Zell belongs in Hell
Thanks to some good reporting by Forbes Magazine, we now know that Sam Zell--not the economy--is the main reason for the Chapter 11 filing of the Tribune Company, owner of the Chicago Tribune, Los Angeles Times, the Chicago Cubs, and a bunch of TV stations.
Zell put barely $300 million of his own money into the 2007 deal in which he acquired the Tribune Co., according to Forbes. That money came from his personal $900 million share in the $36 billion sale of an office REIT he owned to a group of hedge funds. The rest he--or rather the Tribune Co.--borrowed to pay off the various owners of the media company.
According to Forbes, Zell didn't really want, or at least didn't care that much about the media properties of the Tribune. He had his eyes on the Chicago Cubs, believing he could sell the franchise for a tidy sum and recoup his personal investment. It was all a game to him, and it resulted in the destruction, or impending destruction, of two of America's greatest newspapers. In his dealings with newsroom employees, Zell was coarse and rude if they asked "impertinent" questions.
Was it all necessary, despite the bad results? Nah. Forbes says apart from the debt that Zell loaded on the Tribune Co., operating cash flow was fine. Again, it was all a game that wealthy Wall Street types like Zell have gotten away with playing for the past 25 years in the name of "free market capitalism." They are free to play their high stakes game, and if the little people get crushed, that's all for the glory of free market capitalism.
Oh, and one detail I forgot to mention: as part of the bankruptcy, Tribune Co. will cut off severance payments to many reporters and editors who took buy-outs but elected, probably for tax reasons--lump sum payments under IRS rules are taxed at 37 percent, although you get some of it back when you file your next tax return--to take their severance pay over time.
I'd love to see the Tribune Co. employees, past and present, stage a sit-in at their newspapers, just like the employees of Republic Window and Door in Chicago are doing. This nonsense has to stop, and Zell should be investigated by Barack Obama's Justice Department come January.