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Sam Zell's Deal from Hell (Dinosaur Media DeathWatch™)
Business Week ^ | July 30, 2008 | Emily Thornton, Michael Arndt and Ronald Grover

Posted on 07/30/2008 3:00:27 PM PDT by abb

The turnaround maven should have seen the problems ahead in the newspaper industry. His blind side may have cost Tribune Co. its very life

"It's the deal from hell," says Sam Zell, never one to mince words. "And it will continue to be the deal from hell until we turn it around." Zell is talking, of course, about his $8.5 billion purchase of Tribune Co. in December 2007, a tran­saction that's shaping up to be one of the most disastrous the media world has ever seen. Zell is a real estate tycoon, and his plush office reflects his decades of success: Giant even by CEO standards, it brims with paintings and statues and looks out on a private garden above the Chicago River. One item that stands out among the clutter is an upside-down map of the world, a prop presumably intended to convince visitors that they're in the presence of an iconoclast. Zell, 66 and fiercely devoted to blue jeans, has burnished that image carefully over the years.

Were it not for the Tribune debacle, there would be no reason to question Zell's brilliance as a businessman. He describes himself, immodestly, as a "grave dancer" who buys properties at fire-sale prices and resells them for a profit. His biggest coup came in late 2006, when he orchestrated a bidding war for his real estate trust, Equity Office Properties. EOP eventually went to Blackstone Group ("BX") for $39 billion, in what was then the biggest leveraged buyout in history. Weeks later he thumbed his nose at the dealmaking world with a satirical song, posted on the Web, that predicted the credit crunch soon to sweep the globe. It seemed he could do no wrong.

Then Zell bought Tribune and stumbled into a calamity of plunging sales and rising costs.

snip

(Excerpt) Read more at businessweek.com ...


TOPICS: Business/Economy; Culture/Society; Extended News; News/Current Events
KEYWORDS: advertising; dbm; newspapers; tribune
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1 posted on 07/30/2008 3:00:27 PM PDT by abb
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To: 04-Bravo; aimhigh; andyandval; Arizona Carolyn; backhoe; Bahbah; bert; bilhosty; Caipirabob; ...

ping


2 posted on 07/30/2008 3:01:08 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: abb
To Michaels, the moves are a matter of survival. "An animal with his leg caught in a trap will chew it off," he explains. "At the moment, we're doing some leg-chewing." Zell, meanwhile, has no patience for what he views as the pomposity of journalists casting their profession as some kind of sacred trust. "If you want to tell people what they should want, become a professor," he says. "But if you're in the newspaper business—and I emphasize the word business—then you have to respond to what your customer wants."
3 posted on 07/30/2008 3:02:07 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: abb
One item that stands out among the clutter is an upside-down map of the world, a prop presumably intended to convince visitors that they're in the presence of an iconoclast.

I had a teacher who did that, but it was because he was Argentinian and was sick of his part of the globe being on the bottom.
4 posted on 07/30/2008 3:05:45 PM PDT by Dr. Sivana (There is no salvation in politics)
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To: abb
He describes himself, immodestly, as a "grave dancer" who buys properties at fire-sale prices and resells them for a profit.

Sometimes things are at fire-sale prices because they are on fire.


5 posted on 07/30/2008 3:07:18 PM PDT by KarlInOhio (Whale oil: the renewable biofuel for the 21st century.)
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To: abb

Maybe Sam will shoot the Sun Sentinel.


6 posted on 07/30/2008 3:08:18 PM PDT by clintonh8r (Fire mission!)
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To: abb

Schadenfreude, sweet schadenfreude.


7 posted on 07/30/2008 3:08:32 PM PDT by TheWasteLand
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To: abb

Zell is a schmuck. He became so convinced of his brilliance that he believed he could catch the proverbial falling knife.

Obviously, he didn’t believe that the basic law about regression to the mean could ever apply to him. Brilliant deal maker that he is. Was.

Too bad. Time for him to move to Boca Raton with the rest of the has-beens.


8 posted on 07/30/2008 3:10:02 PM PDT by surely_you_jest ( Obamarrhoids are a pain in the ass . . . .)
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To: Toddsterpatriot

I still think he’ll pull it out.


9 posted on 07/30/2008 3:10:37 PM PDT by 1rudeboy
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To: 1rudeboy

It depends on what the definition of “it” is....


10 posted on 07/30/2008 3:12:57 PM PDT by clintonh8r (Fire mission!)
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To: clintonh8r

it = profit


11 posted on 07/30/2008 3:15:34 PM PDT by 1rudeboy
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To: abb
Zell has the newspaper industry down pat:

"The industry has lost its credibility" because of biased, boring, and self-indulgent articles.

12 posted on 07/30/2008 3:17:01 PM PDT by capt. norm (Never underestimate the power of very stupid people in large groups.)
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To: 1rudeboy

OK...so long as it isn’t part of Sam’s anatomy.....


13 posted on 07/30/2008 3:18:07 PM PDT by clintonh8r (Fire mission!)
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To: 1rudeboy
I still think he’ll pull it out.

I can't see it. Paper information distribution systems (formerly called 'newspapers') just can no longer compete with interactive electronic information distribution. Advertisers pay for eyeballs and they are all migrating to the internet.

14 posted on 07/30/2008 3:24:27 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: abb

I know that’s the conventional wisdom, but I ignore ads on the web even more than I ignore print and TV ads. I must be in the minority.


15 posted on 07/30/2008 3:28:19 PM PDT by clintonh8r (Fire mission!)
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To: clintonh8r

http://en.wikipedia.org/wiki/John_Wanamaker

John Wanamaker (July 11, 1838 – December 12, 1922) was a United States merchant, religious leader, civic and political figure, considered the father of modern advertising.

Popular saying illustrating how difficult it was to reach potential customers using traditional advertising is attributed to John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”


16 posted on 07/30/2008 3:34:03 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: 1rudeboy
I still think he’ll pull it out.

Theoretically he could sell the staff into slavery somewhere in Africa. He could still turn a profit.

17 posted on 07/30/2008 3:38:02 PM PDT by Caipirabob (Communists... Socialists... Democrats...Traitors... Who can tell the difference?)
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To: abb

Had he paid my $10 million consulting fee I could have told him with 100% confidence not to do the deal, and my fee would have been an incredible bargain.


18 posted on 07/30/2008 3:40:12 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: clintonh8r
I must be in the minority.

Most ads aren't targeted toward smart people.

19 posted on 07/30/2008 3:41:30 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

Indeed!! Or he could have just lurked here and seen our Dinosaur Media DeathWatch™ postings. Anyone who could read could see this one coming.


20 posted on 07/30/2008 3:43:08 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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