The Chicago Tribune on-line published an interview with new owner Sam Zell. You can see full article here, but parts are worth repeating:
Q: How do you get your information? Do you read newspapers? Do you read online?
Zell: I’ve never read online. I don’t have a Blackberry. I read five newspapers a day, Chicago Tribune, Wall Street Journal, New York Times, LA Times, Financial Times. And I read everything. I read Forbes, Fortune, Business Week.
The new leader of a business who’s very viability is threatened by a new technology does not use it. And we’re to expect he’s prepared for the Market Challenge facing Tribune?
Q: Is it OK for a (top) manager to say, ‘I don’t want to do what you want me to do?’
Zell: No. He has the opportunity. He has the job. Whatever the terms of the job are, he has to live by them. All I can tell you is that, I am your boss and I tell you to do something that is not unethical, but is in line with some big corporate program or directive or philosophy, you’ve got a choice. You can play or you can go work for somebody else…Everybody’s entitled to an opinion. But once you’ve chosen to work with somebody and the lines of the story are clear, I don’t know how you could operate a business if you lay out a strategic plan and then have 20,000 people opt out.
Does this sound like a leader prepared to use White Space in order to find a solution to the thorny market Challenges which have led the Tribune into a 5 year slide?
Q: In the newspaper business, raising revenue means either raising advertising rates or raising circulation or a combination of both. At first blush, which of those makes more sense. How do you do that?
Zell: This is for sure an amateur guess at this point. But I would think the biggest single issue is circulation and circulation penetration. And I think the issue is what if, how do we do this, what’s our cpm? And how can we lower that cpm to make us more competitive with other forms of media. Those are the kinds of questions that I think are relevant. I think the answer is probably we have to find ways to increase circulation and to increase penetration.
Let’s see, the biggest issue is circulation, and that is down because more people, especially young people, are getting news from places other than newspapes (especially the web). And the new leader doesn’t use the web, or even a Blackberry. So how’s he planning to increase circulation? Does he think Tribune has been ignoring this problem the last 5 years? Is he aware of some "silver bullet" for newspaper circulation problems that isn’t known to people at Chicago Tribune, Los Angeles Times, New York Times, Washington Post, et.al.?
Q: But the ESOP isn’t going to have a seat on the board. Why not?
Zell: The idea was that two of the independents would be run by the ESOP. But in the end, it was all about alignment of interests, and nothing else matters. I’m putting $315 million into this deal, cash.
Sounds pretty clear who’s in charge here. The 65 year old guy that reads 5 newspapers a day (how many people do that? how many under 40?) and doesn’t use the web. And he’s not exactly open to ideas from the employees, who ostensibly own the company but have no representation.
Sam Zell has hooked his wagon to the Tribune management team that has not addressed the market Challenges for the last several years. He is comfortably blind to these Challenges. He’s going to use $7.2billion of other people’s money (bond holders) to try and get a return on his $315million. As a real estate magnate, such use of leverage fits his personal Success Formula. But the Tribune is not just a building on Michigan Avenue. Customers and revenues are falling, and there’s not a limited amount of news availability – like there is land.
Defend & Extend Management is planned at Tribune Company. And that means more cost cuts and further erosion in the business. Where’s Steve Case (former CEO of AOL) when you most need him? At least he knows how to use the internet.
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