Sam Zell, 81, magnate whose major newspaper company went bankrupt, dies

Nevertheless, in 2007, the Blackstone Group purchased Mr. Zell’s company – then known as Equity Office Properties Trust – for $39 billion. His own fortune was estimated at nearly $5 billion, and with holdings in residential, drug and department stores, and energy and electronics companies—a lifetime of acquisitions that made him one of the wealthiest men in the country—he had comfortably lived halfway through his life. be able to retire. -60’s.

But seeing yet another inefficient market, he plunged into the unfamiliar world of newspapers and won a bidding war for one of the country’s most important media companies, the 160-year-old Tribune empire. In addition to the Chicago and Los Angeles newspapers, it included The Baltimore Sun, Newsday, The Hartford Courant, 23 television and radio stations, the Chicago Cubs, and Wrigley Field.

A deal comes with debt

Like many newspapers, the Tribune’s properties spawned a hemorrhage of advertising revenue and Internet readership. The company had been up for auction for months when Mr. Zell – insisting his interests were purely economic, not editorial – offered $34 a share in a complex transaction to take the company private under an employee stock scheme.

He took control in December 2007 in an $8.2 billion deal that required him to pay just $315 million in financing, but that left the employee-owners with more than $13 billion in debt, including $5 billion. billion in existing Tribune liabilities. In that highly leveraged buyout, the debt had to be paid off almost entirely with cash generated by the company’s continuing operations.

The new company was exempt from federal income taxes and its debt was reduced through the sale of Newsday, the Cubs, and Wrigley Field. But employees, who had no say in the deal, took on a crushing burden and benefited only if the company survived, while Mr. Zell, for a relatively modest investment, became chairman and was given an option to own 40 percent of buying the company for $500 million if it prospered.