Sunday, February 25, 2007

Will The Grave Dancer Dance On The LA Times' Grave?

The New York Times has more details about the rumored offer by Sam Zell. The good news is that Zell is not a crazy billionaire like David Geffen or Ron Burkle. The bad news he is not a person driven by civic pride like Eli Broad.

The good news is that the financing plan will not cripple the paper with debt. The bad news is that the paper will not be under local control. The good news is that the paper will be run as a business and not as a non-profit unaccountable to the market place. The bad news is that the new owner will expect a high rate of return on his investment

The good news is that the people running the paper will be newspaper professionals who understand that local is better when it comes to news. The bad news is that a non-newspaper man will control the paper and there is no guarantee that newspaper people will continue to run the paper.

February 26, 2007
Tribune Considers Offer From Real Estate Magnate

The Tribune Company, in discussions about its future, is weighing a proposal from Sam Zell, the Chicago real estate maverick and billionaire who sold his huge office development company this month for $39 billion in the biggest leveraged buyout ever.

A special committee of Tribune board members was close to settling on an internal overhaul when Mr. Zell made a last-minute entry into the discussions, people close to the situation said.

His bid for Tribune all but eliminates other offers — including one from the Los Angeles billionaires Ronald Burkle and Eli Broad — from consideration.

Mr. Zell, 66, has never owned a major media property, but gained the nickname the “Grave Dancer” for his ability to spot and exploit undervalued properties in the real estate business.

His proposal would involve buying the entire company with the participation of an employee stock ownership plan, these people said. Although the deal would be highly leveraged, the employee stock plans have many tax advantages, including the ability to write off interest on debt.

Tribune has received two other bids, but considered both inadequate and has been putting together what it called a self-help plan in which it would spin off its two dozen broadcast outlets, keep most if not all of its 11 newspapers, and borrow money to pay shareholders a large dividend.


The board committee is taking Mr. Zell seriously enough that it has slowed its deliberations, which continued over the weekend, to explore his proposals further. It intends to reach a decision no later than the end of March.

Tribune’s newspapers include The Los Angeles Times, which is the nation’s fourth-largest paper, as well as The Chicago Tribune, The Baltimore Sun and Newsday.

It is not clear how the newspapers might change if Mr. Zell had a controlling stake in them. He told The Chicago Tribune last month that “there is no difference” between running a newspaper and managing any other for-profit business.

The Chicago Tribune first reported Mr. Zell’s interest this month. It also reported that the Tribune Company was exploring selling its newspapers in Stamford and Greenwich, Conn., to Gannett, the nation’s biggest newspaper company, and might consider selling the Chicago Cubs baseball team.


Of the two other bids, one came from the Chandlers, who proposed taking the company private in a deal that valued Tribune at $7.6 billion, or $31.70 a share. The second was from Mr. Broad and Mr. Burkle, valuing it at $34 a share. A third bid from the Carlyle Group, just for the broadcast stations, has been dismissed.

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