Thursday, December 11, 2008

Zell Expects Tribune to Survive Bankruptcy Protection

Investor Sam Zell expects Tribune Co. to survive bankruptcy reorganization as long as the company can find sufficient ways to consolidate and improve operations.

Zell also said he had been contacted by the FBI concerning the corruption investigation of Illinois Gov. Rod Blagojevich, who was arrested Tuesday for allegedly trying to sell President-Elect Obama's Senate seat.

Speaking on CNBC, Zell admitted that the company's problems were worse than he envisioned and he took responsibility for the necessary decisions that will have to be made as Tribune navigates through Chapter 11.

A court on Wednesday granted the company approval for interim bankruptcy financing and said it can can pay pre-bankruptcy filing employee wages, taxes and insurance premiums.

"In the end my responsibility is to preserve the value of the company and to make sure that it will go forward into the future," he said. "Our action was pre-emptive in nature so as to preserve the assets of the company to create opportunities for reorganization."

Zell has come under fire as the company has trimmed its positions and laid off workers across its publishing empire that includes the Chicago Tribune and Los Angeles Times. The company also includes the Chicago Cubs Major League Baseball team, the sale of which he does not expect to be impeded by the bankruptcy filing.

"I think that we have been resizing the business all year long and I imagine that going forward we now have the time to really focus on what I call broader issues, issues of consolidation, taking advantage of the position we're in in various markets where we in fact can create an opportunity for one plus one equal three," he said.

On other issues, Zell said he expects a real estate turnaround by the middle of 2009 as excess inventory gets cleared up.

He said the freeing up of credit is vital, something he believes will happen as the various initiatives from the Treasury Department take hold.

As for his own business dealings, Zell said he's not focusing on mistakes made with the Tribune purchase.

"My head only functions looking forward. I'm not really any good at looking behind," he said. "Consequently, I don't reminisce or self-mutilate myself as the result of past decisions. I made the decision when I made it. I thought it was an appropriate investment at the time. Obviously circumstances have proven the opposite, but this too shall pass."

Concerning Gov. Blagojevich, Zell said he had no knowledge of accusations that Blagojevich tried to pressure the Chicago Tribune to fire editorial writers who were critical of the governor. Blagojevich allegedly hoped that he could leverage state help in selling Wrigley Field, the home of the Chicago Cubs, to pressure the Tribune.

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