What many expected has come about – the huge risks in the Zell deal have come home to roost.
A lot of people will be blaming Zell, of course, for putting all of the risk on the employees. But let us keep in mind that it wasn’t Zell who got the Tribune into the fix that resulted in his being the best bid for the company. It was partly Tribune management. But it was also the newspaper industry.
Back in April 2006 the NYT’s Floyd Norris criticized the Tribune deal as “absurd" but nevertheless said:
To those of us who care deeply about the future of newspapers, this deal is encouraging. At long last, someone without an existing tie to the industry has stepped up to say he sees value in it.
But I said:
The Tribune sale should be pretty scary for all of Big Journalism: A guy who made his name buying distressed property takes control of one of the country's major newspapers by putting up a tiny fraction of its supposed net worth, the rest highly leveraged, the employees taking a big risk. Something basic is going to have to change at the Tribune in order to make this shaky deal work. And what's ailing the Tribune isn't so different from the rest of the industry. The difference is that family-controlled outfits haven't been willing to take the medicine – yet.
Norris and the rest of his industry must realize by now for whom the bell tolls.
Comments