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Trib boss Zell on way out (Dinosaur Media DeathWatch™)
Chicago Sun-Times ^ | August 14, 2009 | David Roeder

Posted on 08/14/2009 6:28:15 AM PDT by abb

Sam Zell's days as a media titan in Chicago are nearly over.

The motorcycle-riding billionaire, renowned for his deft touch with real estate and corporate turnarounds, took Tribune Co. private in late 2007 promising to energize the lumbering company. He piled on debt at exactly the wrong time, and a collapse in advertising for traditional media forced him to take the company to Chapter 11 bankruptcy. » Click to enlarge image Tribune Co. Chairman and CEO Sam Zell (AP)

Eight months after the filing, two sources familiar with the process said creditors are working on a reorganization plan that elbows Zell aside. The creditors, including investment banks owed $8.6 billion from Zell's Tribune takeover, would stage a takeover of their own and sell off the company's newspapers and broadcast stations as they see fit.

"The banks will be in charge," one insider said, adding that they are growing impatient with Zell's stewardship. The bankruptcy court on Monday granted Zell extended time, until Nov. 30, to be the first to file a reorganization plan. Creditors have to wait at least that long before filing their own plan with the court.

William Brandt Jr., a corporate turnaround expert not involved in the case, said enough time has passed so that creditors and the debtor want to cut losses and save face. He said an honorable exit is especially important to Zell, who might need investment banking help for future deals.

"This was a textbook case of a leverage buyout gone bad," said Brandt, president of Development Specialists Inc. "These were imbeciles who had no idea what they were doing."

Brandt said Zell waited too long to sell major assets, accomplishing only a $650 million sale of Newsday, the Long Island-based daily. A sale of the Tribune-owned Chicago Cubs for around $900 million is not final and suffered a months-long detour when Zell tried to sell Wrigley Field separately to an arm of state government.

Still, Tribune financial reports filed with the bankruptcy court show recent improvement. The company's cash on hand rose to $740.5 million as of June 28, up from $702 million in late May. It reported profitable operations in June aside from debt obligations, but for the period from Dec. 8, 2008 to June 28 it said it lost $836.5 million. The numbers don't include units such as the Cubs, which were left out of the bankruptcy filing.

Tribune spokesman Gary Weitman said, "Since going private, we have re-engineered many of our existing products and introduced new ones, expanded our local news programming, dramatically reduced our expenses and positioned the company to succeed in the face of an extremely difficult ad environment and a worsening economy."

He added that Zell and other managers "remain actively engaged and committed to Tribune. The restructuring is still in progress and we continue having positive discussions with our various creditor constituencies. It is premature to speculate about the company's final ownership structure."

While the company has laid off workers, it has hired others to fill new needs. Bankruptcy experts said creditors usually don't object to such new expenses if they believe they help preserve value.

Tribune debt recently traded for about 7 cents on the dollar, meaning investors think a lottery ticket is just as likely to pay off. The company's total debt, counting what Zell assumed in his takeover, is around $13 billion.

Brandt said the Tribune deal has become such a "reputational disaster" for Zell that's he's probably not involved much in management other than creditor negotiations. That could be one reason the company wants bankruptcy court approval to pay bonuses of about $70 million to top managers.

Tribune owns the Chicago Tribune, the Los Angeles Times and other major newspapers, as well as WGN-TV and radio and 22 other TV stations.

David Wirt, chairman of the bankruptcy practice at the firm Locke Lord Bissell & Liddell, said Zell may be getting pressure because creditors want to see revenue growth, and not just cost-cutting. Also, the bankruptcy process is expensive and participants tire of paying lawyer fees that can top $800 an hour for senior partners, said Wirt, whose firm is not involved in the case.

In late 2008, debt analyst Mike Simonton of Fitch Ratings estimated Tribune was worth about $4 billion if sold. Since then, the company's balance sheet has worsened. As of June 28, Tribune said its liabilities exceeded assets by $7.1 billion, vs. $5.7 billion at the time of Simonton's estimate.

Even after a drawn-out liquidation, creditors may be lucky to get a third of their investment back.


TOPICS: Business/Economy; Culture/Society; Extended News; News/Current Events
KEYWORDS: advertising; dbm; newspapers; samzell; tribune
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Easy come, easy go.
1 posted on 08/14/2009 6:28:16 AM PDT by abb
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To: 04-Bravo; aimhigh; andyandval; Arizona Carolyn; backhoe; Bahbah; bert; bilhosty; Caipirabob; ...

ping


2 posted on 08/14/2009 6:28:54 AM 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

Poor Col. MacCormick


3 posted on 08/14/2009 6:30:09 AM PDT by Don Corleone ("Oil the gun..eat the cannolis. Take it to the Mattress.")
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To: abb

Zell should have stuck to commercial real estate.


4 posted on 08/14/2009 6:32:30 AM PDT by stephenjohnbanker (Pray for, and support our troops(heroes) !! And vote out the RINO's!!)
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To: abb

http://townhall.com/columnists/RichTucker/2009/08/13/wed_rather_not_have_fewer_sources
Rich Tucker :: Townhall.com Columnist
We’d Rather Not Have Fewer Sources

http://www.boston.com/business/articles/2009/08/14/economy_tests_medias_diversity/?page=full
Economy tests media’s diversity
Newsrooms struggle to look more like the audience


5 posted on 08/14/2009 6:32:40 AM 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
"These were imbeciles who had no idea what they were doing."

