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The Media Deal From ZellBehind the real estate mogul's crappy offer for Tribune.

By Jack Shafer
Posted Monday, April 9, 2007, at 6:07 PM ET

(Continued from page 1)

If I worked for Tribune, I'd say forget the ESOP and begin looking for a new job. I'll bet the company's best journalists are already packing their keyboards. The last good journalist out won't have to turn out the lights. The electric utility will already have shut off the power.

I suspect that Zell has another ESOP card up his sleeve. Tribune owns both television stations and newspapers in four markets—Los Angeles, New York, Hartford, and South Florida. The sale will require Zell to obtain "cross-ownership" waivers from the FCC if he wants to keep all of his overlapping properties, which he very much does for now. Just by postponing the consummation of the Tribune deal, the FCC could cause it to unravel. Identifying the new Tribune Co. as an employee-owned entity would give Zell's legal team political leverage: "If you deny us our waiver, we'll kill this struggling multibillion-dollar media company!"

And what if the whole deal collapses? Zell has that covered that possibility creatively. Tribune will owe him a $25 million breakup fee.

******

Columbia University President Lee C. Bollinger just won nomination to the Washington Post Co. board of directors. As a Post Co. employee, I think I'd be a much better corporate steward. Please second my self-nomination by sending e-mails filled with praise to . (E-mail may be quoted by name unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)

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Jack Shafer is Slate's editor at large.
Photograph of Sam Zell by Jose More/Chicago Tribune/MCT.
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Remarks from the Fray:

Isn't it likely that other "media conglomerates" aren't bidding because they would be even less likely than Zell to get the FCC waivers the story mentions?

Why would the Trib's employees agree to this? They don't have to, do they?

Last I looked the Trib was profitable, although not at the 25% margin the industry thinks is required. Why in the world is such a margin required for investors to invest? There aren't many industries that can claim such margins.

--JackD

(To reply, click here.)

(4/12)

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