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Tribune's Descent Sends New Shock Waves
By: Ken Doctor   Monday, December 08, 2008 9:48 AM

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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.


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