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

[OVERSITE]

zell is a crook


he used esop of employees


his buddies on wall street made a billion on deal


he should be in jail

[Lemeritus]

I'd be suprised if Zell put in a relative-nickel of his own money. As you say, OVERSITE, he used the ESOP (which actually made Tribune employees the owners of the Trib and Times -- sadly, those employees are now without jobs, benefits, and perhaps pensions). Before Zell purchased The Tribune Corp., and before Tribune bought up the LAT, the Los Angeles Times was operating at a 20% profit margin. Not enough, apparently, for the corporate geniuses. And now... dust in the wind. (I tip my hat to all those who perservere at both these once great papers.)

[baffy]

He put in very little of his own money. As usual the employees get screwed while his life does not change one iota.

[MJinCanada]

Thank you for mentioning that. He's screwed both the paper and the employees.

[kells1001]

This seems to compare to a homeowner who purchased or refinanced a home in December 2007. There is one small difference in that the homeowner has new bankruptcy legislation which requires them to make payments on a good portion of debt and put up their personal assets to remain in the home. They of course will not be able to purchase a home for quite some time if they move out.

It is quite feasible that Sam Zell and company will go bankrupt, buy some of these same insolvent newspaper assets in foreclosure at a reduced price under a new name called the New Chicago Tribune (Thanks to the fools who financed us.)

[bikerdude]

There is more at stake here than your gawdam ego Sam. You, personally, through you own self-serving greed and ineptitude have brought down one of the major news organizations in the world. Thanks for nothing you creep.

[Lemeritus]

And thank you, bikerdude! My sentiments exactly.

[lst440]

The newspaper was dying way before Zell came aboard. The reality is that the internet has changed everything. Online advertising rates aren't as high as what they used to charge for the print ads. And whenever they break a story, it will just get stolen by sites like this one.

Say what you want about Drudge but at least he links to the actual story, rather than trying to make it his own.

[ACMallet]

When I went out to my driveway to get my Sunday L.A. Times this week, I was shocked at how light it was .. so few ad pages.

I know the paper is already losing a ton of money, but it appears to be getting worse every week.

[bungalow]

There's an old story about a Sunday edition of the LAT that was thrown onto a driveway and it flattened the poor little poodle that couldn't get out of the way fast enough. These days a copy of the paper wouldn't hurt a fly. What a sad end to a once-great paper.

[hkc]

How can it be legal to borrow money for a takeover using the cash and revenue stream of target as collateral? This really puzzles me. This is the leveraged buyout game, borrow money to buy a company then after the deal goes through you burden the acquired company with the debt you used to buy them. Who wins? Only the bankers who collect their fees and interest. Recently they have been loosing capital when the company goes belly up but they are still first in line in bankrupcy court being secured creditors. The stockholders get wiped out.

So Sam Zell swung such a deal for the Chiccago Tribune, a previously profitable company, and burdened the company with so much debt that the debt service drives the company into bankrupcy. And Sam Zell walks away unscathed?

It shouldn't be legal.

[ramblingjohnny]

It call leveraging and yes it exactly why we have so many banks failing right now.

[BluebirdofUnhappiness]

And businesses unable to make money. Blood sukking vampires now own my company too. Waiting for the salary cuts (I've been already asked to float the idea for my contractors, which we use because we can't afford real employees) Add the decline in advertising, the f00ls who think anyone with a keyboard and internet access is the Oracle and there you go, no more newspapers. On the bright side my little local paper is making a ki!!ing on running all the (paid) forclosure notices, but I'm rarely interested in the news they cover.

[Mintcondition]

The tribune is a right-wing propaganda machine. I am glad.

[constitutional 1]

they cant go away fast enough

[Lemeritus]

"they" being who or what?

[kimk3]

Of course no one wants to buy a hugely over-leveraged and massively debt ridden newspaper company. And that's why the newspaper business is failing because people like Zell have been using these companies as their personal piggy banks instead of as a responsibility towards society.

[denlong]

this post is way too true

[wm1066]

Funny how its only newspapers in America that are having financial problems! I have yet to hear about any Asian papers or European papers going bankrupt.

[teddybobby]

SAM ZELL TRIED TO MAKE A KILLING BY BUYING THE TRIBUNE COMPANY FOR LITTLE CASH UPFRONT, LEVERAGING THE COMPANY WITH HUGE DEBT.
SAM ZELL IS ONE OF THE CENTRAL FIGURES IN THE DEMISE OF PRINT JOURNALISM IN OUR COUNTRY.