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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerBen Berkowitz is the business news editor for AOL. His weekly column looks at news stories with long-term significance that were initially overlooked.
The story you didn't read this week but should have is the almost off-handed way that super-billionaire Sam Zell said he'd perhaps like to buy Tribune Co. (NYSE: TRB). And if that wasn't enough, now everyone's favorite even-bigger billionaire Warren Buffett is said to be snapping up shares of the New York Times Co. (NYSE: NYT).
These titans of industry understand something that even the Internet has not changed: owning a newspaper is both a mark of prestige and an easy way to have a very loud voice. Anyone who thinks their motives are altruistic has perhaps been sniffing too much newsprint.
Sam Zell is a real-estate baron. What on earth would he do with a newspaper chain? (Yes, Trib also owns the Cubs, and some TV stations, and a few other properties, but the same question applies. There are easier ways to own a baseball team.)
Keep asking: why does housing developer and art patron Eli Broad want the Los Angeles Times? Or supermarket magnate Ron Burkle? Why would insurance heavyweight Hank Greenberg want the New York Times? Why does Jack Welch want the Boston Globe? Hint: remember the rumors about Welch trying to steer election coverage in various NBC newsrooms in 2000.
Simple: they want to control mainstream media outlets to push their agendas. Broad has a vision for changing the future of Los Angeles. Burkle is a big Democratic supporter. Greenberg has been abused mercilessly in the press for the financial doings at AIG. Welch's wife is a journalist.
The motives for Zell and Buffett are less clear; maybe Zell wants to take a crack at Trib for the sake of it? Great businessmen love challenges. And Buffett, well, just do what the man says. He buys it, you buy it. Really, he didn't get rich on his looks or fashion sense.
Let's say for the sake of argument (big argument, because it seems unlikely given the state of the auction to date) that Sam Zell wins Tribune. Then what? Which assets does he actually want? It seems a bit far-fetched to think he actually wants the company exactly as it stands now, unless he has some sort of odd affinity for its collection of disparate properties.
The collective wisdom of Wall Street is that newspapers are not a good investment; most newspaper publishing stocks are rated Hold by the Street. As my colleague Jonathan Berr so astutely noted recently, the Tribune auction is essentially one big mess that isn't going to go anywhere anytime soon.
So will any of these deals actually happen? Tribune seems to be leaning toward either not selling at all or doing some kind of deal to take on an investor and distribute a massive dividend to shareholders. The Sulzbergers, having thumbed their noses at Morgan Stanley, seem unlikely to play ball with the company as a whole. (Though you could easily imagine them flipping the Boston Globe given its performance).
Odds on any of Eli Broad, Ron Burkle, Jack Welch, Hank Greenberg, Sam Zell or Warren Buffett outright owning a major American newspaper by the end of 2007: call it 20-1. (And that's mostly because of Welch and the Globe).
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