Sam Zell Must Face Tribune Employees’ Lawsuit Over Pension Plan

Sam Zell, the real estate investor who took the Chicago-based Tribune Co. private in an $8.3 billion stock buyback two years ago, must face an employee lawsuit claiming he knowingly violated federal pension laws. [Click for MORE] Sphere: Related Content

Warren Beatty gets OK to sue TribCo over Dick Tracy

Academy-award winning actor Warren Beatty can go ahead with a California lawsuit against a unit of bankrupt Tribune Co. over rights to comic strip detective Dick Tracy, a federal judge ruled on Monday.

According to court papers, Beatty bought the motion picture and television rights for Dick Tracy in 1985. He went on to star in and direct the 1990 film by the same name that won three Academy awards and also starred Dustin Hoffman, Madonna and Al Pacino.

Tribune has said an agreement that granted rights to Beatty had lapsed because the actor-director had not started work on a new project based on the character. [Click for MORE]

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Sam Zell: No Newspapers Can Survive

When posed with the question of whether or not he regrets his Tribune deal, Sam Zell admitted, "It's certainly the most amount of money I ever lost in a single deal."

He goes on to say that the entire newspaper industry, including Tribune, has seen a crash in revenue, and that "nobody can survive." -- Silicon Alley Insider

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Tribune Co. Papers Were Thin, Now They'll Get Skinny

Tribune Co. is trimming the margins of its daily newspapers in an effort to improve its financial margins. All its daily newspapers -- including the Chicago Tribune -- will adopt a web width of 44 inches in the coming months, the company confirmed Tuesday.

Web width is a measurement of the size of a roll of paper for the presses, and for consumers it translates to the width of four broadsheet pages. By reducing the web width, the papers should realize a cost savings because less newsprint is required.

"Over the next several months, Tribune newspapers will convert to a 44-inch web-width, just as hundreds of other newspapers across the country have already done," a Tribune Co. spokesman said.

"This conversion will have no impact on content and little or no impact on advertising, as we standardized ad sizes across our newspapers earlier this year," the spokesman said.

Tribune Co.'s Baltimore Sun has had a 44-inch web width (or a broadsheet front page width of 11 inches) since late February. The other company papers will complete the conversion in late 2009 and early 2010.

The Chicago Tribune, like the Los Angeles Times, currently has a 48-inch web width, or a 12-inch broadsheet front page, although the Tribune's present layout is for a 46-inch web, the company said.

The South Florida SunSentinel, Orlando (Fla.) Sentinel, Hartford (Conn.) Courant and the Morning Call in Allentown, Pa., have a 46-inch web width and the Daily Press of Newport News, Va., has a 49-inch web width.

The longtime industry standard width was 54 inches, which meant a 13 1/2 inch front page, but it gradually has been reduced in the last decade. The Tribune began reducing its size in 2001.

Overseeing modifications to the presses will be crews from Goss International and Pressline Services Inc., according to newsandtech.com, which first reported the change.

-- Chicago Tribune

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Tribune Bondholders Fault Zell Takeover

Disgruntled Tribune Co. bondholders have asked a U.S. bankruptcy judge to let them investigate Sam Zell's 2007 buyout of the newspaper-and-television chain in an effort to derail a plan that would hand the company over to its banks.

The filing, made late Wednesday, calls the $8.2 billion transaction a "fraudulent conveyance" that left Tribune insolvent from the onset of the 2007 deal. It accuses senior lenders led by J.P. Morgan Chase & Co. of completing a leveraged buyout they should have known would push the company into bankruptcy.

"Fraudulent conveyance" is a legal term most often used in bankruptcy court, in which creditors allege a company has used assets in a way unfair to creditors. In the context of leveraged buyouts, creditors can argue a deal loaded up a company with too much debt, leaving it undercapitalized and unable to meet future obligations. [Click for MORE]

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Who Gets to Grow Up to Be Citizen Kane?

Simon Dumenco of AdAge writes:

I've been thinking about the life cycle of media moguls -- and the future of the very idea of the media mogul -- given all the recent rumors surrounding relative spring chicken Sam Zell, chief of the Tribune Co., the newspaper and broadcasting conglomerate. Just 67 and still invariably described as a "motorcycle-riding billionaire," Zell, having massively botched his attempt at media moguldom since taking control of Tribune in 2007, is said to be on his way out. Either forced out by creditors (if you believe the Chicago Sun-Times) or reduced to simply abandoning the wreckage of his failed investment (if you believe Murdoch's New York Post).

The big man walks away a small man -- diminished in the eyes of history. He could have shuffled off this mortal coil with his legend as a real-estate genius intact, but instead he'll mostly be remembered for helping to drive the Chicago Tribune and the Los Angeles Times and his other papers more quickly into the ground. Surely he'll be the last big man to try to become even bigger through media moguldom. [Click for MORE]

• How Zell botched Cubs deal

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Tribune Finalizes $845 Million Sale of Cubs, Wrigley Field, 25% Stake in SportsNet

Tribune Co. made it official Friday, announcing an $800 million deal to sell the Chicago Cubs, Wrigley Field and a 25% stake in Comcast SportsNet to the Ricketts family.

