April 15, 2009

Zell says buying Tribune was a ‘mistake’

Chicago Tribune publisher Sam Zell said the unraveling of the newspaper industry caught him off guard and buying the newspaper chain was a mistake.

Tribune Co. filed for bankruptcy in December, unable to pull away from a $13 billion debt it incurred when Zell took the company private, Crain's Chicago Business reported Wednesday.

Zell, who made his fortune in commercial real estate, said if you bought something and it's now worth a great deal less, you made a mistake.

I was too optimistic in terms of the newspaper's ability to preserve its position, he said.

We underwrote the Tribune (purchase) based on the fact that over the previous five years, we had seen an erosion of about 3 percent, he said. More recently, losses were significantly larger, he said.

Zell said filing for Chapter 11 protection was necessary to stop the bleeding and preserve a great company.

Zell compared the suggestion of merging Tribune Co. with another company to getting vaccinated with a live virus.

I don't think there's a long list of people who want to buy a newspaper company today, he said.