by Mark Fitzgerald, Editor at Large, Editor & Publisher
NEW YORK One hour into his role as chairman and CEO of the newly private Tribune Co., Chicago real estate magnate Sam Zell declared Thursday afternoon that he would turn around the troubled media giant with a mixture of unconventional thinking, candor, and humor.
At a press conference in the gothic Tribune Tower where the autocrat Col. Robert McCormick once held court, Zell said he was what Tribune needed most -- an owner.
"I felt I needed to be a direct agent of change," Zell said explaining his last-minute decision to take the CEO position, "and I promise you I will not disappoint in that."
Tribune under his management will be a "brave new world," he declared, saying it would operate with "openness, candor, effectiveness -- and profitability."
Zell said he was best positioned to find a solution to the cyclical and secular newspaper business woes affecting Tribune because he is approaching the task with no industry experience, and thus no preconceived ideas.
He suggested that one difference from past management would be the privatized Tribune's focus on acting quickly and growing revenue. "There are two ways: You can cut costs or you could grow revenue. Tribune has spent a significant amount of time in the last five years cutting costs, and maybe not enough time in increasingly revenue," he said.
At the same time, he rejected a reporter's suggestion he was joining a "sunset" industry. "I'm sick and tired of everybody commiserating about the 'end of newspapers.' They ain't ended," he declared.
Dressed in his trademark jeans with a brown corduroy jacket and colorful sports shirt wide open at the collar, Zell was an immediate sartorial contrast to Tribune executives who have uniformly adopted the buttoned-down look of an investment banker. He also set a non-traditional tone in introducing himself to the Chicago media.
"I'm here to tell you that the transaction from hell is done," he said of the going private deal that just 36 hours before still looked dubious.
Zell, though, called the deal "a low-risk" investment.
Earlier today, Tribune disclosed that Zell had increased his personal investment in the $8.2 billion deal to $315 million from $250 million. At the news conference, Zell revealed that an unspecified part of that total investment is coming from Brian Greenspun, the Las Vegas Sun editor and publisher, who is joining Tribune's board of directors. Greenspun's investment is "appropriate, but the preponderance of the capital invested is mine," Zell said.
The deal is structured so that 100% of stock is now owned by the employee stock ownership plan (ESOP). Zell's investment gives him the right to eventually purchase as much as 40% of the company.
The two-part transaction depended on huge loans that will leave the company $10 billion in debt. But Zell said he did not think Tribune was over-leveraged.
"If you look at the numbers, instead of listening to the pundits, the bottom line is this company has significant cash flow going forward -- and we don't think we will have any significant problems serving the debt," he said.
Zell said he had no intention to sell any Tribune assets, other than the previously announced plan to sell the Chicago Cubs baseball team and its landmark ballpark, Wrigley Field, perhaps in separate transactions. Estimates of the total price the team and park could fetch run up to $1 billion.
While Tribune will no longer be required to file financial reports, except in connection with certain publicly traded bonds, Zell said the private company would be transparent to its employees and the public.