Tribune Co.'s board of directors negotiated into early this morning on a deal aimed at handing control of the Chicago Tribune, Los Angeles Times, The Sun and other major media properties to maverick Chicago billionaire Sam Zell for $13 billion.
If the two sides can work out last-minute details, which might include the final bid price, one of the most buttoned-down corporations in America would be controlled by Zell, who has relished a life and career as an outsider with a contrarian investment philosophy and a full-throttle lifestyle.
Zell's bid seemed positioned to trump an 11th-hour offer from rival Los Angeles-based billionaires Ron Burkle and Eli Broad. Though Zell's $33-a-share bid fell short of the Burkle and Broad offer of $34 a share, as of late yesterday, Tribune's board was confident that Zell's offer was more concrete.
The situation was still fluid, and sources cautioned that a deal might not be completed. Tribune directors were hoping to compete an agreement before markets open this morning.
Tribune, which owns 11 newspapers and 23 broadcast outlets, has been on the auction block since September.
Zell, who did not submit a bid before the company's initial deadline, seemed to jump into the driver's seat in mid-February by suggesting his offer could be financed with the help of a tax-efficient employee stock ownership plan. Broad and Burkle countered with their own ESOP plan late last week as the Tribune's self-imposed Saturday deadline loomed.
The deal, which would return Tribune to private ownership, would make the company one of the most heavily indebted enterprises in the media industry at a time of falling readership and declining advertising revenues. But Zell likes to say a true entrepreneur has unending self-confidence - that he doesn't see risk; he sees only solutions.
That might explain why the flamboyant Chicago real estate magnate believes he can transform Tribune Co. even while the industry is an unprecedented state of flux from the Internet.
The fact that Tribune's auction dragged on for nine months with a dearth of serious bidders speaks volumes about how the rest of the world views the outlook for traditional media properties in an increasingly digital world. Zell hedged his own bet by limiting his personal investment in the deal to $300 million and relying on the ESOP as the backbone of his $8 billion purchase price. Tribune's $5 billion in existing debt will remain on the books.
