Will Sam Zell Really Bankrupt the Tribune Co?

A year ago Sam Zell told everybody that he knew how to make newspapers make money. (The implication being that most of the ink stained wretches actually working in the newspaper business didn’t get it.

Then yesterday, the Wall Street reported, (followed by the New York Times and everyone else) that Zell’s humungously-leveraged deal to buy the Tribune Company may be headed for bankruptcy protection.

Here’s some of what the NY Times said on the subject:

The Tribune Company, the newspaper chain that owns The Chicago Tribune and The Los Angeles Times, is trying to negotiate new terms with its creditors and has hired advisers for a possible bankruptcy filing, according to people briefed on the matter.

Tribune is in danger of falling below the cash flow required under its agreement with its bondholders, but it is not clear how seriously Tribune is thinking about seeking bankruptcy protection. Analysts and bankruptcy experts say that the hiring of advisers, including Lazard and Sidley Austin, one of the company’s longtime law firms, could be a just-in-case move, or a bargaining tactic. The company would not comment on Sunday.

A few days before yesterday’s bankruptcy rumor, Peter Osnos, the vice chair of the Columbia Journalism Review (among other titles), wrote an interesting commentary on Zell and the Tribune Company for the Daily Beast. (And by “interesting” I mean interesting in the way that a hideously calamitous accident is interesting.)

Here are some clips:

By now, it is clear that Sam Zell loathes the newspapers he acquired when he took control of the Tribune Company. In every interview, he is contemptuous of what he says has “historically been a non-business business…I can tell you unequivocally that model is a failure.” He sneers at the Pulitzer Prize and mocks coverage from places such as Afghanistan. “Local, local, local” is what readers want, he said at a media mogul conference last month. On the Chicago Tribune website, that means, under the banner of news: “Woman says ex-husband stole half of their bed.” Elsewhere on the homepage is a key to a calorie counter for turkey and a report on the finale of Dancing with the Stars.

[SNIP]

But the more he talks about the catastrophe, the more obvious it is that Zell was clueless about the role of journalism in a democratic society. Sam Zell bought a company whose revenue came from advertising and circulation, while much of its intrinsic value came from reporting the news, an indispensable asset he did not understand or respect. …

I personally don’t believe in the concept of hell. But Sam Zell is one of those people who make one wish for hellfire and brimstone to be real after all.