Tribune will retain a 5% stake in the assets, as expected, which means the overall transaction is valued at about $845 million, Tribune said. [Click for MORE]

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Zell's ESOP Fable

Tribune Employees Are Shortchanged

Tribune's short-lived experiment with employee ownership is coming to an end.

While Tribune is still navigating the bankruptcy process, the creditors are unlikely to keep the employee stock ownership plan, leaving workers with worthless shares, a source involved in the negotiations said.

In 2007, real-estate tycoon Sam Zell used the stock plan, called an ESOP, to gain tax benefits on the $8.2 billion buyout of the struggling company.

The plan made employees official owners with 100 percent of the equity, but they have no say over management or the board. In the bankruptcy, they are viewed as common shareholders with less claim than other creditors. [Click for MORE]

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Operating Management Will Stay With TribCo

Responding to recent media reports he called "inaccurate," a top Tribune Co. executive sent a note to the company's employees Thursday saying that Tribune Co.'s current "operating management" intends to stay at the company following the Chicago media conglomerate's emergence from bankruptcy court.

Randy Michaels, Tribune's chief operating officer, also termed "absurd" suggestions in the reports that the company might be liquidated as part of its Chapter 11 plan of reorganization. [Click for MORE]
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Zell Gives Up

Report: Ready to leave TribCo.

The New York Post is reporting that Zell is "ready to walk away" from the Tribune Company, ending one of the most inglorious chapters of newspaper ownership in Chicago history.

And just to make sure Zell has gotten the message from angry creditors already reportedly organizing a putsch, those lenders have now asked a bankruptcy court for permission to investigate Zell's kinky and controversial $8.2 billion takeover of the media giant,according to the Sun-Times. [Click for MORE]

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Zell May Give Up Claim to Buy Tribune Stake

Steve Greenberg via LA Observed

Tribune Co. chief executive Sam Zell is close to giving up his claims to buy a 40 percent stake in the company, the New York Post said, citing a source familiar with the matter.

Zell looks ready to give up a warrant, which he negotiated as part of his $8.2 billion deal to take the company private in 2007, according to the paper.

The warrant gives Zell the right to buy about 40 percent of the company for $500 million and is the basis of his control over Tribune Co, the paper said. [Click for MORE]

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Tribune Co. Creditors Seek Special Counsel to Probe Buyout, Could Sue to Recover Money

Tribune Co. creditors have asked the bankruptcy court for permission to hire special counsel to further investigate the $8.2 billion leveraged buyout of the Chicago-based media company engineered by real estate magnate Sam Zell.

The inquiry is common practice when a bankruptcy follows closely on the heels of an LBO, said bankruptcy experts. Zell closed the transaction that took Tribune Co. private in December 2007. The new debt obligations were too big a burden amid rapidly declining advertising revenues, sending the company, parent of the Chicago Tribune, into bankruptcy in December 2008.

Creditors have not filed a lawsuit seeking to recover money against parties that were involved in the going-private transaction, which established an employee stock ownership plan to become majority owner of the company. But the court filing on Thursday signaled that they are considering pursuing litigation, said Chicago-based restructuring expert Bill Brandt. [Click for MORE] Sphere: Related Content

A Textbook Bad Manager Gets Ready to Go

From Workforce Management:

[Sam] Zell is the foul-mouthed CEO of Tribune Co., the big media company that owns not only television and radio stations but also big newspapers including the Los Angeles Times, Chicago Tribune and Baltimore Sun. He was in over his head from the moment he cut the deal to take control of Tribune, and his over-the-top hubris, chronic arrogance and terribly shortsighted decision-making (by both Zell and his management minions) have helped push Tribune into Chapter 11 bankruptcy.

It’s a bad management trifecta that led me to award Zell with the 2009 Workforce Management Stupidus Maximus Award, given annually to the “most ignorant, shortsighted and dumb workforce management practice of the year.”

Well, we may be starting to see the end of Sam Zell, at least as the guy controlling Tribune. The Chicago Sun-Times reports that “Sam Zell’s days as a media titan in Chicago are nearly over. … Eight months after [Tribune’s bankruptcy] 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.” [Click for MORE]

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Zell Headed Out?

From LAobserved.com/biz:

Chicago Sun-Times is reporting that Tribune Co. creditors apparently have had enough of CEO Sam Zell and are working on a reorganization plan that would essentially break up the company and get him out. Story lacks detail and the process is still ongoing, but there have been rumblings in recent weeks that the creditors want out. Before they can file a reorganization plan, however, the company must be given a chance to submit its own plan. A bankruptcy judge has given Tribune until Nov. 30 to do so.

