Tribune Widening Its Scope?

By James T. Madore, Newsday, Melville, N.Y.

Apr. 4–Tribune Co., under the influence of real estate mogul Samuel Zell, is likely to buy other media properties and emphasize the Web sites of its newspapers and television stations, said people who know him.

Zell, known for his office-building empire, fondness for motorcycles and aversion to suits, is helping to take Tribune private in a $13-billion deal announced Monday. He eventually will own 40 percent of the successor entity, with control in the hands of an employee stock ownership plan, or ESOP.

But Zell’s rivals in the six-month auction for Tribune, billionaires Eli Broad and Ron Burkle of California, signaled yesterday that they might challenge the announced deal. And Tribune has said it would entertain better offers until shareholders vote in late summer.

A source close to Broad and Burkle said “they are meeting with their advisers and are continuing to study the Tribune opportunity.”

The source didn’t know if the pair would ultimately challenge Zell, though their bid also included an ESOP and $34 a share for investors. They would’ve chipped in $500 million in cash compared with $315 million from Zell.

Spokesmen for Tribune and Broad declined to comment. Representatives of Burkle and Zell did not return calls.

Meanwhile, friends and associates of Zell said he was likely to purchase other assets to bulk up Tribune. It already owns Newsday, the Los Angeles Times, Chicago Tribune and six other papers, along with 23 TV stations including WPIX/11.

“You are going to have a leader who wants to put his foot on the accelerator and wants to go,” said Randy Michaels, who ran radio broadcaster Jacor Communications — Zell’s only previous media investment.

“You should expect tremendous vision, tremendous speed and a great tolerance for intelligent risk,” said Michaels, now head of Local TV Llc, which is buying the TV division of The New York Times Co.

Michaels and others described Zell, 65, as a hands-off manager who empowers underlings to exercise their best judgment. In six years at Jacor in the mid-1990s, Zell never interfered with decisions involving programming and operations, Michaels said.

Zell’s stewardship of Cincinnati-based Jacor offers a glimpse of how he might influence Tribune, based in his hometown of Chicago.

Jacor was bankrupt when Zell bought it for about $73 million in 1993.

But he sensed a turnaround was in the offing because deregulation of radio was being discussed in Washington. After it became law in 1996, Jacor went on a buying spree that transformed it into one of the country’s largest radio-station chains. Zell sold Jacor to Clear Channel Communications in 1999 for $4 billion, pocketing $1.3 billion.

“Zell is betting there will be some law changes … that will enable TV stations and newspapers, under the same ownership, to aggregate under one Web portal in major markets,” said John Eckberg, whose 2006 book, “The Success Effect: Uncommon Conversations with America’s Business Trailblazers,” features Zell.

The Federal Communications Commission has been deliberating for years over loosening the prohibition against cross-ownership of print and broadcast outlets in the same geographic market.

Tribune’s purchase of Times Mirror in 2000 — which included Newsday — was predicated on such a rule change. And now Tribune’s move to go private hinges on the FCC issuing temporary waivers so the company can still operate TV stations and papers in New York City, Los Angeles and elsewhere.

Consumers Union and media watchdog groups yesterday called on the FCC to scrutinize the Zell deal. “Any prior justification for Tribune’s existing waivers to the current cross-ownership ban can no longer stand,” said the union’s Jeannine Kenney.

Those who have followed Zell’s career in real estate speculated that his interest in media won’t stop with Tribune.

“I think he wants to play with it,” said Peter Slatin, founder of the online real estate journal TheSlatinReport .com. “Zell wants to see what he can do … he sees this industry as one that’s undergoing huge change, and so why would he stop at Tribune Company? He’s not done.”

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