope these writers can prevail--that somehow in all this negative publicity Zell will throw in the towel and at least sell it to one of the prospective buyers who understands and values GOOD JOURNALISM. (Writers' control, of course, would be fantastic, but I just can't see that being the outcome here).

Thanks to you all for your efforts.

[useyourbrain]

The paper is toast -- about 600,000 circulation and that is giving it away with $100 home delivery for a year! And it's $.25 cents on the newstand.

The online version gets about 4x the amount of viewers so maybe that will replace the actual paper.

Still, it's terrible writing -- shortened, edited by computer. Their arts coverage is a joke. There is nothing to them except movies and music and all the articles are aimed at the executives, not the public. Their gallery reviews and art listings are non-existant. I don't know why the studios still spend a fortune on those full page ads when everyone goes to the web.

[JailNeoconVicts]

What's happened to the LA Times since John Carroll was forced out, along with the fine team he led, has been a disgrace. The Tribune was always a lousy, rule-from-Chicago operation, but under Zell it's turned the paper into a dispirited ghost town, barely able to function. I hope they empty his pockets--assuming he actually has any money, with the Zell/shell game he's been running--and put this once-great paper back on its feet.

[nellie]

If the reporters could actually take over ownership of the LA Times, perhaps real journalism would return to the City of Angels. What an excellent national trend this could turn into.

[LiberalDemIda]

I wonder if Robert Scheer will be able to add his name to the suit. Since the L.A. Times had fired him after the buy-out it had lost all credibility with me. A newspaper unable to print opposing views to radical right-wing journalists and editors is of no use to anyone.

I hope they bounce that guy out and win big. I'm getting the feeling the media are trying to come back from the abyss having seen right-wing slant on everything doesn't sell papers or advertising.

Obama/Biden '08/'12 the SMART People's Choice!

[bikerdude]

I hope they win big and leave Sam at the curb, barefoot and broke. He deserves at least that.