Sam Zell Speaks at Inland Conference -- Slams That Guy Nero

By: Mark Fitzgerald Why, someone asked Sam Zell, at the Inland Press Association's annual meeting in Chicago on Monday afternoon, would the real estate mogul want to buy Tribune Company, "a 10-times leveraged newspaper company?"

Zell, who is leading the $8.2 billion deal to take Tribune private, didn't miss a beat.

"Because," he said. "I don't view it as a 10-leveraged company. I view it as 61 different entities -- each with a wonderful opportunity to get lucky."

With the Tribune deal yet to be closed, Zell told the Inland Crowd of about 400 that he couldn't talk specifically about the deal, which will covert ownership to an employee stock ownership plan (ESOP) with him as chairman.

Zell did not address recent reports, including one in the flagship Chicago Tribune over the weekend, quoting some analysts and investors as doubting the deal will go through, at least at its announced price of $34 per share.

However, Zell pledged to change the corporate culture at Tribune, just as he has with his many acquisitions in other industries.

"Just by being private, the culture will change," he said. "We won't be forced to make decisions that are 90 days in relevance."

And he suggested he was investing in Tribune for the long term.

"If Tribune proves to be as successful an investment as I think it will be -- I mean, I'm not a private equity investor or have a five-year window; there's no exit strategy. This is a good investment. We want to succeed."

The way the deal is structured, Zell added, he had a financial incentive to stay invested for at least 10 years.

The gnome-like Zell addressed the luncheon crowd of publishers mostly in dark business suits and ties, wearing a brown corduroy jacket, shirt with an open collar, and the jeans that seemingly no published profile of the billionaire is able to resist noting.

Zell promised to be blunt, and although much of his talk was cobbled from newspaper industry conventional wisdom -- newspaper have to be 'relevant,' they have to capitalize on their brand, they have to be profitable of they're to serve the "public trust" -- he occasionally delivered on the promise.

Newspaper management, in general, he said, was too complacent about the changes going on around them.

"I believe there was a fellow named Nero who fiddled with Rome burned," he said.

Zell spoke right after Rusty Coats, Media Generals' top strategic initiatives executive and Paul Ginocchio, a leading Wall Street analyst, agreed the ad partnership with Yahoo and a possible similar arrangement with Google were good deals for newspapers.

Asked at the luncheon what he thought about hooking up with Google, Zell said, "Based on your experience so far -- I'd check your pockets."

Newspapers, he said, are spending about $7 billion annually to create editorial content -- and Google and other aggregators are using it for free.

Zell presented himself as a long-term optimist about newspapers, misquoting Mark Twain's famous quote about his own death being exaggerated to apply the comment to newspapers.

"When all is said and done, what must be remembered is a newspaper is a business. It used to be a fabulous business that made extraordinary margins. It's now a very good business with appropriate margins."

No Tribune company chairman, even a prospective one, ever gets away at occasions like the Inland meeting without getting a question about the Chicago Cubs baseball team, which Tribune has said it would sell at the end of the current season.

Zell made it clear he wanted no part of owning the team.

"Maybe (the Cubs) is a business, " he said. "But it's not a business I understand. So I think I'll pass it on to someone who understands it as a business or to someone who gets enough psychic income that they don't give a shit."