So Much For All That

In these pages this time last year, I wrote warmly about Sam Zell's debt-laden purchase of the Tribune Co. Turns out his initial public comments about rebuilding the company's papers were only comments -- all of the central ones have cut lots of jobs and redesigned their papers so there are fewer stories over less space. Then, last week the Tribune Co. declared bankruptcy, which may be the equivalent of Chrysler doing so (though I don't think Tribune or any newspaper company [or any car company?] deserves a Congressional bailout).

Also, worth noting again is how Zell, one of the country's wealthiest men via real estate, structured the deal. He put up $315 million of a $8.2 billion deal, while employees became the owners through an ESOP. That means they're at the back of the bankruptcy line. Severance deals for the recently laid-off employees are also in jeopardy. (Remember: Debt before equity. Of course, though, the Cubbies and Wrigley Field, really the only valuable assets left in the company, are not part of the filing.)

As if the week couldn't get any worse for the Tribune, the next day's arrest of Illinois Gov. Rod Blagojevich revealed he leaned on Zell to fire the editorial page staff who was calling for his resignation from office. (No one was fired.) Fortunately, Blagojevich did the work for himself. Ugh.