Sam Zell On Tribune Purchase: "I Made A Mistake"

In an interview with Bloomberg TV Wednesday, Sam Zell admitted today that his 2007 purchase of the Tribune Company was a "mistake" and likened the company to a "live virus."

"By definition if you bought something and it's now worth a great deal less, you made a mistake," Zell told Bloomberg TV Wednesday. "And I'm more than willing to say that I made a mistake. I was too optimistic in terms of the newspaper's ability to preserve its position."

Zell, a real estate billionaire, purchased the Tribune Company in a leveraged $8.2 billion transaction in December 2007. The company filed for bankruptcy in December 2008.

When asked about the possibility of a merger, Zell said he doubted anyone would be interested in partnering with a newspaper company.

"That's like asking someone in another business if they want to get vaccinated with a live virus," he said. "There's not a long list of people who want to buy newspaper companies today, and for sure it's not likely to be the case until we reach some kind of a new bottom as to what the newspaper's role is going to be in our society going forward."

Compiled by Danny Shea

Comments

[avraamjack]

Zell would make a good profit if he could implement this model:

One small monthly fee that gives access to all the quality journalistic content is the only model that will work.

The target market would generate many millions of subscriptions because it is the entire English Speaking World.

Each fee would be broken up to each journalistic organization based upon which sites the subscriber visited. It is better to get a small part of $6.99 a month times 100 million than it is to get all of nothing. .

[jneuman771]

Have read the Trib for years and the sad thing is how did Zell ever think he was going to service the debt at 8 billion dollars to begin with. Also, we in this country have been robbed of our newspapers because of this nonsense of merging. the Trib has a long tradition of quality in spite of their being a conservative paper. This has been a common thread accross this country the last few years of acquisitions and the consumer has lost on all fronts, newspapers, department stores etc., and we have lost the competition and variety we once had. Big is not better it is only big.

[BushBites]

Find out who passed the law allowing cross-media ownership in different markets.

I'm pretty sure you'll find it was Carol Mosely Braun at the behest of the Tribune Company.

That law has to be revisited so single companies are no longer allowed to control individual media markets.

[BushBites]

Ah....scratch that.

Looks like most of that stuff was grandfathered in.

She might have introduced some friendly legislation, but it was probably relatively minor.

http://projects.publicintegrity.org/telecom/search/profile.aspx?id=M000051

http://www.commondreams.org/archive/2008/05/30/9320

[Usama]

NO MORE REGULATION! NO MORE REGULATION! DOWN WITH TAXATION! It is absolutely correct to observe the economies of scale found big newspapers buying up smaller ones, consolidating, and liquidating. Competitors bought out opposition. Big sharks bought up newspapers to make them part of their investment portfolio. To no surprise, over the course of decades and constant mergers and acquisitions, the value of the newspaper is jeopardized. I live in Orlando where the sole newspaper, the Orlando Sentinel, is a Tribune product. They have gotten rid of reporters, including local beat , increased wire feeds, increased tabloid-type reporting. The quality of the journalism is essentially dropping each year. That's assuming that the paper was already a pillar of society, when in fact it has long been considered right-leaning and supportive of big business. Since Zell purchased Tribune, he has instituted all of these most drastic measures. Orlando could very likely be without a major paper and subject to being a mere pawn of corporate interests in Chicago or New York. Its a pathetic state of affairs. Not to mention that Orlando has a large military contractor market which hasnt had any major investigative reporting for over 10 years.

[johnnygoodwud]

rememeber zell is still sitting on the chicago cubs, wrigley field, and WGN,,,,,,,,he'll be just fine.

[BushBites]

There's a sucker born every minute.

You just happened to come along at the right time, Sam.

Do yourself a favor: Sell off the pieces and wash your hands of the thing.

[hulka37]

When it comes to national and international politics the Tribune has been reliably wrong on nearly everything.

[Marilyn Holt]

It's the leverage that will put his publications out of business.

[themodernleader]

The next bubble to bail out by the Obama bailout bunch is property bought by Sam Zell and sold at an incredible markup. Commerical properties are tanking after being repeatedly bought and sold, all with cheap money. Freddie Mac will require trillions before the depression is finished with its work in deleveraging this nation.
Cheap money and cheap regulation has resulted in no stability, no predictability and no jobs. Only bankruptcy and ruin.

[Ddayv825]

The news print , especially in Chicago, has failed in their responsibilities. It died with Mike Royko .
The Chicago Sun-Times is a joke. The cumbersome Tribune lost it's focus.
There is sooo much to be followed and investigated in Chicago that is of interest to Chicagoans
that people really need. Neither paper has proved to be capable of their duties to inform the public.
Good riddance to You.
I hope and expect that a real newspaper will emerge. There is a great opportunity , talent and desire
for a good newspaper.

