Friday, April 17, 2009

Sam Zell on Tribune Co. acquisition: 'I made a mistake, I was too optimistic'


Tribune Co. Chairman and Chief Executive Sam Zell told Bloomberg Television today that his heavily leveraged 2007 acquisition of the Chicago Tribune parent was "a mistake" in that he did not anticipate the steep decline in the newspaper business.

"By definition, if you bought something and it's now worth a great deal less, you made a mistake and I'm more than willing to say I made a mistake," Zell said. "I was too optimistic in terms of the newspaper's ability to preserve its position."

Zell, who took Tribune Co. private in a leveraged $8.2 billion deal, reiterated that his goal is to emerge from Chapter 11 bankruptcy proceedings begun in December to manage its $13 billion in debt with its assets intact. But the billionaire investor also said the company is looking at "all options."

"It's very obvious that the newspaper model in its current form does not work and the sooner we all acknowledge that the better," Zell said. "Whether it be home delivery, whether it be giving content away for free -- these are critical issues.

"We are seriously looking at everything because in effect the future of the newspaper industry is at risk today," he said, when pressed on the possibility of cutting back on delivery and print in favor of a greater role for digital publication.

A Tribune Co. spokesman declined comment.

Zell said a near-term merger of some sort is highly unlikely. “I don't think that there’s a long list of people who want to buy newspaper companies today, and for sure it's not likely to be the case until we reach some kind of a new bottom as to what the newspaper's role is going to be in our society going forward," he said.

Asked how he hopes his management of Tribune Co. will be viewed in two years, Zell said, "I think they're going to recognize that by filing for bankruptcy in December and being the first one, we also were able to stop the bleeding and preserve a great company."

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