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.

[CUT]

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.

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It's time for Zell to sell Tribune Co.

Fair or not, Zell has become the poster child for newspapers' ills. Tribune's financial condition keeps getting worse and worse. The journalists employed at his most prominent newspapers, the Los Angeles Times and the Chicago Tribune, gamely fight the good fight against their competitors at the New York Times, The Wall Street Journal and the Washington Post .

But under Zell's stewardship, the Tribune and the L.A. Times are shadows of what they were in fat times. [Click for MORE]

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Cubs Sale Finalized for Tribune Co.

Tribune Co. has finalized a deal to sell the Chicago Cubs to a bidding group led by bond salesman Thomas Ricketts.

Documents describing the fully financed deal were sent to Major League Baseball over the weekend, a source familiar with the negotiations said Monday. The value of the deal is between $850 million and $900 million, the source said. [Click for MORE]

• Tribune Co.: NO Cubs deal, yet

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Tribune Co. Profitability Continues to Deteriorate

Tribune Co.’s financial picture deteriorated even more this year as declining advertising sales continued to hammer the newspaper industry, the Chicago media conglomerate’s bankruptcy filings show.

The company is much less profitable than before its filing in December and is burning through cash, financial statements for the first five months of the year show. Tribune’s revenue declined about 23% in the first half of 2009, according to an estimate by Chicago-based Morningstar Inc. analyst Tom Corbett, who reviewed the company’s financials. [Click for MORE]

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Tribune Creditors Follow the Money to the McCormick Foundation

Irked creditors are following the money from the 2007 leveraged buyout of Tribune Co. right to the stately acres and 27-hole golf course at the mansion-turned-museum commemorating the life and times of deceased Chicago Tribune publisher Robert R. McCormick, new court documents show.

The non-profit Cantigny Foundation that runs the 500-acre estate sold nearly $184 million worth of Tribune stock in connection with the deal. The LBO that saddled Tribune Co. with billions in debt meant a nice bump to the Cantigny Foundation endowment, allowing it to further its mission of providing the public the opportunity to hike, golf and examine the artifacts of the First Infantry Division of the U.S. Army. (McCormick was Colonel McCormick.)

Also in the cross-hairs of creditors in Tribune’s Chapter 11 case is the billion dollar-plus McCormick Foundation, which sold $1.5 billion worth of company stock in the LBO transactions, for a $963 million profit, according to tax records. It dishes out millions annually to civic charities around the country. [Click for MORE] Sphere: Related Content

Sam Zell Might Lose Control of Tribune

From LAobserved.com:

Intriguing story out of the Chicago Tribune (via Romenesko) says that negotiations with big creditors of the bankrupt Tribune Company could lead to chairman Sam Zell losing his role. Details are still in flux, apparently, but the story says:

Bankruptcy experts said the plan's outline raises questions about whether the senior lender group would want to retain Zell and his management team or seek new leadership for the company. It also poses the question of whether Zell would want to stay without a large ongoing stake in the company.

Sources close to both the creditors and the company said it is too early to make such decisions and Tribune management continues to control the process because it currently has the exclusive right to propose whatever reorganization plan it wishes. But Zell's team has indicated that it wants to work toward a consensual plan with the company's creditors, which means issues such as who manages the company and whether those managers are given equity as part of an incentive package will be negotiated over time, experts said.

"It completely depends on whether the new owners see value in keeping Zell," said Douglas Baird, a corporate reorganization specialist at the University of Chicago Law School. "They have to decide: Is the person at the helm when the company went into the storm the most able person to steer it out?"

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'Zell May Be a Genius in Other Lines of Work, But He Is an Idiot in Terms of Journalism'

Sam Zell, who made his fortune in real estate, engineered a takeover of the Tribune Co. in 2007, a deal that saddled his new acquisition with about $13 billion in debt.

I could wear my underwear over my trousers and Tribune would think that’s innovation. Everybody else would think I was wacko." Michael Waller, former publisher of The Baltimore Sun

“Zell may be a genius in other lines of work, but he is an idiot in terms of journalism,” John Carroll, former editor of the Los Angeles Times, said.

Michael E. Waller, a former publisher of The Baltimore Sun, also had choice words for Tribune’s business practices.

“Tribune management confuses innovation with idiocy,” he said. “I could wear my underwear over my trousers and Tribune would think that’s innovation. Everybody else would think I was wacko.”

Waller is not optimistic about the future of some newspaper companies, especially Tribune.

“If this ownership continues its ways, it will be forced to liquidate,” he said.

But he is not willing to give up on the industry overall.

“The real truth is that about 80 percent of the daily newspapers in this country are making money, and most of the real problems are in the big city papers,” he said. “That’s not a dying industry.

“Some of the big papers are going to die because they are being mismanaged, but a lot of newspapers will be fine.” [Click for MORE] Sphere: Related Content