[BushBites]

The Tribune "lost its focus" because it became part of the problem.

An organization with a cable channel, radio station, chain of TV stations and newspapers has important state and federal legislative priorities.

They couldn't piss off anybody whose vote they needed.

[themodernleader]

Un hinged finance over the past quarter century has gutted our once greatest most effective, efficient corporations in the world. Obama has forgotten, or never learned the transformation of American corporations by Wall Street Robbers. Otherwise, he would not be risking our Nations's future by refloating the greed and avarice still waiting to reassert it poisonous position in a failing, falling organization.

[Ddayv825]

What the F*** u talkin bout. You drunk ?

[shaaronie]

Laid off Tribune employee who couldn't be happier that Zell is feeling some of the pain he bestowed upon us. True, the papers were already in dire straits. I recall being asked to quote estimated readers instead of actual subscribers i.e. 260K Sunday subscribers turned into 1 million readers based on households who share the same paper? They also raised advertising rates when they should have been lowering them in light of sites like craigslist. Who would pay $40 for a 4 line ad to sell a $50 item when you can get the same ad for free? Well, it was good while it lasted.

[Ddayv825]

I'm a realtor- the advertising was waaayyyy toooo expensive. Plus , it was NOT effective.

[JailNeoconVicts]

The real virus here is the "greed virus" that infects predatory b@stards like Zell.

[bbuster]

I read in my Jim Hightower newsletter that the bloodsu**er used the employees' pension fund for his leveraged buy of the paper. *astard.

[Brian Ross - Huffpost Blogger]

The problem is not the newspaper. It's the paper. These companies are like music schools in the 1950s and 1960s that stuck their noses up at Rock n' Roll. Most companies, including the Tribune, disdained the Internet instead of embracing it, and slowly migrating their customers and advertisers to the new medium for the same words and images FOR A SUBSCRIPTION FEE. Nothing is free, not even good content written by professionals on the Internet.

This notion that any business can survive on the meager advertising revenue that these robber barons like Google and the other "advertising aggregators" dole out is a joke. I can advertise and get hundreds of thousands of impressions for $5.00 or less because so many models are based on someone clicking. Yet how many times that you have seen an ad in the paper have you jumped right out and bought the product? Called the 800 number? Not often.

Many ads are branding that builds a desire for the product OVER TIME. Papers could sell that space and concept. By letting Google and Co. pervert the advertising system on the web, rather than set up the rules themselves, these big papers have made their own survival 100% harder to achieve.

[arcanepsyche]

I agree completely. I would pay a small fee per month for original, well-written news and I think a lot of people feel the same way. The problem is, I'm not going to pay every month to the NYT and the Washington Post, AND the LA Times, AND the Seattle PI. AND every other paper I read stories out of. It gets too expensive once you add all those fees up for one month. And the small micro-fee idea completely destroys the user experience in my opinion.
I think the paper companies should have most of their content available to content providers (like Huffpo and Drudge) and make them pay a fee and then have the rest of their content "protected" in the sense that you must be a paying member of the paper's site to get that content.

Or something like that. I'm not really a professional on the subject.

It just seems so obvious that they're all needlessly running their companies into the ground when their only problem, the internet, is turning out to be their only solution.

[BluebirdofUnhappiness]

Bingo, but the aggregators aren't enamored of that idea, it would cut into the profits, donchya know

[avraamjack]

One small monthly fee that gives access to all the quality journalistic content is the only model that will work.

The target market would generate many millions of subscriptions because it is the entire English Speaking World.

Each fee would be broken up to each journalistic organization based upon which sites the subscriber visited.

It is better to get a small part of $6.99 a month times 100 million than it is to get all of nothing.
.

[KarateKid]

As a former executive with the Tribune Company, I could have told Zell what a rotten investment he was making. The company went downhill during the John Madigan/Don Grenesco regime. What a bunch of empty suits.

[WiltonDiary]

And, one of Zell's first mistakes was Randy Michaels, and then Carolyn Gilbert both radio (Jaycor and Clear Channell) people that know absolutely nothing about real news! Carolyn destroyed the music industry with her canned music and pay for play theory. Sorry this doesn' t work in the real non-Fox/Clear Channell/WestwoodOne news business.

[AuntLoonie]

Hiring empty suits must be common practice with Tribune, and we inherited quite of few of them unfortunately. We hired their deadwood (claiming the would do things differently) at a competing newspaper...which they subsequently sunk like a stone with their old school tactics.

[BushBites]

Some laid-off Tribster should write a book about this.

It's like the "smartest guys in the room" for media types.

[BushBites]

Seems like it was happening across the newspaper world.

It's a small margin business that a bunch of investors got into thinking it would always be a high-margin business.