The LinkUp Blog The Industry's Best-Kept Secret
With The Tribune Sale, Industry Reaches New Levels Of Disarray
A surprise to no one, the Tribune company was sold to Sam Zell and the employees of Tribune through an employee stock ownership plan. With the sale, another set of daily newspapers will change hands and the turmoil running rampant throughout the industry will continue accelerating. This deal in particular, however, will be interesting to watch over the next few years for many reasons. It involves two of the most storied papers in the country in two huge markets. As well, the vast majority of risk in this transaction rests on the shoulders of the employee-owners of the company who will see most if not all of their retirement plan invested into the company itself. With the tremendous deterioration going on in the newspaper industry and its fundamentals getting worse every quarter, the risks for employees in seeing their entire savings being wiped out altogether in the next few years is extremely high. That’s exactly what happened with United Airlines when the employee-owners lost control of their 55% stake when the company crumbled post 9/11. When the Tribune Company implodes within the next five years, as it undoubtedly will, the devastation will impact far more people than just a few banks or a handful of partners in some private equity fund.
Another interesting piece of information about the deal is that in 2004, the Chicago Tribune uncovered a 1976 criminal case in which Sam Zell was charged with defrauding the Internal Revenue Service. The charges were dropped when Zell agreed to testify against his brother-in-law who eventually went to prison. What a guy. The alarm expressed by some over the upheaval in the media space, the consolidation going on, the loss of the ‘fourth estate,’ the rise of billionaire owners who might use newspapers for their own personal agendas, etc. will undoubtedly reach new heights as this deal unfolds. And well it should. This deal, spearheaded by a crook, is rotten at the core and places the entire industry in a whole new level of disarray.
Time to read the daily newspaper this morning: 8 minutes and 13 seconds.
Daily recommendation for the dailies: If you’re going to raid employees from another company, maybe think about looking outside your own failing industry and try to capture some brainpower that was engendered from and/or has fostered some level of innovation and success.
[tags]Sam Zell, Tribune Company, Chicago Tribune, Death of Newspapers, Tribune ESOP[/tags]