Bloomberg News

Sam Zell Says He Has Had Talks About Buying Tribune

March 12, 2007

Sam Zell, the billionaire real- estate developer, said he's had talks to acquire Tribune Co. and, if successful, doesn't plan to sell its newspapers or television stations.

``My inclination would be to not break it up,'' Zell, 65, said today in an interview. ``There's a lot of opportunity there.'' He said the discussions are a month old.

Tribune, owner of the Chicago Tribune, Los Angeles Times, television stations and the Chicago Cubs baseball team, put itself up for sale six months ago after the stock fell 27 percent in three years. Tribune directors (TRB:US) plan to decide by the end of March whether to accept an offer or spin off television assets.

A native of Chicago, where Tribune is based, Zell declined to comment on a report by Barron's that he topped all offers with a $13 billion bid for Tribune. Barron's cited an unidentified person familiar with the auction.

Zell's bid would be funded with debt and as much as $300 million of his own money, Barron's reported. A proposal to use an employee stock-option plan to acquire Tribune ``has been received well by everyone,'' he said. Zell sold Equity Office Properties Trust, the biggest U.S. office landlord, to private- equity firm Blackstone Group LP last month for $39 billion.

Advertising and circulation declines have cut into publishing revenue at most newspaper companies. At Tribune, newspaper advertising dropped 3 percent in the fourth quarter excluding an extra week. Circulation sales would have declined 6 percent at the company without the additional days. Zell said he's not as pessimistic as most about the future of newspapers.

Optimistic Outlook

``My interest in Tribune Co. reflects my own assessment of the value of its assets,'' he said. ``I'm not quite as bearish as most people about the print side of the business.''

Zell's proposal is competing with a bid by Los Angeles billionaires Ron Burkle and Eli Broad and another offer from the Chandler family. The Chandlers control about 20 percent of Tribune and had urged the company to sell.

Zell said he doesn't intend to influence newspapers' editorial positions.

``Our interest in Tribune has nothing to do with editorial policy,'' he said. ``My interests are solely economic.''

In the 1990s, Zell and a Chicago investment banker bought control of radio company Jacor Communications for about $79 million. When Clear Channel Communications Inc. bought Jacor for $4.4 billion in 1999, the Zell/Chilmark Fund LP earned a profit of more than $1 billion.

Past Success

``We think we understand the media business, and we think, under the right circumstances, this could be an attractive investment for us,'' Zell said.

Shares of Tribune fell 22 cents to $30.33 at 4:02 p.m. in New York Stock Exchange composite trading. They have fallen 1.5 percent this year as interest from buyers has waned.

Separately, Zell said in the interview that he expects rising demand for office and apartment rentals.

``The apartment market is pretty strong,'' Zell said. ``In the end, apartment occupancies are very much connected with overall employment.''

Zell also owns stakes in the Chicago Bulls of the National Association Basketball and the Chicago White Sox of Major League Baseball.

To contact the reporter on this story: Leon Lazaroff in New York at at llazaroff@bloomberg.net

To contact the editor responsible for this story: Emma Moody at at emoody@bloomberg.net


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