Tribune Company CEO Sam Zell confirmed that five bidders remain in the running for the Chicago Cubs and Wrigley Field and he hopes to have a deal by the end of the year. Zell didn’t identify any of the bidders, but one is known to be Mark Cuban. In addition to the five still bidding for the full package, the Cubs and Wrigley Field, Zell said there are also some bidders interested only in Wrigley Field.
Since organizing the buyout of Tribune Company via a tax-advantaged ESOP, Zell has also used maneuvers to avoid any immediate tax bills in his divestures, such as retaining a small interest in Newsday, which meant that no tax was due on the sale of the majority interest. In yesterday’s Q&A, he was asked whether avoiding taxes on the sale of the Cubs might not be possible, due to objections from Major League Baseball. Zell declined to comment, so we’ll just have to wait and see.
As expected, following a debt ratings downgrade by Fitch, Zell was asked about the danger of Tribune falling out of compliance with its debt covenants. He replied that everyone at Tribune HQ is “highly sensitive” to covenant compliance and repeated assurances that the company will have no trouble meeting its next significant debt repayment next summer.
Also on yesterday’s conference call with lenders and analysts, COO Randy Michaels said the changes being made at Tribune are not just about cuts, but also investing in businesses and changing the company culture. He noted that while there has been a lot of reporting on staff cuts at Tribune properties, the company has added over 400 new positions, including 90 in television news. He said adding TV news is particularly attractive because the company controls all of the ad inventory in local news.
“Everything we are doing is focused on long-term, sustainable profitability. We’re focusing on product, decisions and cost controls. We’re trying to eliminate red tape and unnecessary expense,” Michaels said of the operational changes taking place at Tribune.
As for changing the corporate culture, Michaels complained that the company previously had so many meetings that it seemed some employees could keep busy doing nothing but attending meetings. “We are actively campaigning against meetings,” he said, and getting a lot more done.
RBR/TVBR observation: Nobody likes to lose their job and it is also painful to work where lots of other people are being pink slipped. But the reality is that Tribune is in a fight for its survival. Sam Zell made that clear in relating the story of an employee he encountered while waiting for an elevator in Tribune Tower. “I understand what you’re doing. The last company I worked for in this industry doesn’t exist anymore,” Zell said the staffer, whom he did not name, told him. All sorts of old media companies have been making staff cuts to deal with the simultaneous economic weakness and ad market shift to new media. If you look in our Media Business Report section today, you’ll see that McClatchy’s Sacramento Bee is cutting staff – and doesn’t even know yet how many positions will eventually be eliminated.