Welcome to the Age of the Imbecile.

6 posted on 08/14/2009 6:32:49 AM PDT by the invisib1e hand (STOP OBAMA NOW.)
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To: abb

Hard come, easy go.


7 posted on 08/14/2009 6:33:11 AM PDT by Boiling Pots (Evil-Mongering Angry Mobster)
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To: Boiling Pots

The Chandler heirs got out just in the nick of time.

http://en.wikipedia.org/wiki/Otis_Chandler#cite_note-LatObit-0


8 posted on 08/14/2009 6:36:34 AM 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

Don’t know a thing about it, but where exactly does “Shortshanks” come in? Nothing on such a large—read EXPENSIVE—scale happens in Chicago without the Mayor getting a slice, or getting even for being left out.


9 posted on 08/14/2009 6:48:06 AM PDT by Oldpuppymax (AGENDA OF THE LEFT EXPOSED)
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To: abb

http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1004003286
More Newsroom Cuts at 2 Wisconsin Papers

http://www.wwd.com/media-news/fashion-memopad/memo-pad-jon-hamms-moment-businessweek-sale-seen-heating-up-2241481?page=2
Businessweek Sale Seen Heating Up

http://cancelthebee.blogspot.com/
Fresno Bee Guild says NO to management’s vacation burndown proposal

http://recoveringjournalist.typepad.com/recovering_journalist/
Bill Wyman Speaks Truth to Power


10 posted on 08/14/2009 6:59:51 AM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: Oldpuppymax

There was some smoke several months ago regarding the sale of the Chicago Cubs and the feds got interested. Maybe that was his connection. But the Tribune Company is much more than the Cubs and the Chicago newspaper. LA Times, a couple of TV stations, the Orlando Sentinel, Baltimore Sun, etc.

http://www.chicagotribune.com/business/chi-thu-tribune-blagojevich-zellmar12,0,6176923.story
Tribune Co. chief Sam Zell interviewed by federal prosecutors in criminal probe of former Gov. Rod Blagojevich


11 posted on 08/14/2009 7:05:11 AM 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

12 posted on 08/14/2009 7:08:34 AM PDT by martin_fierro (< |:)~)
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To: abb
The creditors, . . . would stage a takeover of their own and sell off the company's newspapers and broadcast stations as they see fit.

Please, Uncle Rush, please, pretty please - buy these commie b@$t@rds out for pennies on the dollar and either fire all the liberals (which is pretty much everyone) or force them to write conservative commentaries and slant the news to the conservative side. Please, huh, please, huh?

13 posted on 08/14/2009 7:11:53 AM PDT by Hardastarboard (I long for the days when advertisers didn't constantly ask about the health of my genital organs.)
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To: martin_fierro

Now he can go back to writing stories about puppies...

http://gawker.com/5002815/exclusive-sam-zell-says-fuck-you-to-his-journalist

Exclusive: Sam Zell Says ‘#### You’ To His Journalist


14 posted on 08/14/2009 7:16:28 AM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: stephenjohnbanker
Zell should have stuck to commercial real estate.

Unfortunately, that market typically dies about 18 months to two years after the economy and market tanks. Most analysts think it will soon be in worse shape than the housing market -- or even newspapers, for that matter.

15 posted on 08/14/2009 7:19:41 AM PDT by Zakeet (Obama: Always wrong, never in doubt.)
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To: Zakeet

True, but Zell used REAL (not 2004-2009 inflated) equity to buy this albatross. He had billions in REAL equity from long term holdings. He blew it trying to become a media mogul.


16 posted on 08/14/2009 7:23:39 AM PDT by stephenjohnbanker (Pray for, and support our troops(heroes) !! And vote out the RINO's!!)
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To: Zakeet

“Most analysts think it will soon be in worse shape than the housing market — or even newspapers, for that matter. “

I read somewhere on FR this week that 2.2 trillion in comml. real estate loans are delinquent(90 days or more of nonpayment).


17 posted on 08/14/2009 7:26:12 AM PDT by stephenjohnbanker (Pray for, and support our troops(heroes) !! And vote out the RINO's!!)
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To: abb
Nice try, Sam.

Economy tests media’s diversity
Newsrooms struggle to look more like the audience

Good GRIEF!!!
The suckers are goin' down fast, be dead in mere months and they're concerned about diversity in newsrooms??
BWWWWWHAAAAA!!!!!

What newsrooms. :o)

18 posted on 08/14/2009 7:30:45 AM PDT by Landru (Arghh, Liberals are trapped in my colon like spackle or paste.)
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To: stephenjohnbanker

IIRC, Zell himself put “only” $350 million into the deal. While that’s a lot of money for sure, he still has most of fortune intact. He convinced Brian Greenspun to put money into the deal, also.

http://www.latimes.com/business/la-fi-greenspun21dec21,0,1038265.story
Owner of Vegas paper takes part in Zell’s gamble


19 posted on 08/14/2009 7:31:25 AM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: stephenjohnbanker
I read somewhere on FR this week that 2.2 trillion in comml. real estate loans are delinquent(90 days or more of nonpayment).

Who knows? The Feds have been cooking the books so much lately nobody knows what's going on. And Congress refuses to let the GAO audit their books because "we wouldn't understand, and don't really want to know."

20 posted on 08/14/2009 7:35:40 AM PDT by Zakeet (Obama: Always wrong, never in doubt.)
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