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After snagging $900 million by selling Equity Office to Blackstone, I think Sam Zell should have taken a nice vacation. Get a tan. Think about the world. And plan the next move.The last thing I thought was that he would actually buy a down-and-out newspaper company, Tribune Co. (NYSE: TRB). OK, he didn't plunk down much cash and he used some fancy leverage (much of which will be at the expense of the trusty American taxpayers).
What's even worse is that Zell is not interested in cutting jobs. Hey, isn't his nickname the "grave dancer"?
Instead, his new dance is the Internet. Somehow, he thinks he can leverage the Tribune's assets onto the Information Highway. But hasn't that been something the newspaper industry has tried to do for the past ten years anyway?
Interestingly enough, last week Zell gave a presentation at Stanford. His great inspiration? He thinks newspapers should stop allowing Google Inc. (NASDAQ: GOOG) from allowing millions of users to search for articles for free. Zell considers it theft.
For years, newspapers have tried to sell their articles. But now there are simply too many free alternatives.
So, if this is the grand strategy Zell has for the Tribune, I think it's a good bet that the Tribune's future is still very much in doubt.
If you want to read more about this, you can check out a story from the Washington Post. And, yes, it's free.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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Reader Comments (Page 1 of 1)
4-09-2007 @ 3:59PM
pat kelly said...
yeah - you are 100% right...Zell is no one-off tail end of the distribution, one-timer a la larry Page and Sergey Brin...he's repeatedly made money transaction after transaction on distressed OPERATING assets over TIME.
and he's no good at co-opting other business models (overture) and generating brand extension after brand extension that fail to generate any revenue.
4-09-2007 @ 4:00PM
John said...
Zell is kidding himself. His vicrory with Equity Office has thrown his ego out of control. There are too many sources of content and the ultimate highway to the distribution of that content is through the internet. Google or die!
4-09-2007 @ 3:47PM
Michael Schneider said...
Sam Zell has hinted at many other ideas about the newspaper business than what you indicate here-- he has made billions and has some experience in turning businesses around. I wouldn't underestimate his ability at this point and it seems far too early to pass judgment. I also think he is correct about the jobs thing-- you can only cut so much especially in information oriented businesses. Those interested in Sam Zell might wish to visit the relatively new Sam Zell section (left side, above trends section) at http://www.Barrelomoney.com.
4-09-2007 @ 7:02PM
Michael Schneider said...
John,
You seem to be half right. Perhaps we are just beginning to see the impact of the Internet on the media and other businesses. Content is indeed likely to be king-- I like Internet content providers and I think the big media companies including Tribune are content providers that will find a way to make things work.
4-10-2007 @ 2:24AM
Sramana Mitra said...
Sam Zell may want to read my article, Newspapers:
Industry in Turmoil for an overview of the strategic
manueverings going on, and more importantly, should be going on. Regards, Sramana