Has it less than a single year? One year since Sam Zell took over
the Tribune Company as its management, like Knight Ridder's two years
earlier, simply ran out of juice and said, "hey you try it, we've run
out of ideas and energy?"
In one quick year -- who's doing the
photo slideshow online? -- we've seen what happens when the barbarians
do enter and start to rule within a formerly genteel kingdom. If it
were any other industry, we might see it more as entertaining, but when
it comes to the news industry, it's been jaw-droppingly sad.
As the Tribune prepares for
the possibility of a bankruptcy filing this week -- and, if not now
then probably later -- we can see the shock waves radiating out from the news:
- Yes, Sam Zell's words and actions have been outrageous,
sometimes outrageously and even refreshingly true -- on
non-commissioned salespeople, on subscription pricing, on trying new
things -- but in the end, it's not about Sam Zell. Look around.
Just in the last couple of weeks, we've seen Scripps sign the Rocky
Mountain News' death warrant; reports that McClatchy has shopping
around the Miami Herald (an offer that insiders tell me has been
floating around South Florida for months); the Journal Register
Company, living on borrowed time and about to shut down two dailies;
and Freedom's East Valley Tribune testing the very meaning of "daily"
newspaper.
The business model's busted.
Whether you
are good journalism advocate Gary Pruitt or it's-just-another-business
Sam Zell, the cards dealt are fairly similar. What separates Zell from
the pack, but maybe just barely, is the mountain of debt he gorged on
to make the ill-conceived ESOP scheme work. From Day One, he put the
sword over his own head and then cried wolf.
- We've learned that Zell isn't too good with math. He told Portfolio's Joanne Lipman just last month that:
"When
we looked at the historical numbers, we saw an average erosion of about
3 percent. At the time we underwrote the transaction, we used a 6
percent erosion."
But look at Tribune's 4Q, 2007,
the quarter running up immediately to Zell's finalization (on Dec.