Thursday, December 20, 2007

Tribune goes private as buyout closes

Tribune Co.'s $8.2 billion buyout closed Thursday after an 8 1/2-month wait to secure final approval and financing, taking the ailing newspaper and TV company private under the control of real estate billionaire Sam Zell.

Zell, who previously agreed to assume the role of chairman when the deal was complete, also became CEO and made immediate changes to the board of directors and senior management.

He added five directors and named two new executives: Randy Michaels as executive vice president and chief executive officer of Interactive and Broadcasting and Gerald Spector as executive vice president and chief administrative officer.

More changes are coming, he made clear.

"We have a tremendous opportunity to take the great brands of Tribune Company, and the enormous talent within the company, to a new level," Zell said in a prepared statement. "Tribune, along with the newspaper industry, has been mired in its monopolistic origins, and we intend to create a fresh, entrepreneurial culture that is fast and nimble, and which rewards innovation."

Zell said the goal is to provide "a sustainable, relevant product for our customers and communities."

Tribune's stock was to cease trading at the market's close on Thursday.

The closing came after Tribune received the final cash installment from the four banks financing the deal -- JP Morgan Chase (JPM, Fortune 500), Merrill Lynch (MER, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500). The lenders had given the deal last-minute scrutiny because of declining conditions at Tribune and in the public markets, but the company cleared all the benchmarks needed to secure financing.

The other obstacle to approval, getting the Federal Communications Commission to clear the way for the deal, was removed Nov. 30.

The swift initial moves by the 66-year-old Zell, a self-described "professional opportunist" who has never before run a media company, confirm his reputation as a no-nonsense manager who doesn't hesitate to shake up the status quo.

He plans to add Jeffrey Berg, Brian Greenspun, William Pate, Maggie Wilderotter and Frank Wood to the board - a mix of people with ties to both the media and Zell among them.

Berg, 60, is chairman and CEO of International Creative Management Inc. Greenspun, 61, is chairman and CEO of The Greenspun Corp., president and editor of the Las Vegas Sun newspaper and a "significant investor" with his family in Tribune.

Pate, 44, is chief investment officer of Equity Group Investments, Zell's firm. Wilderotter, 52, is chairman and CEO of Citizens Communications. Wood, 65, is CEO of the venture capital firm Secret Communications and a former lawyer who spent 33 years in the radio broadcasting business.

Two existing board members were re-elected as directors: William Osborn, the chairman and CEO of Northern Trust Corp., and Betsy Holden, a senior adviser to McKinsey & Co. and former co-CEO of Kraft Foods Inc.

No one knows exactly what cutbacks, asset sales or other moves to expect from the fiery Zell -- known as a brilliant investor and bargain-hunter in industries other than media. But even a man who long ago dubbed himself "The Grave Dancer" for his ability to revive moribund properties faces a tough task in trying to turn around the nation's second-largest newspaper publisher, its revenues still in free fall.

A first task, while eyeing other assets, is likely to be to push ahead with auctioning off the Chicago Cubs, whose sale he insisted on as a condition of the transaction.

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