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NEW YORK - After one of the most tortuous and dispiriting auctions of a venerable media company, Chicago billionaire Sam Zell has emerged as the new proprietor of the city's Tribune newspaper and a portfolio of other assets that includes the historic Los Angeles Times.
The 160-year-old Tribune Co put itself up for sale last year after a boardroom row over the company's performance threatened to tear the business apart.
But as the auction dragged on and advertising revenues went into a nosedive, the company eventually attracted just two concrete bids.
The company's complex deal with Zell has a relatively small breakup fee - $US25 million - leaving open the possibility of another counterbid from Los Angeles billionaires Eli Broad and Ron Burkle, who also submitted US$34-per-share offers for Tribune.
"A low breakup fee could encourage a trumping bid from the Ron Burkle/Eli Broad partnership or another bidder, but this seems unlikely given the lengthy and very public nature of the review process," Citigroup analyst William G Bird wrote in a research note.
At US$8.2 billion ($11.36 billion), the value of the deal is at least one-third lower than Wall Street's original hopes.
Zell, though, has an established reputation for picking apparently moribund assets and turning a profit from them. He even earned the nickname "The Gravedancer" for his fondness for acquiring companies in distress.
Last month, in an interview with Bloomberg News, he took issue with Wall Street's gloomy view of the newspaper industry and its capacity to survive competition from the internet.
Zell insisted he was "not quite as bearish as most people about the print side of the business" and that his interest in Tribune was "solely economic".
The 65-year-old is flush with cash after selling his giant real estate empire Equity Office Properties to the private equity giant Blackstone in a US$39 billion deal - the biggest buyout so far.
He is personally thought to have netted up to US$300 million from that sale and has a fortune estimated by Forbes magazine at US$5 billion.
However, he will put in barely US$315 million of his own money to take control of the Tribune, in a complex deal which will share ownership with the company's employees and load the business with debt.
The company's biggest shareholder, the Chandler family, which sold the LA Times to Tribune in 2000 and has three seats on the board, has been in open rebellion for a year. They have seen the value of their 12 per cent stake slide by more than a quarter, and have publicly criticised management for strategic failures.
Last year, both the publisher and the editor of the LA Times were fired after refusing to implement cost cuts demanded from the firm's Chicago headquarters.
- INDEPENDENT
