What does it feel like to be a tycoon? Does one feel all powerful, or is it just the opposite? Does one let their large pile of money become a 24-7 distraction? We could ask Samuel Zell, but he’s kind of busy right now. You see, the media company he purchased in 2007 isn’t doing well at all. In fact, The Tribune Company–owner of Los Angeles Times, Chicago Tribune, Baltimore Sun, several other newspapers, local TV stations, Web properties like CareerBuilder.com and The Chicago Cubs–declared bankruptcy in a surprise announcement yesterday.
According to The Wall Street Journal:
Mr. Zell said in an interview Monday that he saw no way out other than seeking protection from creditors as revenue continued to slide. “It wasn’t like we were going to the bottom of a canyon and could see the other side,” he said.
Mr. Zell has had his share of ups and downs over the decades as an investor in real estate and in distressed businesses, but the Tribune deal is a blow to both his reputation and his wallet.
Last year, Mr. Zell’s firm invested $315 million in Tribune in exchange for a subordinated note and a warrant entitling it to acquire 40% of the stock. He now says he assumes his investment is worthless.
Zell came on strong, believing his enthusiasm, previous success in business and a drive to find new ways of doing business would prevail over daunting economic realities. For instance, the industry’s advertising revenue through the first three quarters of 2008 is about 21% below levels just two years ago. It’s pretty tough to don one’s Superman cape when there’s very little money coming in.
