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The New Yorker has a long, intermittently informative profile of the probably-soon-to-be-new owner of the Tribune Company. (Unfortunately, the subhed, “Where will Sam Zell take the Tribune Company?” isn’t really answered, except for the suggestion that David Geffen might buy the Los Angeles Times.) Much of it will be familiar to anyone who’s been following his story, but some of the details of the sale are fascinating. Zell has, like a lot of business people, an aversion to taxes, and his deal for the institution involves a complicated end-run around them that I only dimly understand.
“Had Tribune’s employees been invited to assess their risk, they might have reached a different conclusion. If the company is unable to service its debt, it could go bankrupt. (Zell argues that employees’ jobs are already in jeopardy because the company’s revenues have fallen so sharply, and that, by taking the company private and removing it from the glare of public markets, he can reverse the decline.) In addition, the majority of company contributions to employees’ retirement funds will now be made not to 401(k)s but to the ESOP, in the form of company stock; many employees will have a less diversified portfolio, and one that is heavily invested in a company that is saddled with debt. Of course, if the company does well, its workers will profit handsomely.”
