Daniel Gross discusses the decline of the Tribune Co. and the future of newspapers.

Real-time discussions with Slate writers.
Dec. 12 2008 11:33 AM

Shredded Newspaper

Daniel Gross takes your questions about the decline of the Tribune Co. and the future of fish wrap.

(Continued from Page 2)

_______________________

New York Times: I had to look with one eye closed when the New York Times company mortgaged their building to fund current operations.

If real estate has not hit a bottom, won't this endanger the company long term.

Didn't anyone read your book, Pop?

Daniel Gross: The Times basically took out a home equity line of credit on its new home in New York. It wants to borrow about $225 million, I believe, which is probably only about 1/3 of the value of the building. So it's a pretty conservative move. And they're not using the proceeds to fund current operations. They want to use it to pay down some debt and have cash on hand in case they have difficulty rolling over existing credit lines.

Advertisement

I know that some people did read my book, Pop.

_______________________

Evanston, Ill.: Hey Dan, you wrote a provocative book about why bubbles are good for the economy. Of course there are beneficial side effects but I think the questions is what is the net effect of a given bubble. Is it safe to conclude that the housing bubbles benefits are outweighed by fallout we are now living through?

Daniel Gross: Hi Evanston—I don't want to give away the whole book here. It's still available for sale, after all. But basically, the argument is that bubbles are good when they leave behind a new commercial infrastructure that others can use—like the telegraph, the railroad, or the Internet. In other words, without Web bubble 1.0, we don't get Google. Without the telegraph bubble of the 1840s and 1850s, we wouldn't have got the Associated Press and Western Union. When the bubble is in something like paper (credit, stocks) or in something that doesn't really create a new commercial infrastructure (housing), we don't get the same benefits.

_______________________

Toronto: How do the sellers of the Tribune Co. feel about their sale to Zell now?

Do they feel as though they erred in selling to a person who used other peoples money and saddled the company with large debts, as opposed to selling parts of the Co. piecemeal to people like David Geffen, or do you think they simply do not care, because they made a lot of money in the sale?

Daniel Gross: I think the people who sold the Tribune Co. actually feel pretty good. They got a good cash price for their stock at what turned out to be the top of the market. Had they said no, and held on, that stock would probably be cut in half, just like every other media stock.

_______________________

Miami, Fla.: Any idea why they took on additional $3B in debt? Seems they paid for business with $300 million from Zell and $9B from banks to pay off family, Wall St and Fitzsimmons. After this transaction Zell was able to add $3B additional debt—seems like straight forward corporate looting, especially when the business reported $100M-plus profits each quarter in 2007 and 1st 1/2 of '08.

Daniel Gross: I think—not sure, though—that the $3 b may have been existing debt. In other words, when you buy a company you assume all its assets and liabilities. That's why it's sometimes confusing when we report about the size of deals. If you put $1 billion cash down, and borrow $9 billion to pay $10 billion for a company that has $5 billion in debt, the price of the deal is $10 billion, but the value of it may be $15 billion, since the new entity is assuming that existing debt.

_______________________

Washington, D.C.: In the early '90s, when my cousin used to connive to me about terrorists hijacking jets with box knives, I used to tell him that Communism was coming to America through the federal bankruptcy courts, not through firebombs in the streets. Then his younger brother would chime in that the government was going to provide us all with the cure for anthrax after a bioweapon attack—in exchange for our guns.

How much power does the federal court's overseer have in deciding which Tribune creditors get paid and which do not? That would be the most powerful job in the company, wouldn't it?

Daniel Gross: Bankruptcy court isn't supposed to be a place where the judge decides who gets paid and who doesn't. It's supposed to be a place where the creditors and debtors get together and work out deals under the supervision. There's a lot of negotiations, threats, discussions, and sometimes litigation in bankruptcy court. But in a typical bankruptcy, the parties work out deals without massive intervention from the judge.

_______________________

Daniel Gross: Looks like the hour is coming to a close.

Thanks for all the great questions.

See you next time

Dan

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

An Iranian Woman Was Sentenced to Death for Killing Her Alleged Rapist. Can Activists Save Her?

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Homeland Is Good Again! For Now.

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Music

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

The U.S. Has a New Problem in Syria: The Moderate Rebels Feel Like We’ve Betrayed Them

We Need to Talk: A Terrible Name for a Good Sports Show by and About Women

Trending News Channel
Oct. 1 2014 1:25 PM Japanese Cheerleader Robots Balance and Roll Around on Balls
  News & Politics
The World
Oct. 1 2014 12:20 PM Don’t Expect Hong Kong’s Protests to Spread to the Mainland
  Business
Moneybox
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
  Life
The Eye
Oct. 1 2014 1:04 PM An Architectural Crusade Against the Tyranny of Straight Lines
  Double X
The XX Factor
Oct. 1 2014 2:08 PM We Need to Talk: Terrible Name, Good Show
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 1 2014 3:02 PM The Best Show of the Summer Is Getting a Second Season
  Technology
Future Tense
Oct. 1 2014 3:01 PM Netizen Report: Hong Kong Protests Trigger Surveillance and Social Media Censorship
  Health & Science
Science
Oct. 1 2014 2:36 PM Climate Science Is Settled Enough The Wall Street Journal’s fresh face of climate inaction.
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.