Harold Meyerson writes about the Chicago real estate magnet Sam Zell, who appears to be well on his well to destroying the Chicago Tribune and the Los Angeles Times, as well as the Chicago Cubs. This is disgusting. (Read a bio on Sam Zell and more about his newspaper purchases on Wikipedia here.)
Sam Zell never really had much skin in the game. Last year, when he purchased the Tribune Company, which filed for bankruptcy today, he put up $315 million of his own money and paid the balance of the purchase price, $8.2 billion, with the employee stock ownership plan – a move in which Tribune employees had no say whatever. But that actually overstates the amount of Zell’s investment. Of the $315 million he sunk into the company, it turns out that $225 million was simply a promissory note. Due to the vagaries of bankruptcy law, writes business analyst Mark Lacter on laobserved.com, that means that Zell has better protection for his stake than all his employees. Trib’s ESOP holds 100 percent of the company common equity – and it’s the holders of common stock who usually take a bath, or get wiped out altogether, in the debt restructuring that goes on under Chapter 11.
It sounds like Zell is trying to imitate Rupert Murdoch. Why don't these guys stay out of journalism? They don't belong there.
Between Zell and the Governor of Illinois who was just arrested, Chicago is sure getting a black eye today.
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