Real estate magnate Sam Zell took control of newly private Tribune Co. on Thursday and began shaking up the newspaper and TV company the moment the $8.2 billion buyout he led closed, reshuffling the board, naming two top executives and promising more action ahead.
Taking on the CEO and chairman roles, Zell made clear he won’t hesitate to make sweeping changes at the media conglomerate even though he has no previous experience in the industry.
He signaled he has no immediate asset sales in mind at the company that owns 23 television stations and nine daily newspapers, including the Los Angeles Times and the Chicago Tribune, although he hopes to complete the sale of the Chicago Cubs and Wrigley Field by the start of the baseball season at the end of March.
However, he made clear that other changes are coming.
“There’s a new sheriff in town and the name of the game is excellence, relevance tied to revenue,” Zell said at a news conference less than three hours after the deal’s closing was announced. “I’m sick and tired of listening to everyone talk about and commiserate over the end of newspapers. They ain’t ended and they’re not going to end. I think they have a great future.”
Graphically demonstrating the change in culture at the company, Zell was tieless and wore jeans and cowboy boots in his appearance at buttoned-down Tribune Tower.
Asked how long he intends to remain chief executive, he said he doesn’t know but made a careful decision to take on the job for the time being.
“As you are undoubtedly aware, I’m the chairman of everything and the CEO of nothing,” he said. “But in this particular situation, I thought it was extraordinarily important to make it absolutely ... clear my commitment, my interest, my involvement.”
Zell has had 8½ months to ponder changes since agreeing to head the debt-heavy buyout, which takes the company private under an employee stock ownership plan, and he wasted no time putting them into effect.
He added five directors to the board and named two longtime associates to key management posts. Randy Michaels, who helped him turn around radio company Jacor Communications with the help of significant cost cuts, will head the broadcast and Internet operations, and Gerry Spector, who has been chief operating officer at Zell’s Equity Residential Properties, will be Tribune’s chief administrative officer.
Michaels and Spector are “new blood” who can “help us rearrange this company for the 21st century,” Zell said, citing the company’s penchant in the past for making slow decisions and being impeded by its bureaucracy.
He said Spector will effectively be responsible for everything other than content, handling most typical CEO duties. He reiterated that personally he has “absolutely no editorial aspirations” in terms of shaping day-to-day coverage.
The closing came after Tribune received the final cash installment from the four banks financing the deal — JP Morgan Chase & Co., Merrill Lynch & Co., Citigroup Inc. and Bank of America Corp. The lenders had given the deal last-minute scrutiny because of declining conditions at Tribune and in the public markets that will cause them to take a hit on the loan, but the company cleared all the benchmarks needed to guarantee financing.
The other obstacle to approval was removed on Nov. 30 when the Federal Communications Commission cleared the way for the deal.
Tribune’s stock ceased trading at the market’s close on Thursday after rising 91 cents to $33.98. That’s virtually all the way back to the once-criticized price of $34 a share struck by Zell last April after sinking as low as $22.78 in August amid jitters about prospects for Tribune and the sale.
The swift personnel moves by the 66-year-old Zell, a self-described “professional opportunist,” confirmed his intention to change the status quo at Tribune drastically.
No one knows exactly what cutbacks, asset sales or other moves to expect from the blunt-spoken billionaire — known as a brilliant investor and bargain-hunter in industries other than media. But even a man who long ago dubbed himself “The Grave Dancer” for his ability to revive moribund properties faces a tough task in trying to turn around the nation’s second-largest newspaper publisher, its revenues still in free fall.
He said he plans to add Jeffrey Berg, Brian Greenspun, William Pate, Maggie Wilderotter and Frank Wood to the board — a mix of people with ties to both the media and Tribune’s new boss. Zell called them “people who have significant media exposure and experience and tend to be non-conventional thinkers.”
Berg, 60, is chairman and CEO of International Creative Management Inc. Greenspun, 61, is chairman and CEO of The Greenspun Corp., president and editor of the Las Vegas Sun newspaper and a “significant investor” in Tribune with his family.
Pate, 44, is chief investment officer of Equity Group Investments, Zell’s firm. Wilderotter, 52, is chairman and CEO of Citizens Communications. Wood, 65, is CEO of the venture capital firm Secret Communications and a former lawyer who spent 33 years in the radio broadcasting business.
Two existing board members were re-elected as directors: William Osborn, the chairman and CEO of Northern Trust Corp., and Betsy Holden, a senior adviser to McKinsey & Co. and former co-CEO of Kraft Foods Inc.
Under terms set when he crafted the buyout deal in April, Zell’s investment in Tribune now rises to $315 million from $250 million and he owns warrants to buy about 40 percent of the company, which will be formally owned by an employee stock ownership plan. The deal added $8 billion in debt to Tribune’s books for a total of $13 billion, and the company will be under pressure to keep up with its payments before the transaction becomes profitable.
“From my perspective I think it’s a very low-risk investment,” he said. “But this wouldn’t be the first time that my opinion diverged from everybody else’s.”
Setting the stage for the transition, the company said Wednesday that Dennis FitzSimons will step down as chairman and CEO and leave the company at the end of the year. James F. Reda & Associates, a compensation consulting firm, said Thursday that based on an analysis of Tribune filings he will take away an exit package of severance, benefits and other holdings valued at $38 million to $39 million.