An analysis by a trio of BusinessWeek reporters finds that Sam Zell should have seen the problems coming to the newspaper industry before he bought the Tribune Co. last year. They say
Zell's blind side may cost the media company its life.
Zell's "deal from hell" as he calls it, is his $8.5 billion purchase of the Tribune Co. in December 2007, "a transaction that's shaping up to be one of the most disastrous the media world has ever seen," say the reporters. Zell stumbled into a morass of plunging sales and rising costs. He miscalculated expectations of declines in newspaper ad revenue and he loaded the already strapped organization with more than $8 billion in fresh debt to pay for the deal, "leveraging the company to within an inch of its life." say the authors.
The conclusion: a different buyer might not have taken on so much debt, which would have made a significant difference in the prospects of the Chicago Tribune, Los Angeles Times, Baltimore Sun and other Tribune holdings.