Zell Speaks

Check out the story in this weeks Business Week magazine about Sam Zell and Tribune (http://www.businessweek.com/magazine/content/08_32/b4095000408330), appropriately titled "Sam Zell's Deal from Hell."

A lot of the material is stuff we already know, based on the New Yorker piece on Zell published a while ago and also info on the Tribune buyout deal. Still, I think lots of us would shake our heads in agreement with the Business Week assessment that the buyout is "a transaction that's shaping up to be one of the most disastrous the media world has ever seen."

And that's because Zell saddled Tribune with billions in additonal debt, which now leaves him little wiggle room. Of course, from an investor standpoint, Zell's small down payment (only $300 million or so) is smart (whether you like it or not).

Zell cannot be held responsible for the double-digit declines in ad revenue and tumbling circulation. All of that was happening way before he came on the scene.

Still, the story contains material that should send chills down your Florida spine.

Big Return
"Zell doesn't need Tribune to thrive; merely keeping it alive could earn him an astronomical return when it comes time to sell. That has always been the goal."

Newspapers Sacrificed
"With the newspaper industry in free fall, Zell's new survival plan is to build out Tribune's broadcasting and Internet groups, which represent 24% of revenues, and slash costs in the newspaper group."


Financial Assessment
" '... Tribune might violate [loan agreements] in the near term…as early as December.' "
(We knew that.)


TV News
Beefing up lcoal tv news in Fort Lauderdale and Chicago, with newspapers feeding the content. However, with staff cuts and lower news to ad ratio, the questions remains, what content?

Not So Merry December
"Zell says the casualties will be 'significantly greater' by year end. "