Zell Vowed To Times Managers, Deal Remains On
When asked about the advertising and revenue fall that have ensued since he made the offer, Zell declared, according to someone who was there, that the Tribune papers have really not had an owner now for months, and that when he takes over, he will roll up his sleeves and go to work. He indicated his first steps would resound through the company.
As to whether the present management will continue, specifically as to whether the present CEO, Dennis FitzSimons, wanted to stay on, Zell responded along the lines of what the hell of a difference does that make, according to a source.
As the L.A. Times, the New York Times and even an AP business writer have said this week, there are still obstacles to be overcome, if the Zell purchase is to be consummated. First, the Federal Communications Commission (FCC) must approve the deal, agreeing to waive the prohibition against a company owning major newspaper and television outlets in the same city, as the Tribune does presently with the Times and Channel Five in Los Angeles. Second, as the New York Times reported Monday, there must be an independent solvency analysis of Tribune before the deal can be finalized.
A lesser obstacle was cleared Tuesday when Tribune stockholders approved the deal by a vote of 97%. This had been fully expected since under the terms of the deal, Tribune stock still outstanding would be purchased for a hefty premium (about $7 above Monday's closing price). That closing price of $27.02 yesterday was a sharp advance over last week's trading, when Tribune stock had gone for as little as $24.45 a share, and the stock rose again today. Since it seems clear the stock price would collapse were the Zell deal not go through, the rise this week reflects increasing confidence by stockholders that Zell's plan to take the company private with a $34 stock purchase is on track.
FitzSimons told the stockholders meeting that the terms of the deal have been okayed with four major banks that would help finance it, and he insisted that the terms of the deal fully protect existing employee pensions.
On the same day that he met with Times managers, Zell also met at the Times with members of a group of more than 20 prominent Los Angeles business, professional and organizational leaders, representing all of the city's major ethnic groups, who had written to FitzSimons last fall expressing concern about how Tribune management was running affairs at the Los Angeles Times, and specifically about all the cutbacks it had made there. The Los Angeles elite had suggested that if Tribune was not able to run the newspaper successfully, it ought to sell it.
Among those attending this other session, about an hour and 45 minutes long, were former Secretary of State Warren Christopher, Annenberg Center dean Geoffrey Cowan, attorney George Kieffer, Police Commission chairman John Mack, Latino leader Edward Avila, and former mayoral candidate Steven Soboroff, among many others. Tuesday afternoon, Kieffer, who chairs the group, the two-year-old Civic Alliance, called the meeting "constructive" and described what was said there. Besides Zell, L.A. Times publisher David Hiller and Times editor James O'Shea also were present at this meeting. MORE about this meeting in tomorrow's blog.
Things perhaps did not go quite so smoothly at the Times management meeting and just afterwards. Besides his management thoughts, Zell was challenged on the announced plan to start running advertising on Page 1 at the Times. Someone wanted to know whether Zell would be pleased were someone to build a ramshackle building next to his Malibu house.
Zell reportedly responded that how he would feel would depend on the quality of the neighboring house, and he suggested that front page ads would be acceptable if they were in good taste, as he said, they would be. (There are reports that the Times has rejected some early proposals for the front page ads).
Asked how he felt about the Times these days, Zell said he liked the sports section, which he said he reads first, but he was critical of the business section. and he called the rest of the paper bland. He remarked he doesn't like either the New York Times or Los Angeles Times business sections. However, Zell conditioned all such remarks with renewed assurances he is not a journalist and would not give direct orders as to how all these sections should be run.
Altogether, Times managers were said to be fairly impressed with Zell, and came out of the meeting somewhat more hopeful, although doubts about the deal's consummation will persist among some until it is final.
The Zell meetings took place last Thursday, one day before the Federal Reserve Board reduced the discount rate in a move directed at bolstering the credit markets in the wake of the sub-prime mortgage collapse. So they came at a low point of last week's financial troubles.
That Zell has his work cut out for him, is made even clearer with word today that the L.A. Times Washington bureau has lost its investigations editor, Marilyn Thompson, after only 14 months on the job. Thompson is going to join Dean Baquet's Washington bureau of the New York Times.
Doyle McManus, the LAT Washington bureau chief, said in a memo that he would launch a nationwide search for a new investigations editor promptly, and asked for any recommendations. Baquet said in his own memo, "...how terrific it is that the New York Times continues to build its staff at what is obviously a rugged time in the newspaper business."
Thompson is the second major investigations editor to leave the Times in recent months. The other was Vernon Loeb, who had been located in Los Angeles.
Labels: Tribune bids