Monday, December 8, 2008

Sorry Sam - still no subscription for you

Yep. Yesterday, advisers, today, a Chapter 11 filing for Tribune Corporation. Even the Grave Dancer, much as I admire him, can't win them all.

"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," [Sam] Zell said in the [press] release.

"Unfortunately, at the same time, factors beyond our control have created a perfect storm -- a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt," he said.

The Journal's Deal Blog tells us this was never a good idea and people said so:
To many people, the math never worked from the beginning. Tribune’s revenues had been falling precipitously for years. Zell offered a generous $8.2 billion offer for Tribune to win against two other billionaires halfheartedly bidding for the company. From the beginning, his plan was that the price tag would be paid through the pensions of Tribune’s 20,000 workers, held in an employee stock ownership plan, or ESOP. The ESOP structure was designed to reduce Tribune’s taxes to nearly zero and it lowered Zell’s own price tag to $315 million. Unfortunately, it also left a $12 billion debt load to pay just as the newspaper industry as a whole is largely cratering on lower ad revenues. The principle — that the company could hoard its declining cash flows to pay down this enormous debt — was flawed. Cash flows declined, and tax savings couldn’t help. A populism-friendly redesign did little to goose revenues.
It isn't dirt, unless you count Wrigley Field, Tribune Tower (Zell them for Condos?) and ancillary stuff. But the Tribune, the Cubs and WGN are Chicago institutions, so this is news to me.

That said, I don't watch WGN-TV much anymore. They've blown Cubs coverage by putting the games all over the dial. The only good thing they've done there is to add Blackhawks games. The radio side? Still ok, I guess. I have to wait and see on John Williams in morning drive.

But the newspaper? Good grief. It is literally unreadable since the redesign. I tried it for a couple of weeks and then canceled my long-standing subscription. And I'm not coming back. Sorry.

Notably, the Cubs are not part of the filing. Get the team sold already. I know, I know, taxes, taxes and more taxes. But get real and get it done.

UPDATE: Here's a link from the LA Times of the memo to Tribune employees.

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