Cuts needed, Tribune's Zell says, 'so we can survive'

BUSINESS DIGEST

July 23, 2008|By Lorraine Mirabella | Lorraine Mirabella,Sun reporter

Real estate mogul Sam Zell, who took control of media giant Tribune Co. about six months ago, defended yesterday the staffing and page cuts under way at The Sun and its other newspapers as necessary in the worst advertising climate in decades.

In a conference call with Tribune Co. reporters, Zell said reducing staff by as much as 25 percent in some newsrooms and shrinking and redesigning the company's newspapers were the only options to ensure short-term survival and to allow a longer-term reinvention of the American newspaper.

"We're looking at some of the worst advertising numbers in the history of the world," Zell said.

"I have a responsibility ... to keep this business alive when cash flow has eroded at a prodigious level," Zell said.

"We went through every one of our organizations with a goal of getting efficient numbers up and head counts down so we can survive to live another day," he said.

"It is very clear ... the role of the newspaper is changing and we need to size our organization and our newspaper to reflect the realities of the marketplace," Zell said.

The Baltimore Sun Media Group, which publishes The Sun and community newspapers, is eliminating about 100 jobs through voluntary buyouts, layoffs and attrition. The Sun's newsroom will lose 55 people, or about 20 percent of its work force.

Other Tribune newspapers, including the Los Angeles Times, Chicago Tribune, The Hartford Courant and the Orlando Sentinel, are also making reductions.

Zell stopped short of saying that no additional reductions would be needed.

"We're not interested in trial by torture, not interested in dying by a thousand cuts," he said.

"We're doing everything we can to make this downsizing happen as quickly and as painlessly as possible," Zell said.

Tribune's revenue shortfalls are occurring as the company is carrying billions of dollars in debt that Zell took on in his $8.2 billion buyout through an employee stock ownership plan.

Zell originally said he planned to keep all of the company's media properties, but changed plans when revenues fell far faster than expected in the worsening economy.

Tribune announced last month the $650 million sale of suburban New York newspaper Newsday to Cablevision Systems Corp. and is selling the Chicago Cubs baseball team and the team's ballpark, Wrigley Field.

Zell said the Newsday deal could close as early as next week.

Yesterday, Zell was asked whether additional asset sales, including a sale of The Sun, would be considered.

A local investment group led by Theodore G. Venetoulis, a publisher and former Baltimore County executive, has expressed interest in the paper.

Zell said only that with the asset sales in place, "we have adequate liquidity to meet our [debt] obligations for 2008.

"Are there further asset sales? I can't answer that question in specificity," Zell said.

"The Cubs are on the agenda and beyond that we don't have anything definitive," Zell said

lorraine.mirabella@baltsun.com

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