(Photo Courtesy of BusinessWeek)
By Kyle Austin
I caught a glimpse of Sam Zell while lunching at IL Gattopardo with David Kirkpatrick last summer. The restaurant is a bit of a hotspot for media types taking in a working midtown lunch. However, among the charismatic crowd, Zell was still hard to miss. Mercurial blue eyes, swashbuckling style; he’s never been able to blend into a social setting – and he likes it that way.
As Connie Brock described in her profile on him last year in the New Yorker, Zell has always aimed to stick out:
“In the seventies, he would sometimes wear a red polyester jumpsuit and a gold chain to meetings with bankers. He once said that if you dress oddly and you’re really good at what you do you’re seen as eccentric; but if you’re not so good you’re seen as a schmuck.”
These days, as when I saw him last summer, you can find him donning pressed jeans, a tailored shirt and a blazer. However he still carries the confidence of a man who dares to wear a red polyester jumpsuit.
Perhaps Zell’s aura was best summed up a few months back among concerns that he was eroding the journalism integrity of the Los Angeles Times’ newsroom with his own profanity. His actions led Russ Newton, Senior VP of Operations at the LA Times, to address staffers by reiterating what separated their potential copycat behavior from Mr. Zell’s.
So who is Sam Zell?
The “Graveyard Dancer,” a nickname that Zell aptly attached to himself based on his propensity for acquiring the skeletons of other’s mistakes, is currently dealing with the biggest skeleton of his career – The Tribune Company. He’s the guy that issued a spoof news release yesterday (April Fools), a year to the day he closed on Tribune Co. which announced the company was changing its name to “ZellCoMediaEnterprises Inc.”
“I put $315 million into this thing, and we’re on the hook for $13 billion—the least I ought to get is my name on the company’s stationery,” Zell stated in the spoof release.
Funniest perhaps, because it sounded like something that Zell might actually do. Sam Zell is in an unfamiliarly deep hole with Tribune Co. which owns nine papers nationally including the Los Angeles Times, Newsday, Chicago Tribune, Orlando Sentinel, Baltimore Sun and Hartford Courant. In February he cut 400-500 jobs countrywide with the LA Times and Chicago Tribune being most affected.
John Simmons with Fortune recently took a look at which parts of the company Zell will sell to get out of debt. He notes that Zell’s best bet is in selling the naming rights to Wrigley field, one of the Tribune Co.’s biggest assets at this point. Zell has made it a prerogative to sell the team and the ballpark separately to capitalize on the revenue possibilities.
As simmons notes, all of Zell’s moves are being closely watched:
“Zell’s moves are being closely watched because he needs to sell something soon. According to his agreements with lenders for his Tribune purchase, Zell has to repay $650 million in December 2008 and $750 million in May 2009. “The company has no other visible means of repaying that,” says CreditSights’s Newman. Therefore, Newman posits, “nothing can be sacred, not Newsday, not even the L.A. Times. The only asset that may be untouchable is the Chicago Tribune, Zell’s hometown paper.”
None more scrutinized and closely followed then his potential move with Newsday; which has become the Britney Spears of newspaper gossip. Just today, the Wall Street Journal reported that Jared Kushner, the owner of the New York Observer and son of real-estate developer Charles Kushner has thrown his hat into the bidding for the paper – joining the likes of Rupert Murdoch and Mort Zuckerman in the potential bidding.
Jon Fine, the astute media columnist for BusinessWeek takes a deep look at Newsday’s past and future in the issue on news stands now (art from that story above). In which he hypothesizes that Newsday missed its chance to be a real power in the New York area, long before it was a blip on Zell’s radar. However, he still believes that Zell may have leverage to still fetch north of $750 million for Newsday. A number that would leave most industry insiders scratching their heads, like the Sopranos had cut to black once again:
“In today’s climate of falling revenues, paying $750 million for Newsday is obviously nuts. But in the paper’s favor, that moat around its market remains, and no plausible new local competitors loom, online or in print. Zell and the next owner of Newsday, assuming there is one, are lucky on that point, and are lucky that dollars online still can’t support sizable general-interest newsrooms. If Newsday were smart and gutsy, it would co-opt any potential online competition by becoming ad broker to all manner of local sites, blogs and otherwise, selling ads onto them and keeping a cut of each sale—the model made famous by a company named Google.”
(Image Courtesy of the New Yorker)
This brings me back to the point Simmons made in his recent piece, when he noted that all of the Tribune Co.’s properties are up for sale except Zell’s sentimental hometown paper. I would disagree and state that none of Tribune Co.’s properties and no singular person under Zell are safe. In Zell’s world, everything is for sale at a given price, especially in his current position. Which he summed up nicely in the aforementioned New Yorker profile on him last November:
“The way I look at transactions, and the way I look at risk, I have no room for sentiment.”
Never has this statement been more true.