Sam Zell is providing equity in his bid for Tribune, and he’s certainly taking it private. What’s more, as we’ve seen, he’s loading Tribune up with the kind of debt load normally seen only in deals run by private-equity companies. So — is this a private-equity deal, in all but name? David Carr certainly seems to think so.
Taking Tribune private will take pressure off quarterly earnings, but other challenges will remain, including eventually finding an exit for investors in an industry that seems a little short on a future right now…
In the long run, newspaper companies could find new traction in a Web era, using strong local brands and trusted content to rebuild as a digital business. But the profit horizon on that is years away, long enough to try the patience of private equity money.
My feeling is that Sam Zell is not “private equity money” in this sense: he has no limited partners demanding 20% annualized returns, and he never needs to exit if he doesn’t want to. Indeed, Zell might see Tribune as his opportunity to build a permanent legacy.
Becoming a newspaper magnate automatically confers the kind of profile and respect which simply isn’t available to a common-or-garden billionaire whose wealth is tied up in relatively unknown companies such as Anixter International. Since he doesn’t needs the money, it’s hard to see why Zell would even want to sell.