As it emerges from a hellish bankruptcy, the next phase for the storied news publisher is bound to be better than the last.
Of all the miseries inflicted on the news business over the past decade, arguably the worst was the ravaging of the Tribune Company when real estate mogul Sam Zell took it private in a complex transaction in which he risked little of his own fortune while leading the businesses into $13 billion in debt. Jim O'Shea's book, The Deal from Hell: How Moguls and Wall Street Plundered Great American Newspapers (published by PublicAffairs in 2011), is a thorough account of the catastrophe, which Zell himself characterized as "hell's deal."
O'Shea, a former editor of the Los Angeles Times and managing editor of the Chicago Tribune, brought an investigative reporter's skills to the events as they evolved, combined with an undertone of indignation at how an enterprise of admirable assets could be driven into bankruptcy in barely more than a year after it was acquired in 2007. Now, following four years of rancor, downsizing, and management scandals, the Tribune Company has emerged from bankruptcy court with Zell and his cohorts finally gone. In the midst of it all, according to a detailed account of the case by Michael Oneal, a Chicago Tribune reporter, the bankruptcy judge, Kevin Carey, "looked out at a Delaware courtroom packed with high-priced attorneys and conceded the case had broken down into what he called a 'multiconstituent melee.'"
Oneal and Steve Mills, another Tribune reporter, covered the case in a four-part series last week called "Broken Deal" (there are excerpts outside the paywall), which was described as "riveting" by Michael Miner, the astute media critic of the Chicago Reader (a once independent weekly now owned by Wrapports, which also owns the Chicago Sun-Times). The activities of the investment funds and their lawyers--running up to $1,000 an hour--piled enormous expenses on the failed deal as it made it ways through the courts, leading Oneal to conclude: "For Tribune Co., its employees and many of its smaller creditors, bankruptcy became a debilitating period of missed opportunities and stalled strategy. The cost to Tribune Co. in legal and professional fees will likely run to more than $500 million." Moreover, the mess could still ensnare thousands of former Tribune shareholders, because they benefited from Zell's dubious buy-out, which went bust--as Zell and his bankers should have foreseen. Oneal and Mill's reporting confirmed that thirty-eight top Tribune Company managers received almost $150 million in payments from the initial deal, including various incentive and option packages.
The Tribune Company has unloaded Newsday to the Dolan family in New York and the beloved Chicago Cubs to the Ricketts family. What emerges is a company with strong new management, only $1.1 billion in debt, and a $300-million line of credit. The chairman is Bruce Karsh, president of Oaktree Capital Management, the private equity firm that ended up with 23 percent of the company, the largest single stake. The CEO is Peter Liguori, a former chief operating officer of cable television programmer Discovery Communications. Eddy Hartenstein, who was interim chief executive remains on the board and will be chief executive of the Los Angeles Times as well as an adviser to Liguori. In a letter to the staff, Liguori wrote that the Tribune Company still has "unparalleled media assets, iconic brands in major markets and very talented, creative employees." He said the company is an example of "what is best is in media, television, and journalism in America."